Singapore: Casino Junket Restraints

It's not all that bad for the new casinos that will begin operating soon. There is the good news and the not so good news. These rules are found on the Casino Regulatory Authority (CRA) web-page.

So let us digest the good, the bad and the ugly asects of these rules.

"High rollers accustomed to discreet VIP access may find themselves in the spotlight if they plan to gamble in Singapore’s casinos.

The Casino Regulatory Authority (CRA) has released detailed regulations on the licensing and regulation of casino junkets here which require casino operators to make arrival reports that will include the particulars of all junket players and promoters at least one hour before any are allowed to enter the casinos.

This puts an end to gambling incognito and, more importantly, increases the level of oversight expected of casino operators here.

Indeed, the regulations, which were made public yesterday through CRA’s website, leave the onus of maintaining the integrity of junkets on the casino operators.

But this is not to say that junket promoters will have it easy.

Junket promoters organise gambling trips for high rollers and usually earn a commission on the bets placed by their clients. Some promoters offer credit to gamblers as well as ‘comps’ (complimentary items such as travel and lodging) to entice clients to gamble.

To regulate the junket industry, CRA requires all junket promoters and representatives to be licensed and undergo ‘investigations’ which are similar to probity checks for casino licences.

The cost of the checks will be borne by the junket promoters.

Licensing requirements have also been set up detailing the duties of promoters, including maintaining records of all clients, commissions, rebates and financial statements which CRA will have access to.

They will also have to declare their finances on a regular basis.

As a part of the regulations, a junket agreement between the casino operator and the junket promoter detailing the terms of business including commissions must be lodged with CRA. Disciplinary action for anyone who steps out of line could include a fine of up to S$400,000 (RM975,000).

A spokesman for CRA said: “CRA has studied the way various jurisdictions in the US and Australia as well as Macau regulate junket operations. We have also taken cognizance of Singapore’s circumstances — that we are a leading financial centre with a high level of safety and security as a competitive advantage — and developed a junket licensing regime that would be suitable for Singapore’s local context. The junket licensing regime is developed to facilitate a conducive environment for junkets to operate in Singapore, without compromising on law and order considerations.”

Melvyn Boey, an analyst with Bank of America Merrill Lynch, said that he is not surprised by CRA’s junket regulations.

He believes the main aim of the junket regulations is to restrict money laundering and this is likely to “deter” that segment. He also said that certain requirements by CRA, such as the disclosure of junket commissions, is similar to those in other gaming jurisdictions.

It has been reported that the crucial business brought in by junkets could elude Singapore. However, Boey believes “in-house” high rollers from the casinos’ own VIP lists will account for much of the high-roller business in Singapore.

“I am not inclined to change my revenue projections,” he added. For 2011, the first full-year of operations, Boey expects total gross gaming revenue from the casinos at Marina Bay Sands and Resorts World at Sentosa to hit S$4 billion.

Junkets generally refer to the VIP or high-roller business segment in casinos and depending on the country, can account for a significant portion of the gross gaming revenue.

UOB KayHian notes that for Genting in Malaysia, VIP gamblers accounted for 30 per cent of the total gaming revenue in 2008. In Macau, it noted that VIP gamblers accounted for 66 per cent of total gaming revenue while in Singapore, it has projected VIP gaming revenues of about 42 per cent at Resorts World at Sentosa.

UOB KayHian also said in a recent report that the “market may be overly optimistic on Singapore casinos’ high-roller revenues due to rising competition, client stickiness and potentially cumbersome disclosure requirements”.

Krist Boo, the spokeswoman for Resorts World at Sentosa, said: “Junket operators play an important role in bringing premium gaming customers into Singapore. They are integral to Singapore’s vision of making the integrated resort an international success, and we support that vision. We are working closely with both CRA and junket operators to ensure that our operators are regulated and licensed.”

So, let teh casinos live and let live, Singapore style.