Advertisement

SKIP ADVERTISEMENT

The Nanny State Places a Bet

The Singapore skyline is seen in July 2005. Credit...Luis Enrique Ascui/Reuters

SINGAPORE, May 22 — When Lee Chin Koon was a member in the 1930's, the Chinese Swimming Club here offered more than just laps in the pool. There was mahjong and blackjack, too.

"We Chinese are gamblers," he told club historians before his death in 1997. "If two lizards scale up a wall, someone would bet on them."

But what Mr. Lee's son, Kuan Yew, remembered was how, after a losing night, his father would come home in a violent rage demanding his wife give him jewelry to pawn. When Lee Kuan Yew became the first prime minister of independent Singapore in 1965, he set about transforming this once-squalid seaport into a tidy industrial park by putting vice in the crosshairs.

Cigarettes and alcohol were heavily taxed. Drug traffickers were promised they would get the noose. Casinos, naturally, were banned.

Times are changing once again. Lee Kuan Yew's son, Lee Hsien Loong, is now prime minister, and he is striving to shake Singapore's reputation as Asia's nanny state, where chewing gum was once banned because of the mess it makes when not properly disposed of.

With the country's basic manufacturing jobs shifting to China, Mr. Lee wants to stimulate tourism and other service industries by molding a more tolerant, fun-loving Singapore. And one of his signature projects — the world's most expensive casino complex — harks back more to his grandfather's Chinese Swimming Club than his father's profit-perfect industrial landscape.

Last year, the government ended its ban on casinos. Next month it is to choose who will build the first of two planned resorts, a $3 billion extravaganza that will include a casino, entertainment complex, convention center and hotels. The list of suitors includes some of the biggest names in Las Vegas — Harrah's Entertainment, Las Vegas Sands and MGM Mirage.

Strait-laced Singapore and free-wheeling Las Vegas make strange bedfellows. But Singapore is betting that in return for letting casino operators tap the Chinese penchant for gambling, it can create a world-class tourist attraction without sacrificing the image of low crime and cleanliness that make it so popular with multinational corporations.

"That's part of the secret to our success: maintaining this semipermeable membrane," said Vivian Balakrishnan, a former eye surgeon who as Minister for Community Development, Youth and Sports oversees the effort to enliven Singapore. "Make it permeable to success, impermeable to the unsavory elements."

The question among many casino operators, however, is whether Singapore's vision of a sanitized casino culture risks bleaching out the components that attract gamblers and drive profitability.

Four of the biggest casino companies are betting that it won't. Las Vegas Sands is pitching a $3.6 billion project that would include a partnership with the Guggenheim. The Malaysian company Genting has promised an association with Universal Studios.

Harrah's, which has teamed up with a government-owned company, has enlisted James Cameron, the director of the movie "Titanic," to design an indoor theme park. And MGM Mirage, which has also teamed up with a state-owned company, is including Cirque du Soleil as part of its bid.

"It's more money than we have ever proposed for any other hotel-casino integrated resort," said J. Terrence Lanni, the chief executive of MGM.

If Singapore is trying to loosen up, the casino industry is seeking to shed its somewhat unsavory reputation and win acceptance as mainstream entertainment. And after a series of industry mergers — Harrah's with Caesars, MGM with Mandalay — the casino giants see Asia, with its turbo-charged economic growth and fervor for gambling, as the next great frontier.

Analysts estimate that casino revenue in the region will grow 20 percent this year, to $13 billion. And that does not include the estimated $4 billion or more Asians spend each year on illegal gambling or cruise ship casinos.

Perhaps no one takes gambling more seriously than the Chinese. In China, casinos are illegal, so most package tours abroad include a visit to a gambling center like Macao, the former Portuguese enclave near Hong Kong. Since ending a monopoly on gambling two years ago, the once-seedy Macao has attracted billions of dollars in investments. MGM is spending more than $1 billion to build a casino there. Sands is building its second casino, after its first pulled in more than $900 million within three months of opening.

Other Asian governments are taking notice. "The success that Macao has seen is putting pressure on other Asian economies to look at gaming as a source of income," said Joseph Greff, a gambling industry analyst at Bear Stearns in New York. South Korea, the Philippines and Vietnam are expanding their casinos, while Japan, Taiwan and Thailand are considering legalizing them.

