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Advantages and Disadvantages of Having A Casino in Singapore

Advantages and Disadvantages of Having A Casino in Singapore

 Sam Choon Yin (2004)

 

In March 2004, Minister for Trade and Industry George Yeo announced the possibility of Singapore having its first legal casino. If the idea proceeds as planned, the casino will be located in the 500-hectare resort at Sentosa Cove. The news had already attracted the attention of gambling players from the United States such as the MGM Mirage and Caesars Entertainment. Both had expressed their interest in operating in Singapore, and they were waiting more news from the Singapore government.

           According to some observers, legalizing casino gambling in Singapore could bring forth several benefits. First, by having a casino in Singapore, it was estimated that as much as 1,000 jobs would be created (‘A Singapore casino could create up to 1,000 jobs’, Business Times, 31 March 2004). Second, the Singapore casino is expected to contribute to the country’s national product. Crude estimates show the figures to be between USD235 million to USD335 million, which amount to less than half a percent of Singapore’s GDP (ibid). If the estimates are to be true, the economic significance of the casinos on the GDP is minimal.

           Third, from the casino operators, the government is expected to collect tax revenue thus adding more money to the government’s pocket. Failing to legalize casino operations here, illegal gambling dens may emerge. Taxes are usually not paid from such hidden activities (more about this later). With Singapore’s strong budgetary position, absence of this revenue should not impose significant harm to the country (albeit they are good to have). Fourth, the Singapore casino is expected to attract tourists from all around the world. This would help to boost the country’s tourist industry, which suffered from a drastic slowdown because of the war, constant terrorist threat and outbreak of deadly diseases in recent times.

           Fifth, legalizing gambling can hamper the growth of underground activities. Gamblers might turn to illegal gambling dens to satisfy their needs. Bribing of public officers may become more common then so that the gambling dens are protected or warned against any raids by the police. It is also beneficial to contain the growth of the underground activities so that the reported national product does not deviate significantly from the actual (since by definition, hidden activities like illegal gambling and corruption escape the detection from the government and statistical offices). Otherwise, government policies are not likely to be effective in tacking their intended problems because the official statistics are not reflective of the country’s economic status. Sixth, the ambience found in the casino provides individuals a place to relax and enjoy. With growing number of retirees in Singapore, the casino may provide them a ‘desirable’ place to spend their leisure time.

There are however several problems with having a casino. The more important ones are discussed below. First, gambling may lead to more serious social problems like crime, prostitution, bankruptcy, excessive debt burden, higher suicide rates and family violence including child abuse. The main concern here is not that the problems will emerge, as gambling has been a common past time activity in Singapore for many decades. It should not be forgotten that today gambling is possible in Singapore both legally via the Singapore turn club and Singapore Pools and illegally in floating casinos and gambling dens. For habitual gamblers, they can go to Genting Highlands in Malaysia, Batam in Indonesia and Macau to satisfy their urge. What the Singapore casino might lead to is greater severity of the social problems. Closer proximity, greater awareness and legality of gambling in the casino may bring more people into gambling in Singapore and elsewhere for the perceived cost of entering into the trade is essentially lowered. To limit the social problems, there has been a suggestion to open the casino only for the more economically well-off individuals. Such discrimination was, not surprisingly, not well received by a majority particularly if the government is to finance the development of the casino using the peoples’ money. The other argument against the move is that Singaporeans are basically mature enough to think for themselves the dangers of over gambling. It is also wrong to assume that problems can only be created by the economically less well off individuals. The more well off individuals are equally susceptible to the social problems highlighted earlier.

Second, gambling may create the incentive for gamblers to expropriate funds from their companies. The finds could be used to finance their gambling stakes or help repay their debts. A recent case involved Chia Teck Leng. Aged 44, Chia of the Asia Pacific Breweries, was accused of forging documents to cheat four banks of more than S$117 million between 1999 and 2002. The prosecution has called it ‘the biggest case of financial fraud in the history of Singapore’. He was found guilty and jailed for 42 years’ imprisonment (The Straits Times, 3 April 2004). The possibility of more such cases, attributed to the setting up the casino in Singapore, may further divide the interest of the company agents with those of the principals. But again, the agency problem is already in existence. The issue here is that the severity of the problem may increase with legal gambling.

What should be the outcome then? The answer depends on the net social benefit of legalising a casino. No studies have yet to exist in studying the net social benefit of gambling for Singapore. Citing a University of Illinois study, Alan Lim noted that for every dollar of gambling revenue earned in the US, the state had to spend three dollars in criminal justice and social costs (Beware Casinos’ Social Costs, Business Times, 1 April 2004). If this is also true in Singapore, legalising gambling might not be a good move after all.

One of the other issues concerns the location of the casino. A contributor to Today, Prithpal Singh, who is the Vice President of Hotel Properties, suggested setting up the casino in the vicinity of the Esplanade to ‘bring vibrancy to the arts and the theatre scene, particularly if the condition in granting the casino licence is also that top quality shows are brought to this location and substantial contributions made to the local arts scene as well’ (Today, 6 April 2004). He also suggested that the government should play a minimal role in the building and financing of the casino, citing the case of businessmen Tan Sri Lim Goh Tong who founded Genting Highland. His advice is worth considering.