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Singapore – Profits plunge for Resorts World Sentosa

By - 14 November 2014

Genting Singapore has reported that net profit has plunged 43 per cent in the third quarter, sparking speculation that the battle between its Resorts World Sentosa (RWS) and Las Vegas Sands’ Marina Bay Sands (MBS) for the VIP gambling market is set to pitch the two mega-casino resorts at each others’ throats.

The thinning stream of high-rolling gamblers from China has led to a plunge in the earnings of the two Singapore integrated casino resorts, prompting MBS parent Las Vegas Sands to accuse its rival of resorting to desperate means to win market share.

Genting Singapore yesterday reported that net profit had plunged to S$127.1m in the third quarter ended Sept 30 from S$222.7m in the corresponding period a year earlier as overall revenue fell 17 per cent to S$644.8m. Gaming revenue slumped 21 per cent to S$477.3m, Genting said, noting that the premium-player business underperformed in the period.

Genting’s results came about a month after MBS reported casino revenue fell 8.7 per cent to US$573.5m (S$741.7m) as VIP betting volume fell almost 34 per cent.

Data from the Singapore Tourism Board showed that Chinese tourist arrivals fell by 30 per cent in the first half of this year, hurt by the economic slowdown at home and by the disappearance of Malaysia Airlines flight MH370 in March.

The shrinking number of Chinese VIP players is expected to become the new norm as the Chinese government is stemming large cash outflows from the country amid a crackdown on corruption and as domestic reforms have led to slowing economic growth.

CMC Markets analyst Desmond Chua said: “Chinese high rollers contribute to about half of MBS’ premium segment revenue, for instance. With that slowdown and with Asian governments, such as Japan, Korea and the Philippines, also keen to set up the gaming industry, I believe the boom years that we saw previously are now over – even though the casinos will remain profitable in the long term.”

Genting is trying to woo gamblers by offering overly generous incentives and easy credit to VIPs, chief executive of Las Vegas Sands Mr Sheldon Adelson said in the company’s earnings call last month.

Taking a swipe at Genting, the 81-year-old billionaire said: “Maybe one day, they will get used to competing on the basis of a quality product. If they ever build one, they won’t have to buy the business.”

Genting said: “The Asian gaming and tourism industry is experiencing significant challenges in the face of economic slowdown in our major visitor markets. We continue to spend in areas of marketing and promotions to improve new and repeat visitation both in the gaming and non-gaming businesses.”

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