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Las Vegas Companies Lead Singapore Short List

15 Sep 2005

Las Vegas Sun

by Richard N. Velotta

LAS VEGAS -- An Asian casino expert says the four Las Vegas-based resort companies looking to build an integrated resort at Singapore's Marina Bay area have the inside track among 12 companies that have made the "short list" of developers under consideration.

Kelvin Tan, executive director of Surrey Development Ltd., one of the leading consultants for the gaming industry in Southeast Asia, said proposals from MGM Mirage, Las Vegas Sands Inc., Wynn Resorts Ltd. and Harrah's Entertainment Inc., have the best chance of winning the right to build in Singapore.

Tan said the companies' track record for development and favorable relationship with Wall Street to secure financing make them the favorites to secure the first of two bids from the government of the Southeast Asian city.

Tan made the prediction in a panel on the development of the Singapore gaming market at the four-day Global Gaming Expo at the Las Vegas Convention Center. Casino industry executives, vendors and analysts from around the world are attending the show, which closes today.

In a later panel, several other Asian gaming experts gave a progress report on the industry in Macau.

In Singapore, two iconic integrated resorts have been approved by the government, which has spent much of 2005 establishing ground rules for the submission of proposals.

Tan said a request for proposals on the two properties is expected to be issued by the government by the end of this month. The submission of bids for the Marina Bay site -- the more urban setting of the two locations -- would have a December deadline, Tan said, and is expected to be awarded by the end of February.

Bids then could be submitted for the second site, on Sentosa Island just off the coast of Singapore, by the end of March, with the awarding of that project expected by May.

Tan said the favorites to secure the Sentosa Island bid are a partnership by the owners of Casino de Genting, a Malaysian operation, and Universal Studios; Sol Kerzner's Sun International group; and a partnership comprised of Tabcorp Holdings Ltd. of Australia and a cruise ship company.

The Singapore market is attractive to the 12 companies planning to submit proposals because of the city is centrally located between several Southeast Asian countries, densely populated and untapped India and Australia.

The city already has an established tourism infrastructure and the government voted last year to allow casinos to further enhance its tourism offerings.

The government also plans a relatively low tax rate -- 10 percent on premium players and 20 percent from the mass market. Panelist John Malott, managing director for the Asia Pacific region of Washington-based ManattJones Global Strategies, said Singapore also is appealing because of its "squeaky-clean image" and that the government has established a means to address problem gambling issues.

Malott, a former U.S. ambassador to Malaysia, said the casinos would assess a fee of $100 in Singaporean currency -- about $60 U.S. -- for local residents to use the casino. Locals also could buy a $1,200 (U.S.) annual pass, with most of the admission charge going toward treatment of compulsive gamblers.

Tan said the winners in Singapore will be the government, the winning bidders and the citizens of the nation, while the losers would be Genting Resorts, the company with a casino nearest to Singapore, cruise ships operating in the Straits of Malacca and casino operations in Cambodia, the Philippines, Australia and Sri Lanka.

The panelists don't expect the new Singapore properties to impact casinos in Macau because it is so far away -- about three hours by plane.

The panel updating operations in Macau indicated that the city on the southern tip of China continues to be on track toward overtaking Las Vegas by gross gaming revenue.

Casinos in Macau reported 16.7 million visitors in 2004 -- a 40 percent increase over the previous year -- with revenue of about $5 billion. Revenue for 2005 is expected to hit $6 billion.

Macau has awarded three concessions and two subconcessions, to five companies, including Las Vegas Sands, Wynn Resorts Ltd. and MGM Mirage. Las Vegas Sands already has a casino open and is building a second property in an area known as the Cotai Strip on an island off Macau. Wynn and MGM Mirage are building properties that are expected to open next year.

Panelists on the Macau session said the biggest differences in the area this year are the growing importance of the mass market, a slowing growth rate in visitation and a potential increase in slot machine revenue.

Macau is a market built on table game play as high-rolling Chinese gamblers wager primarily on high-stakes baccarat.

But the arrival of Las Vegas Sands to the market resulted in an interest in the mass market and efforts to increase slot machine play, said panelist Larry Woolf of the Navegante Group, Las Vegas, an industry consultant.

Slot play has a long way to go to catch up to table game play, he said, with slots generating about $200 a day in revenue compared with $10,000 a day per table on those games.

Panelist Scott Fisher of The Innovation Group, New Orleans, an industry consultant, said visitor growth is up 10 percent in 2005, a healthy increase but considerably lower than the 40 percent rate previously experienced.

Fisher noted that visitation could spike again later in the year with the opening of a new Disneyland theme park in Hong Kong, which opened its doors last week.05

Copyright © Las Vegas Sun. Inc. Republished with permission.

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