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Business Times - 30 Sep 2010
Junket operators slide into the gaming frame
Regulator says it has received licence applications endorsed by RWS
By GRACE LEONG
(SINGAPORE) The Casino Regulatory Authority (CRA) said yesterday it has received licence applications from junket operators endorsed by Resorts World Sentosa (RWS). But it would not reveal the number of applicants or say when licences will be granted.
'CRA has received junket applications endorsed by RWS and is currently processing them,' a CRA spokesperson said. 'The junkets business is a specialised and lucrative one.
'Because of the nature of this business - where large sums of money are transacted between junket promoters, their clients and the casinos - it is important that junket promoters are well-regulated to ensure junkets do not provide cover for organised crime syndicates to engage in criminal activities.'
While it is uncertain how many applicants will get through CRA's stringent probity checks, analysts say about 20 junket operators applied for licences and at least half of them - following a lengthy background check of about nine months - have moved on to the interview stage, which could take several more months.
Some junkets may be licensed by early next year, they say.
Junket operators source casino players and often extend credit to entice them to gamble. There has been speculation they may be frozen out of Singapore by stringent licensing requirements aimed at preventing money laundering.
But Aaron Fischer, a gaming analyst with CLSA Asia-Pacific, said: 'Some junkets will eventually get approved as the business opportunity is so lucrative that these entrepreneurs will find a way to make it happen.'
In exchange for taking on the credit risk from players, a junket operator receives 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.
RWS representatives yesterday declined to comment on the number and the identity of the junket operators the company has endorsed. But Genting Singapore president and chief operating officer Tan Hee Teck said at a recent CLSA conference in Hong Kong that he believes junkets could help fuel gaming revenue growth and the company would welcome greater use of them.
If junket operators receive Singapore licences by early 2011, Mr Fischer sees the local gaming market size hitting US$8 billion - up from CLSA's initial forecasts of US$6.5 billion.
In Macau, gaming revenue brought in by junkets is expected to hit about US$16 billion next year, he said.
Deutsche Bank, in its latest report on Genting Singapore, isn't as bullish as CLSA on potential gaming market upside from junkets. Risks cited include a prolonged delay in the issuance of junket licences and further liberalisation of gaming in neighbouring countries.
Deutsche raised its gaming market estimate to US$6 billion based on expectations that some junkets could be licensed in Singapore by early next year. Without junkets, the gaming market size is expected to be about US$5.7 billion.
'It really depends on who and how many get licensed, how much rolling volume they bring in, how big are the junkets,' said a Deutsche Bank analyst.
To regulate the junket industry, CRA requires all junket promoters and representatives to be licensed and to undergo 'investigations' similar to probity checks for casino licences.
Licensing requirements have also been set up detailing the duties of promoters, including maintaining records of all clients, commissions, rebates and financial statements, which CRA will have access to. Promoters must also declare their finances on a regular basis.
For example, they have to declare whether they, their spouses or children have made loans over $25,000 in the past 10 years. Applicants also have to list all assets, foreign and domestic bank accounts and business activities for the past 15 years.
Under the regulations, a junket agreement between a casino operator and the junket promoter, detailing the terms of business including commissions, must be lodged with CRA. Disciplinary action for anyone who steps out of line could include a fine of up to $400,000.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reser
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