Thursday, June 9, 2011

Do casinos cause Singaporeans to gamble away more money?

According to the following report, prior to 2010 when the casinos opened, the Singapore government (i.e. the Tote Board) collected S$500 million annually  in gambling surplus (which I take to be gambling revenue (after subtracting payouts) less operating and other expenses). In the absence of financial statements from the Tote Board, this serves as an indicator of the magnitude of the pre-casino gambling economy in Singapore.

The reductioin in the Tote Board's gambling surplus due to the newly opened casinos was more than made up for by the casino entry levy. This implies that the money that the locals saved through the reduced playing of 4D, Toto, etc, went to the casino entry levy (and not to their gambling losses at the casinos).

Therefore the gambling revenue (estimated at US$3.06 billion, or S$4.3 billion, in 2010; here) that the casinos collected from the locals is money that, in the absence of the casinos, would not have gone into gambling. Casinos cause Singaporeans to gamble away a great deal more money (S$4.3 billion).

Contrary to the following report, the casinos and the Tote Board are not in a zero-sum game, competing for a greater share of a fixed-size local gambling pie. The local gambling pie has in fact been growing at a furious pace since the casinos opened.

The casinos serve to significantly expand Singapore's local gambling economy.

I have previously tried to estimate the magnitude of local casino gambling (here). The following report provided some data for further analysis.

My estimate is that 26% (1 in 4) of the local adults gambled at the casinos in 2010. On average, each of them lost S$6000 at the casinos, and S$195 in entry levy, in 2010.

How I estimated

The casino entry levy (S$100 a day, S$2000 a year) in 2010 amounted to S$140 million.

According to the government, casino entry levy amounted to about S$70 million as of May 10, 2010 (after the operation for 3 months of one casino, and 2 weeks of the other) (source). The figure of S$140 million for 10.5 months (in 2010) of casino operation is therefore suspiciously low. ]

If every local gambler paid the daily levy (and none paid the yearly levy), then 1.4 million locals gambled in 2010.

However, let's assume that, of the local gamblers, 5% are serious gamblers and paid the yearly levy, and the remaining 95% paid the daily levy once in 2010.

Thus, on average, each local gambler paid S$195 in entry levy (5%x2000+95%x100=$195).

Therefore, there were 720,000 local casino gamblers in 2010. (To verify: 717950x$195=$140,000,250) This amounts to 26% of the 2.8 million local residents (citizens and PR) aged 21 and above.

(Since there are gamblers who paid the daily levy more than once, 720,000 is an overestimate. For simplicity, I did not further refine this estimate.)

The locals account for US$3.06 billion in casino gambling revenue, and 15.6 million casino visits in 2010 (here).

Thus, on average, each of the 720,000 local gamblers made 21.7 casino visits and lost US$4250 (S$6000, or S$570 a month, for 10.5 months) at the casinos, and S$195 in entry levy, in 2010.

The very high number (21.7) of casino visits is explained by the fact that, even with a daily levy (valid for 24 hours), a local can account for multiple casino visits, with each re-entry counted as a separate visit.


Casino levies boost Tote Board’s surplus
  –Angela Lim, Yahoo Fit to Post, February 11th, 2011 (source)

The Singapore Tote Board will be giving away S$625 million to beneficiaries.

It seems gamblers in Singapore have left their old favourites behind for the latest game in town.

Toto, 4D and horse-racing have seen a drop in takings since the opening of the two integrated resorts (IRs) in February and April last year.

Takings from the Singapore Turf Club were the hardest hit, suffering a 30 per cent drop while Singapore Pools’ takings dipped by 3 to 5 per cent, according to the chairman of the Singapore Totalisator Board (Tote Board), Bobby Chin.

And yet, this has not stopped the Tote Board from doubling its financial commitment to charities.

Its collections from casino levies more than made up for the shortfall, prompting it to announce on Thursday that it will be giving away S$625 million, according to a Straits Times report.

Two of the Tote Board’s major beneficiaries — the Tote Board Community Healthcare Fund and the Community Chest – received S$100 million and S$50 million respectively. The cheque presentation ceremony was held at the National Council of Social Service (NCSS) auditorium on Thursday.

“We have been affected in some ways by the casinos, but nevertheless, because the Government has directed the levy to the Tote Board, it means additional quantum and additional ability and capability to help fund-worthy projects,” Mr Chin said.

Collections from casino levies made up around S$140 million of the Tote Board’s gaming surpluses between April and December last year. This amount is expected to rise at the end of the financial year 2010 in March 31.

The entry levy is what Singapore citizens and permanent residents have to pay to enter the two casinos — S$100 a day or S$2,000 a year.

Ministers of Parliament (MPs) and industry watchers have since raised concerns about the effectiveness of the current levy and are proposing a review of current casino levies.

Before the casinos opened, the Tote Board made about S$500 million on average in annual gambling surpluses. The surplus was used to fund community projects.

But industry experts say the drop in forms of gambling like horse betting, 4D and lotteries was not unexpected.

Dr Derek da Cunha, author of Singapore Places Its Bets, a book about the two IRs and their economic and social impact, said,”I’ve always said that it’s a . The casinos will inevitably affect and cannibalise some other forms of gambling.”

He added that, in comparison to games like 4D and Toto, casino table games offer gamblers better odds.

“Some casino table games offer better odds. This explains why a proportion of people have migrated from the turf club to the table games at the two IRsda Cunha explained.

Mr Carey Wong, an analyst with OCBC Investment Research, said, “The integrated resorts are meant for foreigners — and the Government has said so many times — but the numbers show that Singaporeans have been going to the casinos.”

Although the surplus last year was boosted by the casino levies, Mr Chin said it is too early to tell if the trend will continue.

“We hope to maintain the same level of commitment, but you have to assess the quantum at a steady state. The initial six months to a year, there is a novelty effect. It is not reflective of what is going to happen in the future,” he said.

NCSS, which will receive an undisclosed sum from Community Chest’s S$50 million kitty, plans to increase the number of family service centres (FSC) from 37 to 42 by 2015, and improving the human aspects of the FSCs to provide the same standard of service across its centres.

The organisation’s chief executive officer, Ang Bee Lian, said,”We are quite clear that we want to position FSCs as, what I sometimes call, social polyclinics. We want FSCs to be your first stop, a convenient stop, for social issues that families face.”

Stressing the importance of the quality of intervention, Ms Ang said, “It’s intervention that counts. It’s not about the facility but really the quality of the interaction with the social worker, the counsellor, even the receptionists.”

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