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MBS lashes out as casinos face dwindling VIP pie

Main gambling floor of MBS casino in Singapore. Photo: Reuters

Main gambling floor of MBS casino in Singapore. Photo: Reuters

SINGAPORE – The battle between Resorts World Sentosa (RWS) and Marina Bay Sands (MBS) for the VIP gambling market is set to take a more serious turn after RWS parent Genting Singapore yesterday reported that net profit had plunged 43 per cent in the third quarter.

The thinning stream of high-rolling gamblers from China has led to a plunge in the earnings of the two Singapore integrated casino resorts, prompting MBS parent Las Vegas Sands to accuse its rival of resorting to desperate means to win market share.

Genting Singapore yesterday reported that net profit had plunged to S$127.1 million in the third quarter ended Sept 30 from S$222.7 million in the corresponding period a year earlier as overall revenue fell 17 per cent to S$644.8 million. Gaming revenue slumped 21 per cent to S$477.3 million, Genting said, noting that the premium-player business underperformed in the period.

Genting’s results came about a month after MBS reported casino revenue fell 8.7 per cent to US$573.5 million (S$741.7 million) as VIP betting volume plunged almost 34 per cent.

Analysts TODAY spoke to yesterday said the shrinking number of Chinese VIP punters is a new norm that the casinos would have to adapt to at a time when the Chinese government is stemming large cash outflows from the country amid a crackdown on corruption and as domestic reforms have led to slowing economic growth.

CMC Markets analyst Desmond Chua said: “Chinese high rollers contribute to about half of MBS’ premium segment revenue, for instance. With that slowdown and with Asian governments, such as Japan, Korea and the Philippines, also keen to set up the gaming industry, I believe the boom years that we saw previously are now over — even though the casinos will remain profitable in the long term.”

Genting is trying to woo gamblers by offering overly generous incentives and easy credit to VIPs, chief executive of Las Vegas Sands Mr Sheldon Adelson said in the company’s earnings call last month, Reuters reported.

Taking a snipe at Genting, the 81-year-old billionaire said: “Maybe one day, they will get used to competing on the basis of a quality product. If they ever build one, they won’t have to buy the business.”

When asked by TODAY yesterday, Genting declined to comment on Mr Adelson’s remarks.

However, Genting said: “The Asian gaming and tourism industry is experiencing significant challenges in the face of economic slowdown in our major visitor markets. We continue to spend in areas of marketing and promotions to improve new and repeat visitation ... both in the gaming and non-gaming businesses.”

As the battle to lure gamblers becomes more brutal, CMC Markets’ Mr Chua said: “It’s only normal that operators will resort to more incentives and easy credit to attract VIPs. Reports have shown that this has led to higher non-receivables which, in turn, affect the financials. Margins are likely to be hurt too.”

Partly reflecting that trend, Genting saw its current trade and other receivables — a rough indicator for loans extended — rising to S$1.16 billion from S$1.11 billion between January and September.

Voyage Research’s analyst Ng Kian Teck said: “While RWS and MBS will remain profitable, the industry is facing a lot more challenges, not just in terms of gaming, but also the overall slowdown of tourist arrivals in Singapore.”

Chinese tourist arrivals fell by 30 per cent in the first half of this year, data from the Singapore Tourism Board showed, hurt by the economic slowdown at home and by the disappearance of Malaysia Airlines flight MH370 in March.

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