Analyzing Steve Wynn’s Singapore vs Macau Comments

News has just be flashing all over the world, about Steve Wynn talking about his Wynn Macau being cleared for the public listing (IPO) of its Macau assets on 2 October in the territory of Hong Kong.

That news wasn’t a surprise to those who have been tracking the development of American casinos (Wynn and Sands) in Macau. However, it is quite interesting that Mr. Steve Wynn commented in the press about Singapore’s lack of competitive advantages as in the case of Macau, with regard to casino attraction.

There are opposing views about Steve Wynn’s comment on the differences of Macau vs Singapore.  Expert IR would like to “pinpoint” some of the key factors for all to consider, whether is it true that Singapore vs Macau remains a Walk-over game?

Here’s the key factors:
(1)  Macau has a strong godfather – China.  That is a fact and beyond any argument.  The godfather therefore must ensure that, Macau’s economic development shows a good side of things under China’s One-country-two-systems framework.  Macau and Hong Kong are the showcase for Taiwan and the Northwestern region of China.  Therefore, China will support Macau as in the case of Hong Kong, economically.  But there are some taboo issues remain sensitive.

(2)  China allows Hong Kong to continue with its horse racing was the promise of late Deng Xiao Pin. Similarly Chinese central government allows Macau to develop its territory economy based on its only industry per se – gaming & entertainment.  It is hoped that within a 10 years period Macau could emerge as a more balanced economy including tourism, convention/MICE, tele-communications, etc. and be part of the 9+2 economic region of Southern China.

With that in mind, China must constantly control the effects of casino liberalization in Macau and hence, resulting in several travel visa restriction policies and forbidding Chinese officials gamble in Macau.  Guangdong being in the leadership position of the 9+2 region, its economic and social stability cannot be ruined by Macau’s casino expansion.

Therefore, the (gaming) “PIE” is in the hands of Central government and it will NOT be allowed to grow in such a manner that it affects the Chinese overall grand strategy of Southern China development.  All investors must take note of this mandate order.  Unlike Las Vegas, Macau remains a controlled market.

(3)  It is not known that Chinese government especially like Mr. Steve Wynn (over Mr. Adelson). But over the short history of Macau’s liberalization of casinos, Mr. Wynn has been behaving in a moderated manner that is more welcomed by China and Macau.  That is a serious advantage as Wynn could bring about its good influence and in addition, their Taiwan network to their negotiation table.  On the contrary, Las Vegas Sands is an example on other side of the spectrum.

(4)  Now the $10b question (total investment on the IRs).  Can Singapore compete with Macau over the gaming turf?  Here’s most likely scenarios:

-  On the arena of Chinese VIP market.   The answer is NO.  Macau remains untouchable.  China won’t support Singapore on this too.

-  On mid-level China tourists to Singapore.  The answer is promising.  With the two IRs up and running, Singapore will strengthen its toruism attraction power, having to attract more affordable tourists from China and Southeast Asia with such “must-see” itinerary. China will likely support mid-tier group tourism to Singapore.

-  On the VIP gaming revenue and margins, Singapore IRs will face great challenge to develop such a volatile business.  Both Sands and Genting are far from Wynn Resort in this arena’s operation.  Lower tax regime won’t help,  because the junket commissions & costs will rise correspondingly.  Chinese VIPs will not make frequent trips to Singapore casinos.  (There are other significant reasons than the distance of travel that Steve Wynn mentioned).

-  On the Mass gaming market front.  Singapore casinos will have to rely equally on local (domestic) casino revenue as well as trying to squeeze from tourism.

So, it is still a two-sided coin for any guess of whether Singapore can excel in the Asian gaming arena.  Our stance is that Singapore must first get its pre-conditions right, in order to compete purposefully.

Report Written by. Expert IR