M’sia getting “peanuts”; S’pore getting billions

In M’sian casino operator kanna do NS by Tun?, I speculated that Genting M’sia was forced to buy a yacht by the M’sian govt for US$126m when others were bidding much lower prices.

Here’s the real reason why: Genting will spend S$4.5bn to improve the facilities on Sentosa and pay more tax here, all this when Tun is trying to bully and intimidate us. So maybe Genting was paying US$126m to keep him from getting upset that a M’sian company was going to spend billions here and not in M’sia?

How theS$4.5bn will be spent:

The new attractions of Super Nintendo World and Minion Park, spanning over 164,000 sqm, will be gradually rolled out at the Universal Studios Singapore every year from 2020 and completed around 2025.

Minion Park, inspired by the Despicable Me movie franchise, will take over the Madagascar zone, now designated for rides and shows tied to the animated movie of the same name. Both Minion Park and Super Nintendo World, based on Nintendo’s popular games and characters, will feature new rides and attractions.

The SEA Aquarium will also be expanded to take over the Maritime Experiential Museum, to create a new Singapore Oceanarium.

Apart from these, RWS’ waterfront promenade will be redeveloped to include a free public attraction featuring a nightly show and multi-purpose event zone that can be adapted for different festivals and events, as well as new dining options.

RWS will also introduce a driverless transport system across the Sentosa Boardwalk, which links to VivoCity mall in Harbourfront.

As for the increased taxes

a tiered structure for casino taxes will be introduced after the current moratorium ends in February 2022. Currently, there is a flat tax rate of 5 per cent for Gross Gaming Revenue (GGR) made through premium gaming and 15 per cent for GGR made through mass gaming.

Premium gaming refers to the GGR made through players who open a deposit account with a credit balance of no less than S$100,000. Mass gaming covers players who fall outside of this category.

With the change, the first S$2.4 billion of GGR from premium gaming will be taxed at 8 per cent, while GGR which exceeds S$2.4 billion will be taxed at 12 per cent.

For mass gaming, the first $3.1 billion of GGR will be taxed at 18 per cent while GGR which exceeds $3.1 billion will be taxed at 22 per cent.

https://www.todayonline.com/singapore/irs-allowed-expand-casinos-exclusivity-rights-extended-end-2030

In the context of all these goodies for S’pore, paying US$126 to M’sia is “peanuts”.

Btw the price of Genting S’pore (owned by controlling shareholder of Genting M’sia) fell: investors and analysts are not happy about the taxes, and capital expenditure that have spent.

S’pore’s casinos: 8th, 9th globally/ Sands S’pore beats Sands Macau

 

 

Biggest Macau casinos don’t have US parents: they have strong local connections. 

Why avoid Genting S’pore

In 2010, I wrote

The junket rules that the authorities are likely to introduce will mean a slow start for VIP (high roller) volumes at Genting Singapore, at least in the short term. The Genting gp, I understand, has always believed junket operators are the key to its VIP segment.

So the VIP gaming volumes at Sentosa will take time build up. Note that the preference for using junket operators for the VIP segment reflects the more conservative nature of the Genting gp. Bad debts are the responsibility of the operators, not the casino. In return, the operators get a bigger share of the gamblers’ spending. (https://atans1.wordpress.com/2010/01/08/genting-spore-did-you-know/)

(Or “Money laundering, casinos and junket operators”)

Genting S’pore has been missing its forecasts for some time and is no longer a favourite.

Looks like it has a problem building up its high roller biz without the help of the junket operators.

Here’s how the junket operators operator in Macau and why S’pore cannot afford to have them (emphasis is mine):

Junkets are nearly impossible to regulate: in private rooms several floors above the hordes of tourists, top clients continue to spend millions of pounds in off-the-record bets.

“Junkets are legitimate agents in Macau’s casino system,” said Philippa Symington of FTI Consulting’s Shanghai office and the author of a recent report on money laundering in Macau.

 “Their activities can stray into criminal territory. This can range from working around occasional loose regulations – for example, enabling players to avoid identification – to relying on organised crime groups to collect gambling debts.”

In some ways, money laundering is to Macau what corruption is to mainland China – ubiquitous, yet impossible to eradicate without undermining the entire economy.

China restricts the amount of money its citizens can carry abroad to about £2,000 per trip and £30,000 over a year. Macau appeals to wealthy mainlanders who, fearing scrutiny and volatility at home, may want to funnel their fortunes into overseas property markets and bank accounts.

Junkets take advance payments on the mainland and offer easy credit across the border, allowing clients to far exceed Beijing’s limits. Streets near major casinos are lined with brightly lit pawn shops selling shrink-wrapped luxury watches for thousands of pounds, which punters from the mainland buy on credit and immediately return for cash.

The 2013 annual report from the Congressional-Executive Commission on China, a US government agency, quoted an anonymous academic as saying: “Each year, $202bn in ill-gotten funds are channelled through Macau.”

http://www.theguardian.com/business/2014/jan/05/macau-gambling-tourism-money-laundering

Genting S’pore: Short, Sell or Avoid

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.

Genting S’pore: Time to cash out?

The price is coming under pressure because 3Q results annced over a week ago disappointed. Brokers were initially afraid to openly call a sell because they had called a sell when it was around S$1. And then had to revise that call as the stock powered ahead. It closed Friday at $2.04 and has been higher.

