The share price of Genting S’pore did not fall after it was reported that ” Today has learnt that a Casino Regulatory Authority (CRA) probe against Resorts World Sentosa (RWS) is underway over alleged reimbursements of casino entry levies. The investigation, which started almost a year ago, is understood to allegedly involve hundreds of incidences of these illegal reimbursements” http://www.todayonline.com/Singapore/EDC120712-0000055/RWS-in-levy-probe?
It should have because:
— In May last year, RWS was fined S$200,000 for illegal reimbursements of casino entry levies.
— And remember CAR ordered it to desist from providing free transport for heartlanders to Sentosa?
These show that RWS is not a gd corporate citizen and if found guilty again it could be fined heavily*, and further penalised heavily.
But this is not the only worry. The main worry is that RWS’ (and that of other Genting group’s casinos) business model are based on
— a strong focus on the grind (retail) market; and
— the use of junket operators to fund high-rollers, passing on the credit risk to the operators, in return for lower margins (it pays commissions to these operators to bring in the high-rollers and take the credit risk).
But S’pore doesn’t like this model. It discourages locals from gambling at the casinos and its licensing rules for operators are very, very tough. So tough, that no-one is applying to be one. It is afraid that shady operators will launder money, something that is happening in Macau. S’pore’s reputation as a financial centre will be destroyed if the casinos here get a reputation of being conduits in money laundering.
So Genting S’pore has a problem growing its revenues.
And then there is the use of Genting S’pore to fund Genting group’s ambitions: the latest being the possibility of making a bid for an Oz casino that an Oz gambling mogul already covets. Could be expensive for Genting S’pore shareholders. Hence the falling share price after Genting S’pore annced that it had increased its stake in the Oz casino.
*Update on 16 July 2012:
Singapore plans to toughen its casino laws and allow the regulator to impose a fine of up to 10% of annual revenues generated by operators Las Vegas Sands and Genting Singapore, local media and Reuters reported earlier in July.
The maximum penalty that CRA can now impose is S$1 million (US$785,000). But after amendments to the law are passed, the fines could potentially exceed US$200 million, Reuters reported.
The changes could be in place by the end of the year.