Those optimism blues

After five years of blood, sweat and tears, Singapore’s first (legal) casino threw open its doors at 12:18pm today. (Your intrepid correspondent was going to head out there and investigate, but I gave up when I ran into an hour-long queue for the monorail across to the casino; intertwits are now saying that the queue’s blown out to three hours. The traffic camera on the Sentosa entrance road doesn’t look too bad, though.)

Special bonus: here’s a pic from earlier today of the crush at Harbourfront train station, the jumping-off point for Sentosa and the casino.
Opening Day

Unsurprisingly, the local media’s pretty enthusiastic about the new casino, and about all the money that will inevitably roll in. (Side note: why on earth is Pravda resorting to an AFP wire story about the casino opening? Could they not get one solitary reporter down there?) But here’s an interesting take from Time (emphasis added):

For Genting, operator of Resorts World Sentosa, recouping its $4.5 billion investment won’t be easy. Even though it will be one of two exclusive casino operators, unlike Macau or Las Vegas, where there is fierce competition within a much larger pool, analysts and investors have set their initial expectations for Sentosa’s gaming revenues “far too high,” says Citigroup analyst Dominic Noel-Johnson.

To meet Citigroup’s relatively conservative 2011 gaming revenue estimate of $1.2 billion for Resorts World Sentosa — more than a third less than the consensus of other brokerage houses — every single foreign tourist expected to come to the island that year would have to visit either one of Singapore’s two integrated resorts. In addition to that unlikely scenario, every adult 21 and over in Singapore would have to go to one of the casinos five times a year, and every adult resident of neighboring Malaysian state Johor would have to go twice every year.

Is all that likely? No, Noel-Johnson says, even though such robust expectations are clearly reflected in the high price of Genting Singapore’s stock, currently the most expensive gaming stock in the world. According to Noel-Johnson, Genting Singapore is trading at an estimated price-to-earnings ratio of over 60 for the current fiscal year. Even though he believes Resorts World Sentosa has the potential to be “a long-term success,” Citigroup has slapped a “sell” rating on the stock.

And there’s a competing casino due to open in less than three months.

I think the only real winner today will be the Singapore Tote Board, which pockets a $100 entry fee from every Singaporean citizen visiting the casinos.

Update: regarding those revenue figures… as a very rough approximation, you could stack ’em up against Crown Casino, which is a monopoly casino with a roughly similar catchment area (Singapore’s roughly the same size as Melbourne, and they’ll be targeting the same Asian whales). Crown Casino pulls in almost bang on $1.5 billion a year in revenue (page 5) – but Crown’s a local monopoly, while the Sentosa casino will have to fight with Marina Bay Sands for revenue. The $100 casino entry levy in Singapore will throw a fairly major wrench in RWS’s revenue stream, as well.

So $1.2 billion for RWS might be doable… but it’ll take a lot of work.

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