Gambling Industry in Singapore - Essay Example

Gambling Industry Table of Contents Table of Contents 2 Executive Summary 3 Introduction 4 International Gambling Industry 5 The Gambling Industry ofSingapore 7 Porters "Diamond Model" 9 Firm’s Strategy, Structure and Rivalry 10 Demand Conditions 11 Factor Conditions 11 Related and Supporting Industries 12 Conclusion 13 References 15 Executive Summary The economy of Singapore is one of the smallest economies in the world. It basically depends on the foreign earnings that are generated through tourism and gambling industries. Therefore, the economy has a very wide outlook on the issue. The economy presently is recorded to be among the major economies that have gambling as an important sector to generate large sum of profits. In this regard, in the international market gambling has gained a significant role for the developed economies like America, France, Japan and Canada. The first step taken by the Singapore Government in order to introduce the casinos officially in the international market was in 2005 by providing licenses to two of the casinos in Singapore. There were many controversies and remarks that went against the policy but today after taking proper legal actions and control the government have recorded to generate large incomes in terms of tax revenues from the gamblers. Another reason why gambling is so important for the economy is that it attracts customers from all around the world. Therefore, it enhances the growth of tourism sector, which is another major contributor to the Singapore Economy. This paper in this regard is focused on the challenges of the international market and the competencies of the gambling industry in Singapore. Conclusively the paper shall also direct to evaluate the limitations and drawbacks that can prove to be affective for the growth of the industry and try to suggest the economy to eradicate those factors. On this behalf, the paper shall also consider the Porter’s Diamond Model to analyze the competitive edge of the gambling industry of Singapore. Introduction Geographically emphasizing, Singapore is a country originated by the amalgamation of 63 islands in total and is termed to be the smallest country situated in the south eastern hemisphere of Asia. According to the economists’ view, Singapore is a developing economy, mixed by its nature, with a minimum interference from the part of the Government in its trading market. Mentionable, the economy ranked to be second among the economies possessing the best potential for international investment with the outlook to be most welcoming and liberal for the international trading business. Undoubtedly, despite the fact that the economy is geographically small, it is economically powerful as any other developing economy to attract the international trade (Economy Watch, 2010). The economy, in a wider perspective rather than international investments, is depended on the agricultural sector, the tourism sector and the gambling sector. Certain economists overviewed that Singapore is actually in a threatening situation regarding the gambling industry. But it is not at all ignorable that gambling today plays a vital role in providing support to the Singapore Economy. The impact of gambling industry on the economy was sarcastically observed when in the year 2005 two casinos were already rewarded the license of gambling in Singapore with an estimation that the resorts shall earn around $3 billion surprisingly by the end of 2006. The aim for such legal permission is to increase the number of Chinese visitors in the country by attracting them using their traditional culture to enjoy gambling (Arnold, 2005). With all these considerations and beliefs, the economy is focused on expanding its gambling industry with an expectation of more profits to help it build up strong infrastructures in cities as it did in past few years. Although according to the saying of the critics, gambling in the international market is still termed to be a vice having a bad impulse on the young society. However, the impact and the importance of the industry are strongly accepted in the worldwide phenomenon for the economy of Singapore (Casino 888 Onnet, 2010). International Gambling Industry Historical evidences reveal that gambling has been a part of different cultures in eastern and western countries, like India, Egypt, France and China from the early 14th century. But the origination of this game was from the Chinese culture where it had erupted as a game played with paper money and later with paper cards. From China it went to Europe, where it steadily gained the diversified look that gambling posses today. Gambling is not only played with cards and dices, but it is also played by using a small wheel which is known as the roulette. Presently it may seem that Singapore is comparatively giving more attention to the gambling sector than any other economy in the world is. After America gained its independence in 1776, it became highly focused on the gambling industry to generate huge profit (Gambling Phd, n.d.). There are many kinds of gambling games played presently, like poker, betting, casino, bingo, commercial lotteries and state lotteries. Gambling has even gained its existence in the online media through internet and TV shows. In the international market today, gambling has such a vast and strong impulse which no one can ordinarily think about. The data states that, in the global market gambling has rewarded economies around the world by €229 billions in 2009 and is estimated to increase till €263 by 2012 (Kelleher, 2010). It is not that only Singapore is the country to legalize gambling. It is indeed legalized by many other economies in the world like Sri-Lanka, America, France and others. According to many economists gambling is a kind of industry that is recession free and accordingly is a major contributor in the global economy in provisions of tax earnings. As a report presented by Pricewaterhouse Coopers, earnings on the sector is likely to diminish in America but shall keep the economy in the top position incurring revenue for more than 50% of the total earnings. However, in the Middle-East region along with Europe and Africa is expected to witness a rise in the revenue generated by the gambling industry (Casino Gambling News, 2009). In the