Image
An artist's conception by the Las Vegas Sands Corporation for a casino complex across from downtown Singapore, one of several proposals now under consideration.Credit...Las Vegas Sands Corporation, via European Pressphoto Agency

Singapore does not want to lose out. Tourism accounts for just 5 percent of Singapore's economy, and the authorities, despite a lack of natural tourist attractions here, hope to double annual arrivals to 17 million and triple the amount tourists spend to 30 billion Singapore dollars ($18 billion) by 2015.

Officials here have rejected several casino proposals before, most recently in 2002 when a committee assembled by Lee Hsien Loong, then finance minister, included a plan for one in an overall strategy aimed at helping Singapore improve its competitiveness at a time when the global economy was still sluggish.

But signs have been mounting that Singapore is letting its hair down. In 2003, Singapore lifted a ban on bar-top dancing and signaled an end to a crackdown on gay bars. The next year, it lifted a 20-year ban on Cosmopolitan magazine. Last year, a government minister presided at the opening of a Singapore branch of the Parisian topless review Crazy Horse.

In March 2004, a government minister told the Parliament that the government was considering a casino on a small island theme park off the coast. The government then announced plans to place a second entertainment complex, designed as a showcase, directly across the harbor from downtown on land that city planners have earmarked as Singapore's new business district. That is the one that the government will be selecting next month.

"This is the face of Singapore," said Cheng Hsing Yao, head of planning for the area at the Urban Redevelopment Authority. "We don't want kitsch."

To ensure that gambling does not dominate the scene, the casino will be allowed to occupy no more than 5.5 percent of the resort's area. The operator must build an equally large attraction — a museum, gallery or theater — as well.

Nonetheless, the casinos prompted an unusual level of public debate, with even some members of the ruling party speaking out against them.

Singaporeans are predominantly ethnic Chinese, and remain avid gamblers despite the long ban on casinos. In hopes of curbing illegal gambling, the government has introduced a national lottery, horse racing and gambling on soccer matches. Private clubs, including the Chinese Swimming Club, supplement their income by running slot machines.

The average Singaporean spends roughly $940 a year on gambling, compared with just $320 for the average American, according to data from the Tax Foundation and the Innovation Group, a consulting firm in New Orleans that specializes in gambling.

A survey by Dr. Balakrishnan's ministry in late 2004 found that as many as 58 percent of Singaporean adults, and 68 percent of ethnic Chinese, gambled.

Big casino operators have long known about the appetite for gambling in Singapore. Sands, Mandalay and Caesars all have had marketing offices in the country at one point to lure high-rollers to Las Vegas.

The government decided against banning locals from the casinos but will require them to pay a daily entry fee of 100 Singapore dollars ($63.15) or an annual fee of 2,000 Singapore dollars ($1,263).

But some analysts say the fees could hurt the most important source of revenue for the casinos. "The experience of casinos all over the world is that the locals are the primary market," said William R. Eadington, director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada, Reno. The exception, he said, is Las Vegas, which is able to draw gamblers and tourists from all over the country and around the world with its unique combination of adult pursuits and family attractions.

The restrictions placed on casino development by Singapore proved too much for some bidders. Tabcorp of Australia dropped out, citing the costs of building so much besides the casino. For PBL Gaming, another Australian company, it was Singapore's limit on the number of slot machines.

The most scathing criticism came from Stephen A. Wynn, chief executive of Wynn Resorts, who before dropping out accused local officials of issuing high-handed "thunderbolts from Mount Olympus."

The government is unfazed. "The proof of the pudding," Dr. Balakrishnan said, lies in the "bidders who were prepared to come in despite these restrictions."

The remaining bidders say the odds in Singapore still make sense to them. Singapore's 15 percent tax on their revenues is low by international standards, they say. Singapore has also said it will not allow any other casinos for at least 10 years.

"Would we prefer that some of those precautions weren't there?" Mr. Lanni at MGM asked. "Yes. But we believe anyone who wins here will do well."

Advertisement

SKIP ADVERTISEMENT