Singapore exercising care with junkets

I’m being somewhat facetious.

It’s not like the island-nation’s two casinos are hurting for customers.

Last year, the Marina Bay Sands and Resorts World Sentosa combined for $5.42 billion in gaming revenues. To put that figure in perspective, 55 Las Vegas Strip-area casinos produced $6.068 billion in gaming revenues in 2011.

Several analysts believe the 2-year-old Singapore casino market — which is capped at just two resorts at least until 2017 — will eventually surpass the Strip, maybe even this year.

So why would Singapore put everything at risk by climbing into partnership with junket operators?

The businesses, which are synonymous with Macau’s $33.5 billion gaming market, are under a spotlight. An investigative website alleges Macau’s junket business is heavily influenced by Chinese organized crime triads.

Junket operators have the ability to increase business volumes. They also reduce credit risk and bad debt because they have a closer understanding of a gambler’s financial background and can collect on markers.

In late March, the Casino Regulatory Authority of Singapore licensed two junket companies to bring high-end customers to Resorts World Sentosa, which is operated by the Malaysia-based Genting Group.

The junkets can now lure players to Resorts World in exchange for a commission on the wagers.

One difference is they are no longer referred to as junket operators in Singapore.

“We have decided to use the term, International Market Agents, to more accurately describe what these agents do,” Authority Chief Executive Lau Peet Meng told Singapore media. “They will focus on bringing in foreign high rollers to our casinos, and they will not target our locals.”

The marketing agents are based in Malaysia, not China or Macau. Also, Singapore officials granted the businesses licenses for just one year. At the hearing, 14 junket operators applied, but only two were approved.

JP Morgan gaming analyst Joe Greff said Singapore “remains focused on allowing the market to continue to grow and evolve, while also adhering to strict local laws and regulations.”

Union Gaming Group principal Grant Govertsen, who is based in Macau, said he doesn’t believe the junket business will have much impact on Singapore’s casino market. The operators are only licensed for Resorts World and can’t bring business to the Marina Bay Sands, which is owned by Las Vegas Sands Corp.

“The (Authority’s) language is quite forceful, suggesting licensees will be continually subjected to suitability tests upon pain of revocation,” Govertsen said. “Given a very onerous licensing process, as well as the government’s traditionally cautious approach, we do not expect a flood of junket approvals in the near term.”

Las Vegas Sands has not tipped its hand if it will have junket operators do business with the Marina Bay Sands, which accounted for almost $3 billion in gaming revenues last year.

During the JP Morgan investment conference in Las Vegas in March — before the two junkets were licensed — Las Vegas Sands President of Global Gaming Operations Rob Goldstein said the company would participate if Singapore approves junkets.

He said junket operations in Singapore, however, would operate in “a very, very restrictive environment.”

Goldstein said Las Vegas Sands handles its Singapore gaming the old-fashioned way; “very focused on a sales team that can go direct to the customer.”

Singapore, which legalized gaming as a way of increasing tourism, was restrictive with its casinos from the start. Gaming was mandated to be an amenity at the two operations. Marina Bay Sands has more than 1 million square feet of retail and 1.2 million square feet of convention space. Resorts World operates a Universal Studios theme park. Singapore residents also pay $100 per day to enter the casinos.

The moves didn’t slow gaming, obviously.

Although analysts have wondered how Singapore might emulate Macau, it won’t happen in the junket business. Macau has 219 licensed junket operators. Ultimately, you might be able to count Singapore’s total on one hand.

The International Union of Operating Engineers in Washington, D.C., is sponsoring Casinoleaks-Macau.com, which has posted hundreds of documents alleging ties between the triads and junket-operated VIP rooms inside Macau’s casinos, including those operated by Nevada based companies.

Las Vegas Sands and Wynn Resorts Ltd. have remained silent on the matter. MGM Resorts International, however, called the website’s charges “baseless.” The company cited its self-policing policies and suitability procedures that keep its junket operators in line.

Singapore, it seems, is taking steps so there is no confusion between its International Market Agents and Macau’s tainted junket businesses.

Howard Stutz’s Inside Gaming column appears Sundays. He can be reached at hstutz@reviewjournal.com or 702-477-3871. He blogs at lvrj.com/blogs/stutz.
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