international market, in any economy, gambling may be termed to be illegal but in real phenomenon, it has its own value in deriving high amount of profits to the governments and certainly stands to be among the few industries an economy can rely on. But in social terms, the industry has somewhat an unethical impression in the world market. The Gambling Industry of Singapore "They want to give people a reason to stop here or stay a little bit longer," by David Cohen. (Arnold, 2005) Apart from any other modes of playing gambling the Singapore Industry is focused on the casino gambling. The Singaporean government licensed the two gambling casinos with the belief that gambling can in real practice attract most of the foreign tourists to participate in the game. Thus, it can enhance the revenues earned by the economy each year from the tourism industry. Today gambling in Singapore has appeared as an entertaining option for the local people. As stated by the Singapore’s Ministry of Community Development, Youths and Sports, almost 58% of the young natives from the age of 18 and above take part in different gambling activities and therefore comprise of a significant proportion of the economy. After realizing the fact in 2006, the government licensed two gambling casinos, i.e. the Marina Bay Sands and Sentosa Island. However, while providing these licenses it was clearly mentioned by the then Prime Minister of the country to enforce a strong legal control on the issue (Asian Gaming, 2006). With regard to this statement, the government did establish certain statutory actions in order to control the addiction of gambling in Singapore and the Casino Control Act was enforced in the year 2006. The regulatory framework defines the rule of gaming and the norms and legal obligations to be maintained by the casinos as well as the players. In this context, the government established a regulatory authority named as the Casino Regulatory Authority of Singapore during 2006 (Republic of Singapore, n.d.). However, to state the competency that this industry gained in the global market it should be mentioned that the impact of gambling has generated the economy revenue of more than $4.5 billion in just six months of the fiscal 2010. This figure attained is definitely not due to the inclusion of only handful of foreign visitors or the major participation of the native people. The actual reason is the international trade the industry promoted after its legalization in the economy. Hence, the competency level of the industry has a great significance in the internal gambling industry to help the economy sustain in the market (Bedigian, 2010). Porters "Diamond Model" International business in regard to any kind of industry deals with numerous factors which in turn reward the economy with an effective competitive edge. Certain factors, for example, can be referred to be government policies related to the particular industry both in the global and domestic outlook, the business strategies adapted by the participants of the industry, and even the organizational structures that affect the industry internally (Hill, 2005). Therefore, considering the factors the competitive edge of the Gambling Industry in Singapore can be better analyzed with the implementation of the Porter’s “Diamond Model”. This shall be beneficial. According to the model there are four elements that define the competitive edge of an industry, i.e. firm’s strategy, structure and rivalry, demand conditions, related supporting industries and factor conditions. Figure 1. (Pitts & Et. Al., 2001). Firm’s Strategy, Structure and Rivalry Presently, the economy has provided license to two casinos having an impressive growth rate and promising future, i.e. the Sentosa Casino and the Marina Bay Sands. To be included as the strategies adapted by these two resorts, they deliver a variety of services from travel to fooding and lodging. In the entertainment part the resorts offer the richness of Singaporean Culture along with the excitement of gambling. In the Sentosa Casino the strategy that works to attract the customers in the international market is to render an entertainment package with a wide range of choices including variety of gaming like dice, and poker, and good food. The Resorts World Casino is recorded to be one of the largest and the oldest casinos in the world. The casino as per its strategic agenda welcomes the customers on a basis of 24×7 hours of service. The casino also considers the part of its social responsibility to encourage responsible gaming from the part of its customers (Resorts World at Sentosa Pte. Ltd, n.d.). The next license holder of the gambling industry of Singapore is the Marina Bay Sands which is the subsidiary of Las Vegas Sands, an American Integrated Resort. This casino also enjoys a certain amount of global reputation which has helped it gain a lot of advantage in terms of creating demand and popularity to the global customers. However, the integrated strategies adapted for the promotion of the casino by the management are to organize special entertainment and gaming events during special events. For instance the casino has recently announced to hold a special event in gaming for the month of December named as Wild Cash Weekend. Additionally the casino offers different gaming options to its customers for the whole year, like table games and slot machines (Marina Bay Sands, n.d.). Therefore, with the aid if licensing of casinos and its welcoming strategies the economy has stepped further to progress in its future. Demand Conditions The demand conditions for gambling are worth mentioning in this context. According to the Ministry of Community Development, Youths and Sports, there are almost 58% of the young Singaporeans who are involved in the gaming activities. Today the Singaporeans are considered to be the most educated compared to the international customer regarding gambling and its features. Online gambling, Casinos and other gaming clubs have almost become a part of the Singaporean culture generating huge employment opportunities and growth. This is the reason why, despite having a mixed impression on the perception of native peoples, the demand for gaming in the national as well as in the international market is witnessed to be increasing. Moreover, the licensing technique adapted by the