The parent company of Resorts World Sentosa (RWS) expects China’s ongoing crackdown on cross-border gambling to have lasting effects on its casino business.
Chinese President Xi Jinping has ordered law enforcement agencies to curb overseas gambling by mainland citizens, threatening severe penalties — including prison terms of up to 10 years — for those who promote or organize gambling trips abroad. The directive is aimed at stopping billions of dollars from leaving China for casinos across Asia.
Genting Singapore, a subsidiary of Malaysia-based Genting Berhad and operator of RWS, acknowledged in its full-year 2020 report that the crackdown will likely reduce the flow of high-value VIP players to Singapore.
China’s Intensified Campaign
Authorities in China estimate that as much as $150 billion leaves the country annually through illegal gambling channels. The government claims to have charged more than 35,000 people in connection with cross-border gambling crimes.
On the mainland, all gambling remains banned apart from the state-run lottery. While Macau is traditionally the destination of choice for Chinese high rollers, wealthy players have also fueled the VIP segments at casinos throughout Asia, including Singapore.
Maybank analyst Yin Shao Yang noted that despite Resorts World Sentosa being permitted to raise its operating capacity from 50% to 65% at the end of December 2020, Genting Singapore does not expect a meaningful recovery in gross gaming revenue without foreign visitors. He added that the VIP market is unlikely to return to pre-COVID levels given China’s pressure on citizens and operators involved in overseas gaming.
China has also offered leniency to individuals involved in cross-border gambling if they cooperate in identifying and apprehending organizers.
Worst Year on Record for RWS
In its latest annual report, Genting Singapore admitted 2020 was the most difficult year in Resorts World Sentosa’s history.
COVID-19 restrictions devastated the operator’s results, slashing net profit and shareholder earnings by 90%, while gross gaming revenue fell 57%. Singapore’s strict border closures for much of the year limited tourism inflows, though the nation ultimately reported fewer than 60,000 COVID-19 cases and just 29 deaths.
“We are most grateful to the Singapore Government for providing various support measures in assisting our resort to weather through this crisis,” the company said. “Nevertheless, the effects of the COVID-19 global pandemic were still devastating, leading the Group to record the worst financial performance since the resort opened in 2010.”
RWS, along with Marina Bay Sands, shares a duopoly on casino gaming in Singapore. Before the pandemic, both operators committed to invest $3.3 billion into expansion projects in exchange for an extension of their exclusive gaming rights through at least 2030.
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