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Singapore – Singapore’s expanding casinos hit with entrance fee and tax hikes

By - 8 April 2019

Entrance fees for locals going into Singapore’s two casinos have doubled with immediate effect in a move expected to wipe 15 per cent off the revenues of one operator.

The levy has been increased from SG$100 to SG$150 for saying local attendance on the country’s two gaming floors has ‘declined significantly’ with the problem gambling rate also falling from 2.6 per cent when the two venues first opened to 0.9 per cent in 2017.

Minister for Trade and Industry Chan Chun Sing said: “Although problem gambling has not worsened since the introduction of the IRs, we are nevertheless wary of the dangers posed by gambling, in particular online gambling, which has become an increasingly serious threat.In order to further limit the social impact of problem gambling on our local population, Marina bay Sands and Resorts World Sentosa have agreed to work with us to study how to help casino patrons make more informed decisions on their level of play.”

Union Gaming’s Grant Govertsen said of the entry fee increase: “While we believe this is misguided and more likely to exacerbate problem gaming, it will most certainly have a negative impact on casual local mass market customers. We are now modelling a 15 per cent decline in mass GGR for RWS over the next 12 months. As an aside, the notably higher entry levies can be viewed as an unexpected gift to regional properties (Cambodia, Macau, Malaysia, Vietnam) as the magnitude of the daily entry levy can be translated into round-trip LCC airfare elsewhere.”

Whilst both Resorts World Sentosa and Marina Bay Sands have had their licences extended with exclusivity until 2030, and have seen expansion plans approved, gaming tax will also go up in 2022. Gross gaming revenue is currently taxed five per cent for VIP gaming and 15 per cent for mass gaming. This will change in February 2022, when a new tiered structure will come into effect.

The first $2.4bn of VIP gaming revenue will be subject to a tax of eight per cent whilst anything above that will be taxed at 12 per cent. A similar system will be put in place for mass gaming with the first $3.1bn of taxed at 18 per cent and anything above this at 22 per cent.

Marina Bay Sands is seen as being able to cope with the changes better. It has approval to add 2,000 square meters of gaming space with 1,000 new slots whilst Genting will add 500 square meters of gaming space and 800 slots.
JP Morgan’s DS Kim described the ‘unwanted regulatory changes’ as a ‘hefty price tag.’

He said: “Increases in entry fee and gaming tax will hurt P&L, and it is just a matter of ‘how negative’ they will be. We estimate the hikes in entry fee and gaming tax to impact EBITDA by about four per cent and six per cent respectively, from 2Q19 and March 2022. We see this as negative on balance.”

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