government is also encouraging more investors and entrepreneurs to participate in the industry (Desmond, 2005). Factor Conditions Certain factors affecting the gambling industry in Singapore are the legal interferences and the social factors. To state about the legal factors, the economic structure is quite supportive for the industry. The CSA Act states the rules and regulations which should be maintained by both licensed and non-licensed casinos. On the contrary, according to the social belief that gambling is addictive and can be harmful for the economy in future; the government is taking certain actions to minimize the risk of Gambling Addiction. Notably, a survey held by the government in 2008 revealed the fact that 1.6% of the total young participants in the national boundaries as “pathological gamblers” or addicted gamblers. For many socialists gambling and addictions start up as recreational activity but ends up to be an addiction. But through the proper incorporation of the NCPG awareness campaigns the government has been able to increase the awareness among local citizens by 71% until 2008 (Turkish Weekly, 2009). Related and Supporting Industries A few related industries that support the gambling industry of Singapore strongly are the Tourism Industry and the Technology Industry. To include about the tourism industry, it has a vast impact on the economy generating high volume of revenue each year and rewarding the economy with stability. To be mentioned the tourism sector in the fiscal 2009-2010 had generated almost $18.5 billion to the economy. The past performances of the industry have recorded to maintain a strong and influencing growth till date. To relate the tourism industry with gambling industry it is certainly important to generate increasing number of customers to be served at the countries casinos (Tourism Industry Conference, 2010). Another industry to be related to the gambling industry that has a strong impulse is the Technology Industry of Singapore. As the gambling options today are diversified to the dimensions of internet and TV shows, it becomes very important to attain a growth in the sector to ensure the sustainability of the gambling industry. It is worth mentioning that today different kinds of mobile gadgets are also having an impact on the gaming industry. According to the market projections it is expected to grow faster in the current fiscal by generating $5.3 billion revenue and shall further grow up to $7.1 billion by 2014 (Business Wire, 2010). Concluding in the aspect of competency, the gambling industry from almost every corner appears to be strong enough to sustain in the international market. With a favorable statutory condition, and fast growth of the related industries the gambling industry of Singapore can certainly be expected to have a stronger competitive edge in its near future. But the economy should also consider the fact of global market growth in the same industry and increasing competency with an increasing acceptance of gaming to generate profit. Moreover, the limitations to the industry can also be remarked as the social interferences which have a chance to take a serious shape to affect the competency of the gambling industry in Singapore. Conclusion In the international market, as per the data, Japan is considered to have the potential to be one of the major markets of the international gambling industry. This is due to the new strategy adapted by the government to attract FDI to invest in casinos and gamming clubs in the country. Along with Japan as an Asian country certain other countries are also gaining a considerable amount of significance in attracting customers from around the world. A few of them that rose as a challenge in the international market for the Singapore Gambling Industry are Canada, America, Europe and other Middle-East economies (Casino Gambling News, 2009). The Singapore Gambling Industry is also expected to grow fast but is subject to the amount of supremacy it shows in facing the global challenge. Coincidentally, in the current fiscal the two licensed casinos in Singapore, was recorded to have a drop in their revenue income. The Resorts World Sentosa was recorded to have a 12% reduction in its annual revenue by the first quarter of 2010-2011 and continued to fail by 15% in the next quarter. While the Marina Bay Sands, with its parent company the Las Vegas Sands, erupted as the leader. This certainly provided the US market with a larger share in the gambling industry of Singapore. To state regarding the social terms, after the approval of the licensing scheme in 2005, it was recorded that more than 30000 complaints were signed online against the resorts. Additionally, the estimation of costs incurred due to problem gambling stood top with a figure of S$500 million every year. Considering the tax structure the Government is likely to raise it by the year 2011 on gaming, and proportionately restricting the gaming industry to the superior class of an economy. Conclusively, due to the dominating nature of the gambling industry the other minor industries of entertainment are getting affected. For instance, Singapore is listed in the world records to have the tallest twin rollercoaster in the country which can be very beneficial in attracting more customers from the international market. But unfortunately the operation was recorded to be out of order since the first quarter of 2010 (Cohen, 2010). Consideration all the facts and figures, it can be fairly stated that the limitation of the industry is not on the part of its international outlook but it is on the terms of its internal affairs which in turn affect the international competency of the industry. Thus it becomes very important for the industry heads to first eradicate those drawbacks to ensure their further growth in future. References Arnold, W. (2005). Singapore, Courting Tourists, Allows Casinos. The New York Times. Retrieved Online on December 02, 2010 from http://www.nytimes.com/2005/04/19/business/worldbusiness/19casino.html Asian Gaming, (2006). Singapore’s Example for the Global Gaming Industry. Article. Retrieved Online on December 03, 2010 from http://www.asgam.com/article.php?id_article=1245 Bedigian, L. (2010). The Next Big Thing in Singapore: Gambling. Benzinga. 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