Kevin Lim & Nopporn Wong-Anan
Reuters
Las Vegas Sands said it expected to recoup its $5.5 billion investment in the Marina Bay Sands in five years as it opened the casino on Tuesday, banking on Asia’s appetite for gambling remaining strong.
The Marina Bay Sands is the second casino to open in Singapore since it legalised casino gambling in 2005.
Sands, the world’s biggest gaming firm by market capitalisation, opened the first stage of its complex, including the casino, about 950 hotel rooms, and part of the retail and convention space.
The firm, along with U.S. rivals Wynn Resorts and MGM-Mirage, already have footholds in Macau, which is now the world’s biggest gambling centre.
The Singapore casino opened at 3:18 p.m. local time, an auspicious moment as in Cantonese it sounds the same as “business will prosper”.
Sands said its Singapore casino should generate earnings before interest, tax, depreciation and amortisation of more than $1 billion a year, above a range of analysts’ expectations of annual EBITDA of between $300 million and $800 million.
The Sands’ billionaire Chief Executive Sheldon Adelson said the optimistic forecast was due to Asians’ interest in gambling and their willingness to place bigger bets than Americans.
“Chinese people see gambling as a form of entertainment,” Adelson told reporters. “There is enough room in Asia, not just China but all over Asia, for five to 10 Las Vegas.”
“That is why we expect Singapore to be a grand slam home run,” he said.
Singapore attracts many visitors from across the region. The city-state of 5 million people is a private banking hub and has the highest number of millionaires in the world on a per capita basis.
Many casino operators are banking on Asia for growth as gaming revenues in Las Vegas, Atlantic City and other U.S. centres decline or show only small growth.
Macau has generally exceeded expectations. Sands recouped its investment in Sands Macau, the first casino in the Chinese territory owned by a U.S. operator, in just one year and it said on Tuesday that it expected the strong growth to continue.
UBS expects Macau, a former Portuguese enclave crammed with more than 30 casinos and the only place in China where casino gambling is legal, to generate $20.5 billion in gaming revenue this year, nearly four times the estimate for Las Vegas.
The casino operator said it hoped to attract 70,000 to 80,000 visitors a day to the Marina Bay Sands, the world’s second-most expensive casino to build after MGM Mirage’s CityCentre in Las Vegas.
Adelson brushed off concerns that Singapore’s strict rules regarding junket operators would make it hard for Marina Bay Sands to attract high rollers, who account for nearly 70 percent of casino revenue in Macau.
Junket operators provide credit to the players they take on organised visits to casinos. Some of these operators have been linked to triads, including a group convicted of conspiracy to commit bodily harm to a dealer working at Sands Macau casino.
“It’s not a system that is seen worldwide. It’s uniquely Asian and primarily in Macau,” said Adelson, who is also the firm’s founder and major shareholder. “We don’t have junket reps in Las Vegas.”
Marina Bay Sands will instead provide credit directly to high rollers, as it does in Las Vegas, where it has many visitors from Asia.
When Singapore legalised casino gaming in 2005, it said it would grant licenses for two giant casinos.
Genting Singapore was the first group to open a casino. the $4.8 billion Resorts World at Sentosa, which opened on Feb. 14 and is still seeing big crowds.
When completed, Marina Bay Sands will have 2,600 hotel rooms, convention facilities for up to 45,000 delegates, restaurants run by celebrity chefs and a cantilevered floating garden perched on top of its 200 metre-high three hotel towers. ($1=1.366 Singapore Dollar)
http://www.reuters.com/article/idUSSGE63Q08X20100427?type=marketsNews