Singapore Casino Experiment Pays Off

Singaporeans wrestled for years with whether to green-light its first two casinos, which opened with fanfare earlier this year. Many residents and government officials feared they would destroy Singapore's reputation for crime-free, family-friendly living.

So far, the resorts appear to be a huge success. The $5.5 billion Marina Bay Sands, developed by Las Vegas Sands Corp., has drawn five million visits since late April, when its phased opening began. Nearly 300,000 non-guests have visited the resort's 57th-floor viewing deck, with an infinity pool on a ledge overlooking the Singapore skyline. The resort complex is expecting 70,000 to 80,000 visitors a day by the end of the year, when it is fully open.

The parent corporation of the other casino, Malaysia's Genting Bhd., recently said its second-quarter net profit more than tripled after the successful opening of its $4.4 billion Resorts World Sentosa complex in February. Analysts are already projecting Singapore's gambling revenues could be larger than the Las Vegas Strip, perhaps as early as 2012. (In the 12 months to July 31, the Las Vegas Stripe generated revenue of $4.92 billion.)

It's far from certain whether the traffic can be sustained. There are also many Singaporeans who still worry about the potential for organized crime and gambling addiction. One local businessman recently lost 26 million Singapore dollars ($20 million) in a three-day spree, according to local media reports.

Still, the casinos' initial success appears to be justifying the government's decision in 2005 to approve them. Visitor arrivals in August hit a record high for the ninth month in a row in large part because of the casinos, tourism officials say, with arrivals now expected to reach 12.5 million in 2010, versus 9.7 million last year. Economists say they're becoming more comfortable Singapore can achieve its goal of 17 million visitors and S$30 billion in tourism receipts by 2015.

Economists are also growing more confident the casinos can serve as anchors for future real estate development that could attract more conventions and expatriates.A new W Hotel is under development on Singapore's Sentosa island, near the Resorts World casino, and another new luxury hotel overlooking Marina Bay, the Fullerton Bay, opened in July. Matthew Fry, senior vice president of acquisition and development for Starwood Hotels & Resorts Worldwide Inc., which owns the W brand, said he's looking at the possibility of working on another project in the Marina Bay area, though he declined to provide details.

The casinos have really changed the branding of Singapore, making it a more hip, happening place, he said.

The developers of Marina Bay Financial Centre, an office, retail and residential development covering 3.5 hectares (six acres) near Marina Bay Sands, say the resort has increased activity in the area, making it easier to attract tenants. Marina Bay is now becoming the focus in Singapore and that's what a lot of occupiers are looking for, said Wilson Kwong, chief executive of Raffles Quay Asset Management, which manages leasing at the site.

Counting on casinos to keep boosting Singapore's growth— which is on track to hit 13% to 15% this year—comes with risks. One is that developers will push too quickly to add more shopping and other amenities, outstripping even a sizable leap in demand.Another is that the government will grow more nervous about the casinos—and their potential to disrupt society—if they become more successful. Despite a S$100 levy imposed by the government on citizens and permanent residents of Singapore to discourage them from entering the casinos, locals have made more than one million visits so far.

The number of Singaporean gamblers is more than expected, said Prime Minister Lee Hsien Loong in an interview in September. Although people are paying attention to Singapore lately in part because of strong tourism, as for any social fallout, he said, We'll have to see—we're watching it.

The resorts are a bit different from what gamblers are accustomed to in Las Vegas. The Resorts World complex has a Universal Studios theme park, an artificial beach and an area for kids to watch cartoons in a hotel lobby. At both of the casinos, staff hand out tea and coffee instead of the free booze in Vegas.Singapore also isn't likely to change its other famous hang-ups. The government this year reaffirmed its famous restrictions on gum, and it has resisted calls to ease rules on adult-oriented films, which are heavily restricted.Still, Singapore's casinos are putting the city-state on a world stage, said Paul Pinn, a 54-year-old Australian software executive working in Singapore as he ambled through the Resorts World complex one recent Saturday.

Before, people would just use it as a stopover, but now, people want to stay over here. He said he got his own annual pass to the Universal Studios park.

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