What Market Segment IR Casinos Attract?

Posted: July 25, 2010 in Uncategorized

Professional Ground brief commentary

25 July 2010  Sun                                      

If any thing was to be noted for the IR casinos, pictures on The Sunday Times today clearly say a lot about the demographic of casino patrons from across the border of Singapore-Malaysia.

A quick gauge of the mass gaming market so far, being rammed up by the Intergrated Resorts casinos is as follows,

*  While Resorts World Sentosa (RWS)  is better than Marina Bay Sands (MBS) in rally the Malaysians from across the border, most of the casino patrons come from within the Johor state that’s within 2 hours travel time.

*  RWS has established their relations with Malaysians within a short time, taking leverage on the brand (Genting) familiarity. On the contrary, MBS has to target outside the Malaysian pool and locals.

*  The busing program run by both the casinos is an important platform for the Malaysian visitors but it is clearly not yet reached the expected volume.  For example, RWS could only “acquire” about close to 1,000 pax or so on weekday run of their busing from across border and up to 3,000 pax on weekend.  MBS seems to be much worse in their busing capacity.  It is therefore not surprising that RWS has to send in the buses to local housing estates for “catching the fish”.  It is a sign of deperate move, as busing and daily pax is concerned.  i.e. they still lacking the expected level of critical mass to cream off good revenue &  margins from the mass gaming floor.  

*  Of the busing patrons are day-tripper from Malaysia and mainly the grey hair (silver-hair) population.  We can expect that RWS casino will make some good money from the slots but table games revenue may not be overwhelming due to lower average bets from this segment.  MBS seems to attract younger population of casino goers.

*  With the slow development of Malaysian market per se, the importance of local market (Singaporeans & permanent residents) is a crucial factor to help sustain the two IR casinos daily pax headcounts.   From observation, average daily pax to the casinos is likely to hover in the range of 12,000 to 15,000 for each casino.  On some weekends the number may hit a higher note up to 18,000 – 20,000 each (?).   Participation rate of Singapore locals (including permanent residents) has been closely watched by social scientists and social development agencies alike.  If  reported cases of problem gambling increase and become an alarming signal, it may trigger off intervention from the authority in terms of further restrictions put on local casino gamblers.

*  Beyond Malaysian and local casino patrons, there is still no clear sign of Singapore IR casinos are attracting significant number of foreign players to come.  The real potential problem is, reliance too much on the Malaysian grey hair market segment and coupled with if it is mainly from Johor state, it may not be a sustainable business model.

*  The next two quarters of financial reporting by the IRs will be telling their stories.

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  2. Jim says:

    Great insights. Thanks for the posts on the IRs. I’m a California-based investor in this space, and would love to have a quick discussion over the phone with you.



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