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Singapore Gaming Model to Lead Way for Other Asian Nations: Analyst

Macau may have the top spot in global casino revenue, but neighboring Singapore is hot on its heels, with some saying the latter’s gaming model will be the blueprint for other Asian countries looking to emulate it's growth.

"It's the Singapore model…of a large integrated resort with convention operations, entertainment operations," Chad Mollman, Equity Analyst at Morningstar told CNBC on Friday, referring to the Marina Bay Sands, one of the country's two integrated resorts owned by Las Vegas Sands. The nation’s other casino play - Resorts World Singapore - is run by Malaysia’s Genting and features both a casino and a theme park.

The idea is simple: provide sidebar attractions to draw in the customers. In the case of Marina Bay Sands, the heavy focus was on conventions and high-end restaurants, while Resorts World Sentosa provides a more family-friendly draw with its Universal theme park.

The end game is to pull in tourism money; and regional countries are paying attention. Mollman says a number of countries including Japan and Taiwan are closely studying the Singapore model and may pass legislation sometime in the next 18-36 months, authorizing casinos for the first time.

“They (Singapore) opened these 2 huge casinos are doing $3 billion revenue each,” he said. “That has increased tourism by 20 percent in Singapore so it's really the desire for tourism that's making these other countries look at the Singapore model.

The bet seems to have paid off. Singapore welcomed a record 11.6 million tourists last year; and in the first nine months of 2010, the resorts accounted for 1.7 percent of the country’s gross domestic product (GDP). Analysts are expecting the sector to make up a quarter of the country’s GDP growth this year.

In terms of gaming revenue, Singapore raked in $5.1 billion last year, putting it in third place behind Las Vegas, which generated $5.8 billion, according to the American Gaming Association. Macau remains in first place with a whopping $23 billion.

But Singapore may topple Vegas as soon as this year, with gaming revenue set to top $6.4 billion.

"You look at Vegas, it's a mature market, it's saturated, we have over 900 casinos and it's very cyclical, the market was down about 20 percent in Vegas 2007 to 2009,” Mollman said.

“Asia is really unique in that it has a very strong VIP market, so you have gamers betting anywhere from $5000 to $200,000 dollars per hand, and Vegas just doesn't have those high rollers, that type of customer only makes up 10-15 percent of the revenue there,” he added.