An integrated resort is the term for a casino-based resort in Singapore. Singapore has two IRs now: Marina Bay Sands located at Marina Bay, and Resorts World Sentosa (RWS) located in the Sentosa island. Both casino IRs had started operation since early 2010 and they are the first of its kind. The main motivation to build them is to boost Singapore’s tourism industry which has been facing intense competition from other destination in the region.
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Gambling has always been illegal in the island state Singapore until 2005 except the government-run Singapore Pools for lotteries and Singapore Turf Club for horse racing. Prime Minister Lee Hsien Loong announced the cabinet’s decision to develop two IRs with casino in it in a parliament session on 18 April 2005. Before the announcement, the government of Singapore had invited industry player to submit concept proposals for these two IRs and final awards were made to Las Vegas Sands for MBS and Genting International for RWS in 2006. Both of the IR were being built after then and were officially opened in 2010.
Since then, the economic benefits are tremendous. The two IRs created more than 20,000 job opportunities (Lee Hsien Loong, 18 April 2005). In 2010, annual tourist arrivals reached a all time high of 11.6 million. (Channel News Asia, 2010). The average visitors to MBS casino has been more than 25,000 daily, with about a third are locals (Channel News Asia, 3 Feb 2011).
In 2010, the tourism receipt for Singapore hit $18.8 billion, the highest in ten years, an amazing 49% increase from 2009. (ChannelNewsAsia, 10 Feb 2011). Tourism receipts for just second quarter 2011 alone were estimated to be of 18% growth at $5 billion. (Straits Times, 25 Oct 2011). The tourism receipts mainly comprised of tourist spending on accommodation, dinning, shopping and admission fees. The growth is especially from visitors from Indonesia, India and China, as well as an increase in international visitors due to recovering economic environment after 2009 global financial crisis and the opening of the two IRs. Overall, the two IRs contributed approximately $5 billion to Singapore’s GDP in 2010. (Straits Times, 18 Feb 2011). The hotel industry has benefited the most, with estimated 10-12% growth over previous year in revenue and occupancy rate is expected to reach 80-85% in 2011.
When the decision to build two IRs was made by the government back in 2005, there were already some discussions about the IRs will increase gambling activities in Singapore, may lead to more problem gamblers (Statement by PM Lee Hsien Loong, 18 April 2005). Along with the IR development, government has put in measures to minimize the possible social impact, such as a $100 entry levy for local Singaporeans and Singapore Permanent Residents to discourage them to go into the casino. It also introduced exclusion orders in 2009, to let people with problem gambling ban themselves from entering the casinos. In addition, the casinos would not be allowed to extend credit to the local population. A National Council on Problem Gambling (NCPG) was founded with the purpose to help people cope with their gambling issues (MSF 2008).
As of June 2011, NCPG has excluded 47,178 locals and foreigners from entering casinos (NCPG, 2011). This clearly shows that some people are aware of the potential problem with gambling addiction, and are willing to sign up for self-exclusion or exclude their family members. The number of foreigners applied for self-exclusion has increased from 50 to more than 12,000 from Nov 2010 to Jun 2011, of which any are male foreign workers, whose employers have helped them apply for self-exclusion. (ChannelNewsAsia, 27 July 2011).
Those who are objected to the casino development often mentioned that this could lead to higher crime rate in the city. However, over the past decade, before and after the casino’s opening, Singapore’s crime rate has remained fairly constant. Compared to other countries or cities with casinos, the casino related crime rate here is considered low, at just 0.3% of all crimes cases. One thing to note is that NCPG has put in special efforts to prevent, monitor and educate any teen problem gambling or related crimes(NCPG, 2007).
However, the development of casino and prosperous tourism industry have brought some other unexpected social issues into the local community. As Singapore does not have enough labours for the construction and service industry and many local people do not want to work in such sector, bring in foreign labours become a cost effective and necessary solution. The increasing influx of foreigners, especially those who came to Singapore to work, brings pressures on the housing and public transportation. In fact, the two most cited issues during the election period in early 2011 were rising housing prices and public transportation congestions, hinting that they were caused by sudden and huge influx of foreigners over past few years. The government has subsequently introduced several cooling measures on the housing market including more strict rules and higher stamp duties for foreign buyers.
On the other side, Singapore is regarded as a place with advanced infrastructure for its residents in Asia. With high penetration of next generation fiber optic high speed broadband for household and 4G mobile networks across the island, it is indeed a place with high speed and affordable internet connectivity for all the people living here.
Macau
Macau is a special administrative region (SAR) of China since 20 December 1999, before that, it was ruled by Portugal for more than 400 years since 1550s. Different from Singapore, Macau has a historical reason to develop casino and gaming industry. Gambling in Macau has been legal since the 1850s colonial days when the Portuguese government legalized the activity in the colony in an attempt to generate revenue for the government. Since then, Macau has become known as the “Monte Carlo of the Orient”.
