Held up as a shining example to Hong Kong by Chinese Premier Hu Jintao at the 5th Anniversary celebrations marking the return to Chinese rule on December 20th last year, Macau may be heading for less brilliant times. Nine days later the Singapore government gave the green light for initial plans for a casino complex to be submitted. Since the People’s Republic of China opened Macau’s gambling industry to foreign investors in 2001 its economic growth has been phenomenal, but two factors are threatening its continued success.

Lately the Chinese government has been cracking down on gambling both within and without its borders. By cutting off access to casinos set up across its borders, some legal and some not, and tightening money restrictions, the flow of Chinese players that was the raison d’être of the casinos has been cut off. This should not affect Macau and indeed could be seen as a further boost to the only place in China where gambling is legal. However, after a number of scandals involving Chinese officials gambling with public money, the clampdown by the authorities will affect the major source of income for Macau – the Chinese gamblers.

The second factor that may dim the shining light is the increase in competition. Macau has recently opened two new casinos to tap the Asian gambling market, but a proposed tourist complex with casino in Singapore is almost certain to be strong competition, with the Singaporean government making a concerted effort to revitalise its tourist industry and keep some of the Singapore gambling dollars, at present spent mostly in Macau and Malaysia, at home. It is estimated that Singapore citizens spend nearly US$1 billion a year at overseas casinos.

It is not only Macau that feels the winds of change starting to blow. The leading Asian gaming company, Genting Bhd, is taking the initial steps to widen its gambling portfolio. Moves last year took it into the British market with acquisitions of Maxims in London, increasing share holdings in London Clubs International and Stanley Leisure, and a joint venture with the latter for regional casino development if the Gambling Bill is passed with no further detrimental amendments. A prospective tourist and gaming complex in Singapore would dilute visitor numbers to the world famous Genting Highland Resort in Malaysia.

The fact that the Singapore government is considering an expansion of gaming in the city-state has much to do with its neighbours. Stable government in Singapore has given it a long tradition as a centre for shipping, manufacturing and finance, but more cost-effectiveness from the growing economies of China and India is increasingly an unequal challenge. Foreign or local investors wishing to present initial studies and outlines for a tourist complex including a casino in Singapore have until the end of February to do so. MGM Mirage and Kerzner International have already expressed their intention to submit a Request for Concept (RFC), both in partnership with the 47% government-owned Capitaland Ltd.

CapitaLand is a Singapore listed company and owns and develops private property on a large scale. MGM Mirage has decided to focus on the urban Marina Bay area for its proposed casino complex, whereas Kerzner has selected the holiday destination of Sentosa Island. A casino should bring an anticipated US$304.5 million to Singapore’s GDP.

Casino development in South Korea, Laos and the Philippines as well as possible future competition from Singapore and Thailand will in time have an effect on Macau’s glittering revenue makers. More immediate is the effect that China’s tighter money transfer controls, and crackdown on officials gambling, will have. The increasing discontent about the low wages paid to Chinese workers in Macau is also starting to be felt. With American gaming expansion reaching a saturation point, there is still plenty of enthusiasm for the Asian market amongst the major US gaming companies. The Greek Mythology Entertainment Group, already extending its new casino opened last month in Macau, is considering expansion in Singapore and may submit an RFC. After Macau, Singapore is the natural progression. (E-02.01.05)

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