June 23, 2010 / 9:51 AM / 8 years ago

Sands' $5.5 bln bet on Singapore looks to be paying off

* S‘pore casino open, but complex not fully completed

* Reiterates EBITDA forecast of over $1bln from S‘pore casino

* Marina Bay Sands hurt by delays, cost overruns

By Kevin Lim

SINGAPORE, June 23 (Reuters) - Las Vegas Sands’ bet on gambling-wary Singapore may be paying off. The world’s most valuable casino firm said its $5.5 billion casino resort in the city state is on track to draw up to 150,000 visitors a day once things are in full swing, the highest number for any of its properties worldwide.

The casino itself, the second in Singapore after Genting’s (GENS.SI)(GENT.KL) Resorts World on the resort island of Sentosa, is seeing 25,000 visitors a day, above Las Vegas Sands’ (LVS.N) expectations, officials said on Wednesday.

The world’s second-most expensive gambling complex after MGM Resorts’ (MGM.N) CityCenter in Las Vegas, was formally opened on Wednesday after a soft launch in April and economists said the numbers it had forecast could help bolster the economy.

“If these numbers are really achieved, you could see a more sizeable impact on Singapore’s GDP,” said Kit Wei Zheng, an economist at Citigroup.

“If you do 150,000 a day it would probably offset some of the growth drag you may see from G3 economies.”

The numbers could help ease the persistent ambivalence in closely regulated Singapore about legalising the gambling business, and worries about the social ills that could come in its wake.

The government levies a hefty S$100 fee on each Singaporean every time they step into a casino but that hasn’t deterred those who want to have a flutter. About S$70 million has been collected from locals visiting the city’s two casinos as of May 10.

Sands said Singaporeans accounted for about one-third of the 25,000 people who visit its casino every day.

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For factbox on world’s costliest casinos: [ID:nSGE63M0F8]

For special report on Asia gambling [ID:nN26170872]

For graphic on Macau/Las Vegas gambling revenues:

here

For Reuters Insider interview:

link.reuters.com/fev53k

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The resort, resembling a giant surfboard perched on three columns at the mouth of the Singapore River, is still far from finished with many of the shops at the glitzy mall still yet to open. It will also have a link to Singapore’s subway system by 2012.

“When we get into 2012, when the subway is open and all the shops are open, we expect the numbers to grow substantially,” Sands Chief Operating Officer Mike Leven told reporters.

EARLY HICCUPS

Las Vegas Sands originally planned to open the Singapore casino resort in the fourth quarter of 2009 but the project, first budgeted at $3.2 billion, was plagued by delays and cost overruns.

The parent company said it was close to bankruptcy in 2008 but recovered after billionaire Chief Executive Sheldon Adelson ploughed in an estimated $1 billion of his own money into the firm.

    In Singapore, the Sands is engaged in a legal battle with the Inter-Pacific Bar Association, which has sued the resort for unfinished rooms, power failures and lost luggage during a convention. Sands has claimed unpaid bills from the association.

    But Adelson clearly doesn’t see the opening hiccups as any more than that.

    “The integrated resort model is unmatched and Marina Bay Sands will now be the reference point by which all new tourism projects are judged,” he said at the launch.

    He said Marina Bay Sands would generate earnings before interest, tax, depreciation and amortisation (EBITDA) of more than $1 billion a year, above a range of analysts expectations of annual EBITDA of between $300 million and $800 million.

    Sands COO Michael Leven reiterated the forecast on Wednesday.

    The company expects to recover its massive $5.5 bilion investment in Singapore by five years. Sands recouped its investment in Sands Macau, the first casino in the Chinese territory owned by a U.S. operator, in just one year. [ID:nSGE63Q08X]

    Las Vegas Sands posted a net loss of $28.9 million, or 4 cents a share for the three months to March, narrowing from a loss of $80.9 million, or 12 cents a share, a year earlier.

    For the current quarter ending June, analysts expect Las Vegas Sands to report net income of $63.5 million and earnings per share of 6.3 cents excluding one-time items.

    Adelson refused to comment on the second-quarter performance.

    Las Vegas Sands, along with many casino operators, is banking on Asia for growth as gaming revenues in Las Vegas, Atlantic City and other U.S. centres decline or show only small growth.

    Singapore, along with the former Portuguese enclave of Macau, crammed with ith more than 30 casinos including those run by Sands’ rivals Wynn Resorts (WYNN.O) and MGM-Mirage, is one of two key gambling centres in Asia.

    But after decades of being one of the most stable and safe nations in Asia, some citizens still query the need to open casinos.

    “There will certainly be a rise in problem gambling and the attendant social and law and order ills,” said Eugene Tan, an assistant law professor at Singapore Management University.

    “It’s the nature of the beast. The barometer of the ”rightness“ of the decision to allow casino gaming will be whether the government can regulate and manage the attendant social ills that come from the operations of the two casinos and the easier and increased access to gambling.” (Editing by Raju Gopalakrishnan and Valerie Lee)

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