Final Lap - Junket Regulation
The race for first-mover advantage in Singapore is not quite overTuesday, 26 January 2010
VIP gamblers in Singapore won't be able to play incognito
On 31st December, Singapore's Casino Regulatory Authority (CRA) released details on the licensing and regulation of junket operators in the city-state. According to the regulations, the reporting onus is largely on the casino operators, who will have to make arrival reports to the CRA including particulars of all VIP players and accompanying junket operators at least one hour before they enter the casinos.
All junket operators and their representatives will have to be licensed and undergo investigations similar to the probity checks made on casino licensees. The cost of the checks will be borne by the junkets. Under their licensing requirements, the junkets will also need to maintain records of all clients, commissions, rebates and financial statements, and allow the CRA access to these records.
Furthermore, a junket agreement between the casino operator and the junket promoter detailing the terms of their business relationship, including commissions, must be lodged with the CRA. Failure to comply with any of the CRA's regulations could result in penalties including a fine of up to S$400,000.
A spokesman for the CRA commented on the need for stringent junket regulations in the city-state: the "CRA has studied the way various jurisdictions in the US and Australia as well as Macau regulate junket operations. We have also taken cognisance of Singapore's circumstances—that we are a leading financial centre with a high level of safety and security as a competitive advantage—and developed a junket licensing regime that would be suitable for Singapore's local context. The junket licensing regime is developed to facilitate a conducive environment for junkets to operate in Singapore, without compromising on law and order considerations."
Ultimately, any cumbersome regulation of junkets and high rollers will reduce the revenue they bring to Singapore's casinos. It appears Singapore needs to make that sacrifice, however, in order to deter money laundering and maintain its position as a financial centre.
On the bright side, Singapore will not be as reliant on junket operators as Macau is, since it is the inability of Mainland Chinese high rollers to bring money out of the Mainland into Macau that makes them such an integral part of the latter market. Singapore's casinos should prove much more successful at courting high rollers directly—something each successive new casino operator entering Macau attempted and failed to do, before turning to the familiar old junket arrangements.
Furthermore, it seems likely that Singapore's casinos will be able to generate a much higher proportion of revenue from highmargin mass market play than their Macau counterparts. In Macau, low-margin VIP play accounts for around two thirds of total casino revenue, while it only accounts for 30% of revenue at Genting's monopoly casino in Malaysia.