Sands Wins Singapore Casino Bid

123jump.com Staff
27 May, 2006
New York City

Singapore in an attempt to diversify from the its manufacturing base granted its first gambling license to build a casino. The $3.2 billion casino may be the most expensive casino built ever in the world. The casino is scheduled to open in 2008 and generate more than 10,000 jobs in Singapore and add S$2.5 billion to the economy by 2015. Las Vgas Sands stock rose 9%.

The license for the casino-resort to be located in Singapore’s Marina Bay was awarded to Las Vegas Sands Corp. today. The company’s bid for the casino-resort totaled $3.16 billion, topping the previous world’s most expensive casino, the Wynn Las Vegas, at $2.7 billion, which had been completed only last year.

Investors responded positively to the news as the stock in New York trading rose $5.96 or 9.4% to $69.93. The company stock has been volatile since its IPO in November 2004. The stock has traded between $29 and $73.

Sand’s expects to open the new casino in 2009. It also plans to involve competing rivals MGM and Harrah’s Entertainment. The casino is expected to be built on a 50.9 acre waterfront site near Singapore’s financial district. Also, to ensure that gambling does not dominate the area, the casino will not be allowed to occupy more than 5.5% of the resort’s area. Additionally, Sands will be expected to build an equally large attraction – a museum, gallery, or theater as well.

The proposal for a casino was announced March 12th 2004. The maximum area allotted for the actual casino is 15,000 square meters, with enough room for 2,500 maximum gaming machines allowed to occupy the facility. A second casino resort to be located in the island of Sentosa, the Sentosa casino-resort, is the second casino planned after the Marina Bay casino is built. It will occupy up to 343,000 square meters of gross floor area for commercial activity, plus an additional 60,000 square meters for other amenities.

According to the local Singaporean authorities, both casinos combined the Marina Bay and the Sentosa, could increase Singapore’s annual gross domestic product by $2.5 billion Singaporean dollars in the year 2015 and create around 35,000 jobs. Singapore lifted its four decade old ban on casinos in April of 2005.

Nineteen bidders responded to last year’s request for proposals for the new casino, including the top three; Harrah’s Entertainment, MGM Mirage, and Las Vegas Sands competed to close in on Singapore’s first casino to be built since the ban was lifted. Absent from the list of bidders was Wynn Resorts who had earlier indicated interest in the casino project.

Wealthy Asian city-state with a population of five million relies on manufacturing, banking and technology based economy. In the last ten years, many manufacturing plants from Singapore have relocated to cheaper sites in China, Taiwan and Malaysia. In order to diversify its economy, the country lifted its forty year ban on gambling in the year 2005. Hong Kong and Singapore have competed neck to neck in attracting foreign investments in Asia. Since the emergence of China as manufacturing hub, Singapore had to compete with Shanghai as well. Manufacturing plants are increasingly located in Southern China and high-tech and software related jobs are migrating to India. Singapore’s once near monopoly in attracting foreign companies as Asian-region head-quarter has considerably weakened in the last five years.