Gambling tourism is Macau’s biggest source of economic revenue, generating about 40% of the GDP and about 50% of the government tax revenue for the past decades. After 1999, visitors are made up largely of mainland Chinese entering directly or from Hong Kong. With the entry of large foreign casinos from Las Vegas and Australia since 2003, Macau overtook the Las Vegas Strip in gaming revenues in 2007 and in all subsequent years (DICJ, 2007).
Before western style casino games were introduced into Macau in the 20th century, only Chinese games were played, the most popular one is Fan-Tan. Generally, three are 3 different types: casino games, horse racing and greyhound racing. Sports betting and lotteries are also available but in a smaller scale. Macau does not license online gaming operations at present.
Grand Lisboa is a 58-floor, 261 metre tall hotel located in the heart of the Macau Peninsula, owned by Sociedade de Turismo e Diversões de Macau (SJM). Grand Lisboa has a theme of Gold Age, luxury interior designs, and landmark lotus architecture designs which is the same as the Macau SAR flag. SJM is one of the six companies authorized to operate casino games of fortune and other games of chance in casinos, under the terms of a concession granted by the Macau SAR government in March 2002. It is owned by Hong Kong listed SJM holdings limited, which in turn is owned by the legendary gambling king Stanley Ho. Its casino and restaurants were opened in Feb 2007 and hotel was opened in De 2008. The casino has more than 800 mass gaming tables and 1000 slot machines. The hotel has 430 hotel rooms and 10 exclusive VIP suites. The hotel has 8 restaurants, 3 of them are Michelin restaurants. The products used in the hotel spa place are all from French Clarins brand. It has a grand ballroom which can accommodate more than 1300 people and 4 meeting rooms (Grand Lisboa,2012).
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There are two policies that have great impact on Macau’s casino tourism industry in the past decade. First one is the government-issued monopoly gambling license for Stanley Ho’s Sociedade de Turismo e Diversões de Macau has expired in December 2001 and the government has opened up the industry and issued 6 casino operating concessions to both local and foreign industry players, such as Las Vegas Sands, Wynn Resorts and Galaxy entertainment group. This policy has significantly changed the landscape of Macau casino industry as several new casinos and resorts are built by foreign players over the years. By June 2011, there are 34 casinos, 5453 gaming tables and 13,787 slot machines in Macau. Macau already has an established gaming industry due to historical reasons, it has significantly enhanced the position as the gaming center in the east with such large scale expansion with international players. The second policy was a result from Mainland and Macao Closer Economic Partnership Arrangement (CEPA) between the Chinese central government and Macau SAR government in October 2003, which allowed residents in major Chinese cities to go to Macau & HK for touring individually with simplified process. It is reported that the number of mainland Chinese tourists has risen from 1.5 million in 2003 to more than 10 million in 2009 (DICJ,2012).
The combined effect of both policies to Macau’s economy is ground-breaking. In 2006, per capita GDP in Macau reached $29,800 USD and it over took HK for the first time in history. Gaming revenue for the first 9 months in 2006 was over 4.9 billion USD and it over took Las Vegas for the first time which has revenue of slightly less 4.9 billion for the same period, latest figure shows that gaming revenue reached all-time high of $38bn USD in 2012. Gaming and tourism comprised more than 80% of Macau’s economy, with more than 20 million tourists arrived in 2009 and over 70% average hotel occupancy rate, the economy has really took off since 2003, the GDP growth rate was more than 11% for many years. In terms of tourist origins, mainland China has been the number spot since 2005 (54.5%), followed by HK (31.6%) and Taiwan (6.5%), the remaining are mainly from other South East Asian countries (DSEC,2009).
The booming of gambling industry has also brought tremendous opportunities for other related industries, such as hotel, restaurant, construction, transportation and financial services. Unemployment rate in Macau has decreased steadily from 6.8% in 2000 to 3.1% in 2008. In fact, there has been labor shortage in Macau since 2003 after the boom, by end of 2006, the total number of foreign labor has reached 400 thousands, and almost 4 persons are foreigners in every 10 people working in Macau.
Besides casinos, Macau is a place with beautiful environment and rich cultural heritage. The Historic Center of Macau was inscribed as a World Heritage Site in 2005; it is an urban area within the old city of Macau spinning eight squares and 22 historic buildings; it is the product of cultural exchange between East and West over 400 years and is currently the oldest, most complete and consolidated array of European architectural legacy in Asia. The famous A-Ma temple, Barra Square and Cathedral Square are all in this heritage site. It is not easy to find such a small place with such a rich cultural and historical past as Macau. It also has over 20 museums, with the majority located in the Macau island, such as Maritime, Wine and Tea museums. The fortresses across the island are another heritage that reminds people about the past, some of them dating back to the early 17th century when Dutch forces threatened Portugal’s hold on Macau. From the tourism point of view, this rich cultural feature has attracted lot of casual gambler who come to visit Macau for relaxing holidays or family members travelling together with those who came to Macau and gamble (Porter,2000).
