What lessons can Macao and Japan learn from Singapore’s casino regulatory oversight?

Singapore’s government has effectively employed regulation to reap the benefits of the gambling sector while mitigating its dangers. The island-state holds lessons for other nations looking to do the same.

Editorial

Singapore has been highly effective in attracting foreign tourists interested in the luxury gaming sector while ensuring that gaming habits do not negatively impact their citizens. 17.4 million tourists arrived in Singapore in 2017, tripling the city’s population and contributing 4% to the city-state’s gross domestic product (GDP). At the same time, problem and pathological gambling rates of Singapore residents decreased from 2.6% in 2010 to 0.9% in 2017.

The city is the envy of the region. As Japan loosens its gambling laws and prepares to open its first casino, it will look to replicate Singapore’s integrated resort development, while mitigating the negative effects of gambling on locals. Macao on the other hand, where gambling is already a prominent industry, is becoming increasingly reliant on taxes and fees from casinos. As it stands on the brink of re-tendering casino concessions, Macao has the opportunity to introduce Singapore’s model as well to preserve casino profits and tackle dangerous habits among its inhabitants.

Regulation is enforced through an autonomous body

Alongside casino legalisation, Singapore created a National Council on Problem Gambling which helped to establish and enforce regulations. This institutionalised body banned all forms of casino advertising and promotion in the domestic market. Moreover, all gaming floor employees have to be trained to spot problem players immediately.

These policies, the government argues, prompted the decrease in problem gambling rates in Singapore. This commitment to tackling problem gambling sets Singapore apart in the region. While a government unit also oversees the operation of gaming activities in Macao, the Gaming Inspection and Operation Bureau (DICJ) operates differently. Casino exclusion is voluntary in Macao, meaning that problem gamblers, or their kin, must officially file to be excluded from entering a casino. There are signs the policy is working. Macao’s casino self-exclusion numbers grew by 34% in the first half of 2018. However, to reach the most afflicted gamblers, a mandatory exclusion program will be necessary.

Singapore has regulated the tricky field of online gambling

How do you regulate online gambling, especially for offshore casinos? Singapore’s answer to the rise of online gambling was to implement a Remote Gambling Act, which came into effect in 2015. The act allowed online gambling operations to legally set up shop provided they had secured a license from the Singaporean government.

The Infinity Pool on the roof of Marina Bay Sands Hotel and Casino in Singapore.
Photo: Silas Khua

In true Singapore fashion, regulation remains strict, so much so that only two online gaming operators have been granted a license to operate in the city-state. Both Macao and Japan would benefit from adopting Singapore’s regulatory model for online casinos to protect their revenues from foreign gaming companies.

Currently, online gambling is illegal in Macao, as this competes with their land-based casinos. However, this has not stopped junket operators in Macao facilitating online gamers in China. These offshore online casinos prompt players to bet through online casinos in The Philippines and Cambodia.

Gambling laws in Japan used to be very strict, with sports the only form of legal betting. Japanese citizens had to go online to play casino games. Expatbets’ guide to gaming in Japan reports that online casinos were popular. In 2013, Japanese citizens spent US$30 billion on gambling activities despite no casinos or online casinos registered in the country. However, with the country now granting a license to open a casino resort, Japan will now have to limit online gambling activity to ensure gaming revenues stay in the country.

The city-state distinguishes between foreign and local gambling

Singapore’s casinos are designed to attract foreign visitors while heavily regulating locals. Casino entrances must offer different lanes for tourists and locals. Locals pay an entrance fee which currently is at S$150 (US$108) per day and S$3,000 (US$2,170) annually. This newly increased entrance fee was part of an agreement for an integrated resort expansion that also resulted in a 3% gaming tax increase. Such tactics have proven effective in ensuring that luxury casinos cater primarily to foreigners while the locals reap the benefits of the industry through jobs and GDP growth.

Japan has followed suit. It will charge Japanese visitors 6,000 Yen (US$55) per day, with restrictions on how many times they can enter the casino. So far Macao has no such restrictions.

When it comes to regulating the casino industry, Singapore is leading the way. As the industry evolves, both established gaming hubs like Macao and countries with an embryonic gaming industry like Japan can learn a lot from the regulatory steps Singapore has taken. However, all three gaming capitals need to understand that effective regulation should be balanced with the need for innovation if they are to remain dominant in the competitive global arena of casino tourism.