The Shifting Global Gambling Landscape

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Posted on Oct 24th 2010  -  Subject: The Shifting Global Gambling Landscape

The live global gambling landscape continues to shift.  Atlantic City once bemoaned the dominance of Las Vegas.  Now that state casinos are opening all over the country, Las Vegas' dominance has lessoned. Internationally Macua has become the biggest gambling mecca in the world, far eclipsing the revenues and profits of Las Vegas.  

The newest gambling hot spot, Singapore, is growing at a faster pace than even Macau did. The decision to limit the number of gambling options to two mega resorts, Marina Bay Sands and Resords World Sentosa, seems to be paying off.  In their first nine months, those two casinos are bringing in revenues that rival the entire Las Vegas strip. Morgan Stanley estimates that by 2012, revenues at Singapore’s two casinos could account for some $7-10 billion annually.

According to Sand's CEO Sheldon Adelson, much of the credit for this incredible growth is due to Singapore's 5-15% tax rate, which is much easier than the 39% levied in Macau.  This reduced tax rate allows for margins on earnings before interest, taxes, depreciation and amortization (Ebitda) of close to 50% in Singapore, while they are about 28-30% of gross revenue in Macau.

Other important factors influencing the rapid growth In Southeast Asia, there are only an estimated 15,000 people for every (legal) gaming table or slot machine, whereas in the US, that number is only 250. Asia doesn't suffer from negative Judeo-Christian anti-gambling voices and their cultures seem to support their citizens’ willingness to devote almost twice as much disposable income on gaming activities than their Western counterparts.

With the runaway success of Macau and now Singapore, it is feared other Asian countries, like Japan, may jump in full force to capture some of the action. But Adelson isn’t troubled. “Asia is far from saturated,” he told the Barrons reporter. “It will never be satisfied in my lifetime. It will probably not be satisfied in yours.”

Source: Barron's


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