One thing to highlight for Macau is that it has established comprehensive legal structure and relevant laws to ensure the proper growth for gambling and related industries. Currently casinos have to pay a fixed premium for the concession and a variable part based on gross gaming revenue. The tax rate is currently 35%, plus another up to 2% and 3% for social and economic contribution, thus the maximum tax is therefore 40%. Macau has specific law provision for criminal offences related to gambling, however, the exclusion of players from any gambling venues is voluntary as of November 2011 and the government is analyzing a new draft law to deal with problem gambling (DSEC,2012).
All the economic data shows that the booming casino and related industry since 2003 has bring tremendous amount of wealth into the city, and helped Macau to recover from the SARS crisis in 2003 very quickly. GDP growth remained to be very strong in the following years, and it has been the number one in terms of gaming revenue in the world since 2006. This has greatly help the local residents with higher income, greater employment opportunities and better infrastructure. However, the gambling industry is dependent on the prosperity of other Asian economies, especially mainland China in Macau’s case, thus it is not a very stable and independent business model. Gambling alone generally does not provide technological advancement or productivity growth, which are considered to be the better source of economic growth. Data shows that over 70% of the new growth in gaming revenue are from VIP rooms and tables. Although gaming industry has provided a lot of employment opportunities, it however mainly attracted low to medium skilled workers and does not provide many higher end positions which are essential for a more balanced and sustainable society. In the past, gambling has also brought many problems in the colonial days, such as criminal activities related to loan shark, money laundering and smuggling. There was a period that Chinese gangster triad societies become the norm in the society and people tend to seek help from them rather than from the police. Since Macau’s return to China’s rule in 1999, the public security situation has markedly improved( DSEC,2007).
Does all this mean Macau should stop developing gaming industry? A simple answer would be no. Despite the huge economic growth that gaming has brought to Macau mentioned earlier, the lowering unemployment rate, higher government tax revenue and better infrastructure over the past decade, there is simply no immediate threat that Macau should completely stop the development. However, the high growth rate does bring some potential concerns, such as heavier reliance on the gaming tax for overall tax revenue and huge influx of foreign works and tourists may have a negative impact on the local development as Macau has a relatively small land area and small population. In response to these concerns, Macau SAR government has stopped issuing new concessions since April 2008 in an attempt to try to slow down the casino development. However, on the other side, given the small population, is it not that harmful to attract tourists as a main strategy to develop the local economy as it simply does not have enough resources to develop full scaled industries such as manufacturing, shipping and energy etc. Compared to Las Vegas which has more than 200 casinos and serving 300 million potential visitors within 3-hour flight range; Macau has only 31 casinos and serving over 1 billion potential visitors within 3-hour flight range. With growing economy and higher urbanization rate in China, which means more potential visitors to Macau, Macau still have a lot of room for growth in the casino tourism in the next few decades(Cohn,2012).
Unfortunately, gambling is not a magic, it will bring in some ugly scenes as well as wealth. Prostitution, or under the cover of escort services, drug dealing and abuses, and loan shark are often common in the cities with casinos. The government needs to balance the money gambling tourism has brought in and these negative social impacts on the local community, as they are clearly not something good for the society. Although money can benefit Macau economically, social responsibilities are more important, especially on the teenagers and younger generations. We shall discourage and take steps to prevent casinos to make money without any concerns on social impact. One thing can be done is to monitor more closely in the casinos, especially on those who won or lost large amount of money, as they are more prone to the above mentioned criminal acts(John,2010). An government agency can also be setup to promote various leisure and sports activities for teenagers so they are not only attracted to gambling. Other activities such as regular promotional message can be produced by the police on the roads in the way of banners, or over the radio and TV broadcast. Government also needs to invest more to upgrade the technology and equipment used by the police and to upgrade their skills with the latest development in forensic science.
The future
Macau’s gaming industry faces challenges in the coming year including the scheduled implementation of a smoking ban and expectations of an anti-corruption drive on the mainland from the new leadership. Revenue growth is expected to slow further in 2013, with Macquarie analysts forecasting a 7 per cent increase year-on-year. (Financial Times, Jan 2, 2013)
However, infrastructure developments such as the expansion of Macau’s border crossing with China and the extension of a high-speed rail link with the mainland Chinese city of Zhuhai are expected to boost visitor numbers. Also, the imbalances on gaming revenue and related hotel and restaurant revenue become a concern in Macau. In Las Vegas, half of the revenue is from hotel, restaurant and entertainment sector while Macau’s has only less than 20% share of the total revenue. This is actually a very attractive and untapped segment as not all tourists going to Macau will gamble all day long, with more leisure activities and entertainment shows it will become a more attractive place for casual gamblers and family tourists. This will be a very good strategy to develop a more balanced and fun casino tourism industry for Macau. For example, in order to further promote the hotel for tourists in the next year, we have proposed collaboration with Chanel to have a new product launch event to be hold in March 2013. (the details of this event is on the brochure attached to this article.)
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