Singapore Paves Way for Las Vegas Firms to Compete for Licenses

Singapore scrapped a four-decade ban on casinos to boost tourism, clearing the way for companies including Las Vegas Sands Corp., Wynn Resorts Ltd., Harrah's Entertainment Inc. and MGM Mirage to compete for the right to build two entertainment complexes in the city.

The government will allow casinos on the island of Sentosa and in downtown Singapore, Prime Minister Lee Hsien Loong said in parliament today. It will seek detailed plans from developers, having received 19 proposals already, he said.

"Singapore is seen as unexciting" and needs "crowd pullers," Lee, 53, said. "We want Singapore to have the X- factor, that buzz you get in London, Paris or New York."

Lee said the two casino resorts may create as many as 35,000 jobs. They may also lure tourists to a city where the economy is forecast to expand this year at half the 8.4 percent pace of 2004. The Chinese enclave of Macau, where 17 casinos operate, had three times the economic growth and twice as many visitors as Singapore in 2004.

"We can pick the two that have the wow factor to attract not only Asian tourists but a large number from around the world," said Jennie Chua, chief executive of Raffles Holdings Ltd., which owns Singapore's 117-year-old Raffles Hotel. "We need something with more buzz, more snazziness, to attract repeat visitors and new visitors."

The island state will award contracts this year for two "integrated resorts" that will include convention facilities, retail outlets and restaurants, said Lim Hng Kiang, minister for trade and industry. The resorts, which will be completed by 2009, may cost $3 billion to develop, Lim said. The government is expected to award casino licenses by the end of the year.

Some Las Vegas resort operators said they weren't surprised by the decision to offer two casinos, which would allow for some healthy competition.

Some bidders praised the government's thoughtful approach toward legalization.

"I don't think any of us have seen a government move with such care and thoughtfulness about this process," MGM Mirage spokesman Alan Feldman said. "They've been extremely careful about delineating issues they believed were important and asking bidders to respond to those issues."

In a statement, Harrah's said the resorts will "not only attract new visitors and visitor spending but create new revenue streams and areas of economic growth opportunity for Singapore through job creation, capital investment and spin-offs."

Harrah's, which is partnering with Asian developer Keppel Land Ltd., also said it is known in the United States for creating responsible gambling programs that eventually became standard practice for the casino industry.

In a statement, Las Vegas Sands said it would respect the "culture and history of Singapore."

"We celebrate the high standards and the unmatched quality of life enjoyed by the people of Singapore and we pledge to serve as a vested partner in this process," the company said.

Concerns about gambling addiction derailed past efforts to legalize casinos in Singapore, which had for years turned down such proposals. Restrictions put on the casinos will also help deter gambling problems, officials said.

Under consideration are rules requiring casinos to charge an admission fee of about $60 per entry or an annual membership payment of about $1,200, set credit and loss limits and post no gambling advertising. The casino floor would be limited to 161,400 square feet -- not more than 3 to 5 percent of the resort space -- and 2,500 slots each.

A 15 percent tax rate under consideration by the Singapore government is lower than Macau's 40 percent rate but about double that of Nevada, Deutsche Bank stock analyst Marc Falcone said in a research note to investors today.

"Considering the Singapore opportunity could be a monopoly, the tax rate is actually quite attractive and could result in an overall larger market size," Falcone said.

He said the resorts could generate some $1.5 billion in annual gaming revenue and host more than 17 million visitors per year.

Singapore had 8.3 million visitors last year. Tourists spent S$9.6 billion, accounting for 5.5 percent of gross domestic product. The city wants to triple tourism revenue to S$30 billion by 2015 as manufacturers move to lower-cost countries including China and India.

"The whole region is on the move," Lee said. "The question we have to consider is: 'Will Singapore be part of this new world or will we be bypassed and left behind?"'

Singapore expects economic growth of as little as 3 percent this year, compared with 8.4 percent in 2004.

Bloomberg News and Sun business writer Liz Benston contributed to this report.

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

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