Singapore to restrict residents’ access to casinos

Linus Chua

Wednesday, Dec. 29, 2004 | 11:03 a.m.

Singapore's government said it will restrict its residents' use of a proposed casino, moving to reduce opposition among church and social groups. In return, it may offer a 10-year monopoly to the gaming operator.

The casino would restrict credit for Singapore citizens and permanent residents, and the government would charge them membership fees of S$100 ($61) a day or S$2,000 a year, the Ministry of Trade and Industry said today in a statement. Tourists would enter free.

The city-state may include its first casino in a planned resort and convention center to attract more tourists, who contribute more than 5 percent of the $91 billion economy. Las Vegas companies Las Vegas Sands Corp., MGM Mirage, Harrah's Entertainment Inc. and Macau casino boss Stanley Ho have all expressed interest in the project.

"It's important for Singapore to develop its tourism industry and a casino is one of those services that attract a lot of tourists," Mark Mobius, who manages $13 billion in emerging market stocks at Templeton Asset Management Ltd., said earlier. "It can be done in a nice way that's not ruinous to the society and that's been shown in many parts of the world."

Focus on the Family in Singapore and other groups have warned of the potential for social problems such as gambling addiction, loan-sharking and prostitution. An online petition against the casino has garnered almost 20,000 signatures.

The development may cost as much as $2 billion, according to analyst Galaviz, Ong & Co., which tracks the global gaming market.

Casino companies are aiming to tap into Southeast Asia, a region with a combined population of more than 500 million people, almost twice that of the U.S. These operators are expected to submit initial proposals for the casino resort by the end of February.

The government said the casino wouldn't be allowed to admit anyone under 21 years old. It also expects that individuals may be able to voluntarily have themselves or family members excluded from the casino, which would pay a 15 percent tax on gaming revenue. Also, it wouldn't be allowed to advertise in the local mass media, the government said.

Harrah's, which is buying Caesars Entertainment to become the biggest U.S. casino company, said earlier this month it plans to use the Caesars brand in its bid for the Singapore gaming development.

Richard Mirman, senior vice president at Las Vegas-based Harrah's, said after reading the restrictions that the company plans to submit a proposal. He said Harrah's operates in 14 U.S. states, some of which have taxes on gaming revenue that are higher than what Singapore is proposing.

In a statement today, Mirman said Singapore is "clearly taking a thorough, thoughtful and prudent approach to integrated casino entertainment, quite similar to the manner in which our company operates."

"Our job now is to try to think about what we're going to do to make the overall economics work for the project," he said in a phone interview. "If the government issues only one gaming license, that's not too far from what it should be, because the economics are more favorable when there's only one casino in the market -- it's now a game of math."

Las Vegas Sands Corp. officials declined to comment on whether they would submit a proposal, citing a Securities and Exchange Commission-imposed quiet period tied to the company's recent initial public offering.

MGM Mirage spokesman Alan Feldman said company executives are still analyzing the requirements but added the company plans to submit a casino plan.

"We're following the situation in Singapore very closely," Feldman said.

The company is in talks with potential business partners in Singapore and "chances are pretty good" that the company will involve a local partner, he said.

The project may include a hotel, concert hall and convention center, and Vivian Balakrishnan, senior minister of state at the Ministry of Trade and Industry, said the casino franchise would likely receive a 30-year license and the land for the development would be sold with a 60-year lease.

Still, some community groups say the restrictions may not be enough for a country that already spends S$6 billion ($3.7 billion) a year on legal horse-racing or lottery bets on the island. Lee Kuan Yew, who was Singapore's prime minister from 1959 to 1990 and remains in the Cabinet as minister mentor, has also said he opposes casinos.

"The safeguards aren't exactly safeguards," said Joanna Hoe, vice president of Focus on the Family in Singapore, which is affiliated with a U.S. Christian group of the same name. "As much as you want to set criteria to exclude certain people, people who want to gamble will get to it anyhow."

The government estimates Singapore will attract record arrivals of more than 8 million visitors in 2004, twice its population. The resort could boost those arrival figures to 15 million a year, said Jonathan Galaviz, a partner at Galaviz, Ong.

Sun business writer Liz Benston contributed to this report.