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24 jan 11
(SINGAPORE)
In a bid to ensure that Singapore's two integrated resorts are among the cleanest in the industry, the government has set new regulatory standards in junket licensing - the likes of which, some gaming insiders say, are unprecedented.
Spectrum Gaming Group, a Linwood, New Jersey-based gaming industry consultant, has been hired by the Singapore government to conduct background checks on several entities that have applied for junket licences since last year, The Business Times has learned.
'Singapore is taking junket licensing to a new level of regulation that's never been seen before in the industry,' said a US-based gaming source.
Junket operators, also known as gaming promoters, source players for casinos, and often extend credit to entice them to gamble.
Singapore's tough stand on junket operators is hardly surprising when one considers the allegations that some may have ties to triads, use threats and violence to collect gambling debts, and/or may be engaged in illegal activities such as money laundering.
It is unclear how many junket licence applications have been submitted to date, and how many or when these will be granted. But analysts earlier said that as many as 20 entities, endorsed by Resorts World Sentosa, may have applied - including several from Singapore, Malaysia, Indonesia, Australia and Hong Kong.
When contacted, Spectrum founder and managing director Fredric Gushin could not comment on the investigations in the matter, citing confidentiality requirements.
According to Spectrum's website, the company was hired by the Singapore government to conduct due diligence investigations into all applicants for the Marina Bay Sands and Resorts World Sentosa projects and has recently been retained for a second major research project.
Mr Gushin, a gaming industry expert on issues relating to casino development and regulatory and law enforcement matters, has been working with the Casino Regulatory Authority (CRA) and the Singapore Ministry of Home Affairs since 2005.
He served as the former assistant attorney-general with the New Jersey Division of Gaming Enforcement, and oversaw the openings of 12 Atlantic City casino hotels during his 13-year tenure there. He also managed civil and administrative litigation before the New Jersey Casino Control Commission.
In the private sector, he led teams to develop and expand casinos for companies including Las Vegas Sands prior to working with Singapore, and has worked with numerous governments from Croatia to Queensland, Australia, in drafting regulations and developing compliance programmes and anti-money laundering controls.
His experience stands him in good stead. BT's source said: 'Singapore's junket licensing form was predicated on the New Jersey version, and then put on steroids.
'The basic format is similar to New Jersey's but Singapore's version goes into much greater detail, requiring the junket operator to provide original documents, certified copies, financial audits, personal history, tax history, credit checks, etc.'
Since it is a monumental task to audit these junket operators thoroughly, that in part explains why no licences may have been granted yet in Singapore, he said.
'Basically, they're looking for any type of criminal element trying to operate through legitimate fronts. They don't want a junket operator with a criminal background to be operating behind, say, a squeaky clean MBA holder,' the gaming source said.
'Spectrum has a staff of highly experienced executives who have relationships with law enforcement in other countries. This comes in handy when you're trying to get background checks done on junket operators from countries or remote areas where it's not easy to get answers about their financial capability, business background, tax history, or whether they have ties with organised crime. In some instances, it's quite dangerous to do such checks,' the source said.
That would also explain why fees can be very high for background checks, he said. These fees are paid for by the gaming promoters and are non-refundable even if they fail the probity check. The fee may be substantially less for junket operators that are sole proprietors, he said.
Many junket operators are now on the sidelines, waiting for a better understanding of Singapore's regulations before investing heavily in background checking fees, he said.
In Macau, junkets exist because there are few financial records in China to show whether someone is a good credit risk. Gambling debts are also not legally collectable and there are strict limits on taking or sending money out of the mainland.
So, casinos rely on junket representatives to get access to high rollers and collect gaming debt. In exchange for taking on the credit risk from players, the junket operator receives a commission from a casino operator, based on a percentage of the volume of bets made by players. The junket operator then shares this commission with the players.
To regulate the junket industry in Singapore, CRA requires all junket promoters and representatives to be licensed and to undergo 'investigations' similar to probity checks for casino licences.
Under the regulations, licensed promoters must keep records of all junket players, including their personal details, date and time of arrival at the casino, and amount and type of any commission, rebate orcomplimentary given - data that CRA will have access to.
Promoters must also declare their finances on a regular basis.
Applicants also have to list all assets, foreign and domestic bank accounts and business activities for the past 15 years. They must agree to have their photograph, fingerprints and palm prints taken.
Disciplinary action for anyone who steps out of line could include suspension or loss of licence, a letter of censure, or a fine of up to $400,000.
That junket operators are required to give CRA 'unfettered access' to information, including their credit sources and the high rollers they bring in, would enable Singapore regulators to 'follow the money' more easily, the gaming source said.
So how will the entry of junket operators affect Singapore's gaming industry?
Regulated junkets will help casinos to expand market share especially into countries such as China and Indonesia, where collection of gaming debt is unenforceable, the source said.
If Singapore can structure 'workable' controls, then junkets will eventually be a win-win situation for everyone, the gaming source said.
Source: Business Times © Singapore Press Holdings Ltd. Permission required for reproduction.