But sell calls are now coming out despite its strong cash flow and expectations that Singapore may overtake the Las Vegas Strip in terms of gross gaming revenue by 2013.  They see downside risk to Genting’s share price after a 63% run-up year-to-date. And they see no reason to take into account its possible entry in new gaming jurisdictions such as Japan, or the anticipated licensing of junket operators in Singapore.

Genting S’pore: Still trust analysts?

Genting S’pore is flying as bearish analysts calling “sell” when it was much lower, are calling it a “buy” when it is flying. Sell low, buy high?

I don’t track this stock but I’m wondering who are the gullible fund mgrs who having sold stock or refrained from buying earlier on their brokers’ recommendation, have now turned buyers at higher prices.

And why they trust the analysis of people who got it wrong only weeks ago? I mean would you trust an astrologer who got it wrong a few weeks ago when you visited him?

Let’s hope its not a case of “Buy high, sell low”.

High rollers take bus to Sentosa casino?

Genting S’pore’s share price has been strong presumably because of expected high takings at its Sentosa casino.

Well if takings are high, it ain’t from high-rollers.

Sunday Times carried an article saying that at Resorts World Sentosa there is a bus terminus for buses from various points in West Malaysia and back, and that the buses are used by Malaysian punters visting the Sentosa casino

Err these high rollers that Sentosa IR and S’pore government want? Looks more like the M’sian equivalent of the grind market gamblers that once travelled from the HDB heartlands to Genting Highlands. Oh and BTW, Genting use budget airline AirAsia to bring in “high rollers”, unlike Marina Sands that has its own jet based in Senai because Changi is too expensive.

Can you imagine high rollers taking the bus from Senai to the city? It’s a two hr ride at least.

PM make yrself, yr government and party popular with the “little” people: Lift the charges that make it expensive for the locals to gamble at the casinos. As to the problem gamblers that seem to the issue, treat them the way the government treats the homeless, destitute and unemployed: “It’s yr fault, you are that way. Be responsible.”

And admit to yrself that the IRs are being kept afloat by the” little” people of S’pore and Malaya, not the high rollers and money-launders.

You can declare it a success that the fact that high rollers and money launders are giving S’pore a miss:  the rules here on junket tours, money laundering and non-privacy are the toughest in the world.

Update 25 June

Why Marina Sands must be targeting locals and not high rollers and tourists — or why the numbers don’t add up https://atans1.wordpress.com/2010/06/24/why-mms-and-sands-views-on-casino-differ/

RW Sentosa yet to call in the bomohs or shamans

Some moons ago, I posted this when RW World ran into a spell of bad — Tom Jones falling sick at concert,and attraction (still) not working https://atans1.wordpress.com/2010/03/27/genting-spore-help-needed/ suggesting it called in the bomohs or Red Indian shamans.

Obviously my advice was ignored as there is a problem with another attraction.

Well my tot that if the bad luck continues, someone may break the bank at RW Sentosa, could come true.

Genting S’pore: Help needed?

Genting S’pore’s share price has declined since this was posted https://atans1.wordpress.com/2010/01/08/genting-spore-did-you-know/

Trumpets pls.

Seriously what with the problems at the UA theme park (favourite ride suspended) and the Tom Jones concert (he sang two songs), and bearing in mind the original name of Sentosa, Blakang Mati (“behind death”), Gentings would be prudent in calling in a bomoh* to “buang sui” and a fung shui master to check out the alignments. If mgt decides to be rational, who knows what may happen next: a super rich punter breaking the bank?

The losses could be horrendous. I was in a super VIP room (friend invited me to see how the super rich live) and the money changing hands would make a S’pore cabinet minister feel a pauper.

And thinking abt it, mgt should bring in the medicine men or shamans (the politically correct term) from its related N American casino operations. Redskins are its partners there.

Remember you read this prediction of big losses, if the shamans are not called in, here first.

Update

*I’ve seen a bomoh ensure that rain did not spoil the Sultan of Pahang’s (and my) enjoyment of a high-goal polo match. The rain fell everywhere except on the polo field and the spectators’ stand. It was awesome.

Casino tots

Sands China and Wynn Macau, with existing cashflows in the largest gaming market in the world, trade below 11x 2010e EV/EBITA forecasts.  Genting, despite the fall from January’s highs, trades at 14X forecasted EV/ EBITA.

Harrah’s is one of the few major US casino companies without a presence in Macau and its chief executive has indicated he would like to open there.  Here’s a way: via buying the 32% stake in Melco Crown Entertainment (traded on Nasdaq) owned by James Packer-controlled Crown. Crown could get an offer for its $US600 million stake —  article from an Oz newspaper, from few weeks back.

The price spiked up then before coming off sharply. But it is spiking up again.  A better punt than the doomed optimism at any gaming table at Sentosa.

And placing yr bets, like the government on the IRs at Sentosa and Marina?There are other gaming places where it is much easier to be anonymous, launder money and obtain credit. If you are wondering why S’pore is being so toffee-nosed abt these things, do remember that among the leading global financial centres, it has two major public casinos. New Yorkers have to go to Atlantic City to gamble, Hongkies and Tokyoites to Macau. And the gaming clubs in London are private ones.

And remember that the IRs are places where you can gamble, not merely resorts you visit in order to gamble.There are plenty of other places around the world where you can spend your tourist dollar in a similar fashion: Las Vegas and Macau and Monaco.

S’pore’s casinos face tough competition.