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The propensity to play slots is much higher in Southeastern Asia than China. In fact, there were already slots in Singapore pre-RWS and they knock the cover off the ball.

Details:

Long-term margins in Singapore could be a little better than people think due to higher slot play than Macau.  A lot of people do not realize that there are already 76 slot clubs in Singapore some of which have been around for 30 years.  SE Asians are much more partial to slots than Chinese and Hong Kong visitors, which make up the majority of Macau's players.  Here are some fun facts:

  • 76 slot clubs, 71 of which run linked jackpots
  • The slot clubs vary in size from 5 to 40 machines with a total market size of ~1,600
  • Slots are mainly old “fruit style” machines with no machines on a TITO or other cashless systems
  • Payback of approximately 82% vs a legal minimum of 90% for the two casinos

Analysis:

Our Singapore sources indicated that the 1,600 or so slots generate approximately US$800 win per day each.  This compares to very favorably to the Las Vegas Strip at $155 and Macau at $178.  The Integrated Resorts - Resorts World Sentosa (RWS) and Marina Bay Sands (MBS) - will have an estimated 2,900 machines between them, bringing the total number of units in the marketplace to about 4,500. Each of the casinos has a maximum allowed number of 2,500 machines but are not expected to hit this high for the first few years.  The performance of the slot clubs suggests that the market will ultimately support the maximum.

The clubs are currently prohibited from operating the kind of games the casinos will offer. Casinos slots will primarily consist of the 25 and 50 multi-line games, which are much more volatile than the more basic games on offer at the clubs. It's possible that regulations will change to allow the clubs to offer similar games to their loyal customers as the casinos, but in that scenario its likely that they would also need to raise their payback to 90% from the current 82%.  We expect the local market, which has been strong for many years, will move to the IRs, given their better environments, better service standards, and larger mix of games; especially for the high end or VIP slot players.

Singapore is a very different slot proposition to Macau, where there is no history of playing slots and the interest in baccarat is so strong, be it low end mass or high end VIP, that it is not expected that slots will ever comprise more than a small percentage of total revenues.  Singapore however, has a long history of playing slots, and is more akin to the market in Malaysia at The Highlands, which has offered a wide range of games for the many decades they have been in operation. Early indications from RWS are that the limited numbers of machines they have available are generating daily wins per day of US$1,200.  While this can be expected to fall as more machines come online and the aggressive busing from Malaysia diminishes, slots will be a major contributor to the IRs.

Right now, we are projecting slot win per day of only US$400 for MBS, a number which will likely prove low.  Factors working against matching the $800 win per day at the slot parlors include the locals levy of $100, the aggressive busing by RWS from Malaysia, and the supply increase.  See the slot win per day comparisons of various properties/markets below.

SLOTS A BIG DEAL IN SINGAPORE - Slot Win