PINPOINT VIEWS

Posted: May 15, 2009 in Uncategorized

“At the Crossroads?”

“Could Singapore’s massively undercutting gaming tax regime be a threat to Macau’s VIP sector?

(Inside Asian Gaming, May 12th 2009)

Reasoning

While this analysis has a clear rationale in terms of the Macau market’s traditional catchment area for players (i.e., Hong Kong, Taiwan and Guangdong province in Mainland China), there is arguably, beginning in the final quarter of 2009, a wild card coming into play—namely the threat of external competition in the form of Singapore, with its massively undercutting tax regime.

Expert IRPINPOINT VIEWS by expert IR

On assessing VIP gaming, many people still leaning on hope against hope, just comparing tax issue alone to paint a dreamy picture for Asian’s VIP or I rather call it, Junket Gaming.

The scenario and fact remain,

–         Asian VIP Baccarat turnover mainly contributed by junket channel, which also heavily relying on credit facility.

–         The article in this blog “Will They Come?” has already pointed out why mainland Chinese VIP player (including Hong Kong) is not the so called ‘wild card’.

–         The lower tax regime only helps to fuel higher junket commission/expenses and credits! Therefore, it only translates to much higher customer acquisition costs which still seriously affecting margins. Just anticipating, the Lion City’s junket commission alone can be as high as 60+% of gaming win in order to achieve sustainable turnover, excluding other related expenses.

–         The trend has already showing that in Macau, huge amount of betting has gone “under the table” through tele-betting and ‘Double-down’ action to avoid gaming tax.

–         The Lion City would maintain its strong grip on funds transaction in/out of the IR. While the junkets will rely on higher credit settlement to bring over players to IR casinos. That will inevitably raise the credit/financial risk exposure.

– END of View –

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