Towards Financial Freedom
Genting SP (Why Prices Kept Falling!!!) ...
Sustaining the growth momentum may be harder from here, if proposed changes to the law governing the casinos take effect. In fact, some observers even expect business at the casinos to suffer when the amended Caisno Control Act kicks in.
The government is carrying out a month long public consultation exercise to get feedback on a slew of changes it intends to make as it steps up oversight of the gaming industry. The Casino Control Amendment Bill is scheduled to be tabled in Parliament by end July 2012.
There is still much uncertainty as to how the Singapore government's proposed changes to its casino law will impact Genting Bhd and its 52%-owned unit Genting Singapore, whose Resorts World Sentosa is one of only two casino resorts in the island-republic.
The situation was fluid as the proposals, which aims to impose harsher penalties and restrictions on gaming operators and their patrons, were at the public feedback stage and only scheduled to be tabled in Singapore 's parliament at the end of 2012.
In its financial year ended Dec 31, 2011, Genting derived RM7.79bil, or 39.9%, of its revenue from its Singapore subsidiary, putting the latter neck and neck with Genting's Malaysian operations which brought in RM7.77bil, or 39.7%, to the group. Its 49.4%-owned associate Genting Malaysia Bhd was previously the top earnings generator.
In early July 2012, the Singapore government, via the Casino Regulatory Authority (CRA) as well as its trade, home affairs, finance, and community development ministries, announced a slew of improvements to the six-year-old Casino Control Act. It is now seeking feedback from the public starting mid July 2012 till Aug 6 2012. With the benefit of practical experience in regulating and managing the casinos over the past two years, a review of the casino regulatory regime and the Casino Control Act is therefore timely.
The key proposals included raising the maximum fine allowable for disciplinary action taken against casino operators to 10% of gross gaming revenue from the current SG$1mil limit.
Another proposal involved junket operators, also known as 'international market agents' (IMA), where the CRA would have the power to set a cap on the commission payable to them by the casino companies. In March 2012, the CRA gave out its first IMA licences, which must be renewed annually, to two Malaysian junket promoters endorsed by Resorts World Sentosa. IMAs can only target the international market and not Singaporean citizens or permanent residents. The CRA would be empowered to suspend or cancel an IMA licence 'if it is in the public interest to do so,' while the onus to detect and block unlicensed IMA activity would be on the casino operators. An 'evaluation panel' may be appointed by the Trade and Industry Ministry to give its opinion to the CRA on the performance of both integrated resorts for the latter's consideration when processing casino licence renewal applications.
Furthermore, VIP high rollers may have to draw down their SG$100,000 deposit before they can receive more credit from casino operators. Industry observers said that the proposed amendments would be 'detrimental' to the company's VIP volume if passed, possibly eroding up to 25% of earnings before income tax, depreciation and amortisation in the worst case scenario.
They could be a 'long drawn out affair'. A lot would ride on the implementation. You may be able to stop people at the door, but you wouldn't know who the problematic players are once they get in.
These and a number of other proposed changes will add to the operating risks of Genting and LVS, might be warranted considering that the fallout of compulsive gambling in casinos is not insiginifcant.
As at end May 2012, more than 93000 people including foreigners were banned from casinos.
It remains to be seen how far the new measures could go in containing the social fallout. But Singapore is determined to keep a tight rein on casino operators to ensure compulsive gambling among its citizens does not get out of hand.
At the back of its mind, the government is likely wary of imposing too many restrictions on the casino operators as it would want them to continue to thrive, having collected in taxes from the two integrated resorts. The casinos would also need to do well in order fro Genting and LVS to continue running and refreshing the other attractions in their integrated resorts.
A much stricter Casino Control Act is bad for business.
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1 person likes this. Showing 2 of 2 comments
The time has not yet riped for collection. Wait till the big 4 gambling cum casino gaints in Hong Kong and Macau shares continue to move north. Now the gambling cum casino shares are moving south.
2012-08-02 05:43
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CS Tan
4.9 / 5.0
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
jack_ng
Since the price already so low now. It is time to collect some?
2012-07-20 16:53