RWS wooing high rollers
It dangles credit, VIP tables in absence of junket licences
By Ng Kai Ling and Huang Lijie
RESORTS World Sentosa (RWS) is rolling out the red carpet for high rollers to its casino while the waiting game continues for the authorities to issue junket licences.
Junket operators are middlemen who bring in big-time players.
Analysts from the Royal Bank of Scotland (RBS) said in a recent report that RWS is courting premium players with carrots such as access to credit, a cigar lounge and more VIP gaming tables.
According to the report issued last Friday, RWS had 74.4 per cent of the VIP market here last year. It is expected to keep a majority of that pie - or 61.3 per cent - till 2013 in competing with Marina Bay Sands (MBS).
'We believe Genting Singapore will continue to use credit, leveraging on its extensive knowledge in the region, to drive VIP gaming volume in the absence of junkets,' said the RBS report.
Both RWS and MBS declined to comment on their efforts to attract VIP casino players who typically chip in with a larger proportion of gaming revenues.
In the fourth quarter of last year, VIP play accounted for 60 per cent of RWS' gross gaming revenue, and 45 per cent at MBS.
Last year, RWS made $1.35 billion and MBS, $833 million, in pre-tax profits.
In Singapore, casinos can extend credit only to clients who have deposited $100,000 with them. Casinos will decide on a case-by-case basis how much to lend, taking into account the client's financial standing and ability to repay.
According to gaming analysts, the credit can be as much as $3 million to $5 million.
Many casinos worldwide pay junket operators to bring in the big spenders. The commission paid can range from about 0.6 per cent to 1.8 per cent of the amount of chips bought by clients.
The casinos rely on junket operators because they have access to an extensive network of VIP players worldwide. The arrangement also relieves casinos of the risk of extending credit and the task of chasing the customer for payment.
Analysts estimate the annual gaming revenue of the two casinos here could increase by at least 20 per cent if junkets are given the green light.
But more than a year after it received its first application, the Casino Regulatory Authority (CRA) said it is still 'processing and investigating'.
RWS has endorsed around 20 junket applications which are pending approval by CRA.
Last week, the CRA said it was investigating claims of illegal junket activity in the two casinos.
Its announcement followed comments by Mr Sheldon Adelson, chairman and chief executive of Las Vegas Sands, parent of MBS, on his discovery of a suspicious $5 million money transfer from MBS to Macau.
Mr Melvyn Boey, head analyst of research and gaming at Bank of America Merrill Lynch, said the probe might delay the issue of junket licences.
'CRA might exercise stricter scrutiny on the applicants, but the delay in approval is not likely to be significant,' he added.
While there has been no official timeframe on when the licences will be granted, many in the industry expect this to happen in the second half of this year.
Mr Carey Wong, research manager with OCBC Investment Research, said the hold-up is because of CRA's detailed checks on junket licence applicants.
'Given that it is the first time such checks are being done, it is better to do it right from the start,' he noted.
Mr Sean Monaghan, senior consumer and gaming analyst for South-east Asia with HSBC, said the Singapore Government is adopting a 'tough' approach to granting such permits because junkets have been known to be linked to organised crime.
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It dangles credit, VIP tables in absence of junket licences
By Ng Kai Ling and Huang Lijie
RESORTS World Sentosa (RWS) is rolling out the red carpet for high rollers to its casino while the waiting game continues for the authorities to issue junket licences.
Junket operators are middlemen who bring in big-time players.
Analysts from the Royal Bank of Scotland (RBS) said in a recent report that RWS is courting premium players with carrots such as access to credit, a cigar lounge and more VIP gaming tables.
According to the report issued last Friday, RWS had 74.4 per cent of the VIP market here last year. It is expected to keep a majority of that pie - or 61.3 per cent - till 2013 in competing with Marina Bay Sands (MBS).
'We believe Genting Singapore will continue to use credit, leveraging on its extensive knowledge in the region, to drive VIP gaming volume in the absence of junkets,' said the RBS report.
Both RWS and MBS declined to comment on their efforts to attract VIP casino players who typically chip in with a larger proportion of gaming revenues.
In the fourth quarter of last year, VIP play accounted for 60 per cent of RWS' gross gaming revenue, and 45 per cent at MBS.
Last year, RWS made $1.35 billion and MBS, $833 million, in pre-tax profits.
In Singapore, casinos can extend credit only to clients who have deposited $100,000 with them. Casinos will decide on a case-by-case basis how much to lend, taking into account the client's financial standing and ability to repay.
According to gaming analysts, the credit can be as much as $3 million to $5 million.
Many casinos worldwide pay junket operators to bring in the big spenders. The commission paid can range from about 0.6 per cent to 1.8 per cent of the amount of chips bought by clients.
The casinos rely on junket operators because they have access to an extensive network of VIP players worldwide. The arrangement also relieves casinos of the risk of extending credit and the task of chasing the customer for payment.
Analysts estimate the annual gaming revenue of the two casinos here could increase by at least 20 per cent if junkets are given the green light.
But more than a year after it received its first application, the Casino Regulatory Authority (CRA) said it is still 'processing and investigating'.
RWS has endorsed around 20 junket applications which are pending approval by CRA.
Last week, the CRA said it was investigating claims of illegal junket activity in the two casinos.
Its announcement followed comments by Mr Sheldon Adelson, chairman and chief executive of Las Vegas Sands, parent of MBS, on his discovery of a suspicious $5 million money transfer from MBS to Macau.
Mr Melvyn Boey, head analyst of research and gaming at Bank of America Merrill Lynch, said the probe might delay the issue of junket licences.
'CRA might exercise stricter scrutiny on the applicants, but the delay in approval is not likely to be significant,' he added.
While there has been no official timeframe on when the licences will be granted, many in the industry expect this to happen in the second half of this year.
Mr Carey Wong, research manager with OCBC Investment Research, said the hold-up is because of CRA's detailed checks on junket licence applicants.
'Given that it is the first time such checks are being done, it is better to do it right from the start,' he noted.
Mr Sean Monaghan, senior consumer and gaming analyst for South-east Asia with HSBC, said the Singapore Government is adopting a 'tough' approach to granting such permits because junkets have been known to be linked to organised crime.
[email protected]
[email protected]