It’s been barely five years since Singapore announced that it would develop integrated casino resorts, yet already the island nation has become a serious rival to Las Vegas, with just two major casinos.Second quarter 2010 winnings put Singapore on track to have a $4 billion casino market on an annualized basis according to the Wall Street Journal. That’s just 20% shy of what Las Vegas is expected to do this year, and even Las Vegas is impressed:
“It’s just proof that if you build it they will come and in Singapore they built two products that are worthy of that title,” says Andy Nazarechuk, Dean of University of Nevada Las Vegas’ Singapore campus.
“Las Vegas will continue to attract (Asian visitors) but instead of the player making two or three trips to Las Vegas in the year they may make only one trip and the other two trips may be more closer regionally.”
Even the bears expect a substantial market size for Singapore:
Las Vegas-based gambling consultancy Galaviz & Company has relatively conservative forecasts for actual earnings in Singapore of $3.5 billion in 2011 and projects the Las Vegas strip will earn $5.8 billion, a modest improvement on the $5.1 billion expected in 2010.
And the bulls think Singapore could torpedo Las Vegas’s market position within just the next few years:
However, some among the investment community believe the Singapore market will approach the sorts of numbers Galaviz expects for the Las Vegas strip, which accounts for about half of the state of Nevada’s gaming revenue, by 2012.
Aaron Fischer of CLSA has some of the more bullish forecasts, expecting the combined gaming revenues of both Singapore resorts to generate $5.1 billion in 2011, up from his previous estimate of $3.9 billion. Goldman Sachs also expects the sector could bring in $5 billion in 2011.
Combined with the development of Macau, it seems like Las Vegas’s leadership position could be toast over the next decade, even should the U.S. economy rebound well past its past peak. Las Vegas probably needs to roll out some heavy branding initiatives in Asia.
Note however that Steve Wynn, the founder of Wynn Casinos (WYNN), isn’t waiting for any magic from the Nevada government. He’s planting himself in Asia quite often, even if he’s backed off from plans to move his HQ to Asia, realising that Wynn’s long-term success revolves around being a global company, like Hilton. It’s not about being stuck in Las Vegas alone.
Thus it’s not the U.S. casinos that need to be worried about the rise of Asian casino hubs per se, but more Nevada state. Nevada better move fast, given the ambition and well organised government efforts in Singapore and Macau. Heck, I’ve never been to Vegas, but I’m already dying to jump into Singapore’s new infinity pool…
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