Feb 9, 2010

Too early to assess impact of casinos

As Singapore benefits economically from the mammoth IR projects, the social impact of casino gambling is also an issue at the forefront of the minds of quite a few people. Given that many Singaporeans already enjoy games of chance – from the 4-D lottery to horse racing and soccer betting – some have argued that the casinos would not represent a radical departure from the existing menu of available gambling options. They argue, furthermore, that Singaporeans have already shown themselves to be generally adept at handling the fallout from their fondness for gambling, be it of a casual or serious nature. Whether these arguments hold true in the months ahead remains to be seen.

For now, however, a few insights from other jurisdictions may provide some indication of the sorts of social issues that may arise following the opening of casinos in a major urban centre.

The issue of the distance between a major, and densely populated, city, to a casino, tends to be a key determinant of an individual’s gambling habits and behaviour.

To that extent, it is worth noting that there is a logistical commonality between Genting Highlands and Macau. Genting Highlands, nestled atop a mountain ridge in the Malaysian state of Pahang, is about one hour’s drive along a winding and somewhat treacherous road from the centre of Kuala Lumpur. And Macau is about one hour by jetfoil from Hong Kong’s main ferry terminal, after which Hong Kong residents and other visitors have to pass through Macau Customs and immigration.

What is the significance of this common logistical aspect? Distance and time constitute an inherent deterrence to people visiting the casinos at these two places too frequently. Singapore will have no such logistical deterrence to Singaporeans and permanent residents wanting to visit the casinos at Resorts World Sentosa and Marina Bay Sands.

A $100 entrance fee for each 24-hour visit (or a flat S$2,000 annually) that will be levied on Singaporeans and PRs, to discourage them from visiting the casinos, may not be much of a deterrence.

For quite a number of people, when it comes to gambling, what determines their behaviour is relative convenience – the ease with which they can gamble. The expense involved in gambling is often a secondary consideration. To that extent, an American study involving a survey of 2,631 adults and quoted in the journal Science Daily in June 2005 noted: ‘A casino within 10 miles (16km) of home has a significant effect on problem gambling and is associated with a 90 per cent increase in the odds of being a pathological or problem gambler.

‘The reason for the increase… is that the availability of an attractive gambling opportunity can lead to gambling pathology in some people who would otherwise not develop it.’

Another study, also based on the American experience and published in 2004, noted: ‘Increasing crime is a well-documented companion of legalised gambling. Crime predictably rises three to four years following the opening of a casino as problem and pathological gamblers begin to deplete their resources. Gamblers who have ‘bottomed out’ their own resources frequently begin borrowing money from family, friends and business relationships. This ‘borrowing’ frequently takes the form of theft. Gamblers often feel they are only borrowing other people’s money until they can win it back.’

Crime is one dimension of the negative consequences of the presence of casinos. The social dimension is another. Here it is worth noting that a number of jurisdictions, including Australia and the United States, had experienced a dramatic rise in personal bankruptcy rates during the decade prior to the global economic crisis of 2008-09.

This increase had puzzled some observers as it occurred during a period of relative economic prosperity. The increase in legalised gambling, in addition to a reduced stigma attached to bankruptcy in these jurisdictions, offers a plausible explanation for the surge in bankruptcies.

It will probably take one to two years to determine whether Singapore’s experience with casinos falls into the general pattern seen in other jurisdictions. Whatever the case may be, Singapore’s experiment with casino gambling is being keenly watched by other countries in Asia and beyond. Some of these countries have yet to take the plunge into this form of gambling. They are therefore awaiting to see how the balance between the economic benefits of casinos and their social consequences plays out in Singapore before deciding on their own course of action.

Derek da Cunha is the author of Singapore Places Its Bets: Casinos, Foreign Talent And Remaking A City-state.