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Slots Won't Sway Singapore Officials

18 May 2005

SINGAPORE -- Companies vying to sway government decision-makers in an effort to win two potentially lucrative casino development opportunities in Singapore need to have ambitious ideas beyond casino gaming, America's ambassador to the city-state said Tuesday.

Frank Lavin, who has represented America's interests in Singapore since 2001, said the small nation's government wants something more than the average Strip casino in order to tap into a potential tourist market of 650 million who live in southeast Asia and neighboring countries.

"In Singapore, what they don't want is a warehouse full of slot machines," Lavin said. "They want an integrated resort, something that is special and original. My guess is that at end of the day, the winner is going to be someone who has offered something extra. You've got to do something more than build just a nice hotel."

In April, the Singapore government agreed to end a 4-decades-long ban on casino gaming, opening two potential resort sites for development.

Nearly 20 companies, including Nevada's largest gaming operators, expressed an interest in the sites, which Wall Street gaming analysts have speculated could exceed $1.5 billion in annual revenues.

Lavin did not favor one company over another. But he said proposals such as one by Las Vegas Sands Corp., which would include a Guggenheim Hermitage Museum, a cruise ship terminal and a monorail; an Australian idea that includes a Formula 1 auto-racing course; and a group that includes a Universal Studios theme park as well as a gaming element, are the type of offers Singapore leaders are seeking.

Other gaming companies in the mix include MGM Mirage, Wynn Resorts Ltd., Harrah's Entertainment, Kerzner International and Eighth Wonder.

"The American firms so far look pretty strong, but my guess is that some of them could heavy up their offer a bit," Lavin said. "If you have any good ideas at all, now is the time to bring them forward."

The Singapore government expects the resort developments to double the nation's tourism numbers to 17 million annual visitors and triple the annual tourist spending output to $18 billion. The government is expected to decide which company will develop the two sites by year's end.

"Right now, there is not a reason to go to Singapore," said Lavin, who worked in Singapore as a banker and venture capitalist before his appointment as ambassador by President Bush. "What you need to win is a proposal that is outside of the box, something that shows you're thinking in a creative fashion."

Lavin was in Las Vegas on the second stop of a six-city tour by the U.S. ambassadors to six Asian countries. The tour was organized by the U.S. Association of Southeast Asia Nations Business Council, which promotes trade and business development. During a luncheon at Caesars Palace, Lavin and the other ambassadors met with about 45 community and business representatives.

While the tax structure for the gaming sites haven't been set, Lavin expects the Singapore government to have a favorable climate.

"They believe in low taxes to promote economic growth, so your starting point is a very promising one," Lavin said.

Approving gaming as part of the resort developments was the first hurdle to overcome. Lavin said the process was similar to debating the pros and cons of gaming in any American community.

"They want the upside of gaming, but they are concerned about the downside, such as problem gambling and organized crime," Lavin said.

Lavin said he has met with representatives from nearly all the American companies proposing to develop the Singapore projects.

Several gaming operators have partnered with Singapore-based companies in submitting bids. That, alone, Lavin said, won't guarantee a winning proposal.

"Being with a local group in itself doesn't get you to the finish line," Lavin said. "My belief is size is going to matter. A $2 billion proposal will beat a $1 billion proposal even if that bid comes with a local partner because it probably means more jobs."

It is also helpful not to criticize the process.

Earlier this week, Wynn Resorts Chairman Steve Wynn was quoted in the Singapore media calling the government "unsophisticated," saying leaders were attempting to exert too much control over the design process.

Government leaders, Lavin said, who are looking over the proposals and awarding the contract, might not take kindly to Wynn's criticism.

"I would say in fact that the public is inclined in general to be somewhat deferential to the government," Lavin said. "The government will be sitting down and looking for the best proposals. It's kind of like a government awarding a contract for someone to build a new stadium."

While two sites are up for bid, Lavin said there's a thin chance three companies could be ahead of the pack and Singapore might explore a third casino site.

"I've told (Singapore leaders) not to leave money on the table," Lavin said. "I wouldn't be surprised if they came back in mid-summer saying they have three superb proposals."