Our response to the public feedback was posted on the Feedback
Unit¡¯s e-Consultation portal on 13 December 2005.
Investors¡¯ Feedback
In comparison, the investors¡¯ concerns were whether the various
requirements were overly stringent and could affect their ability to
raise funds or run their businesses effectively.
We took into account the investors¡¯ feedback and suggestions, and
decided to relax a number of operational controls on the casino
operator that may interfere with their day-to-day operations. They
include the requirement for the casino operator to seek the
regulator¡¯s approval for the casino layout, and the powers to
stipulate a minimum number or a maximum number of a particular game
in the casino. CRA¡¯s power to limit the number of hours that a
casino can operate has also been removed. We believe that our
supervision and regulation of the casinos will not be compromised by
these changes.
In response to feedback, the Government also decided to enact the
Casino Control Bill early so that potential investors will have a
better idea of our regulatory regime and what they can and cannot
do. In addition, through this Casino Control Bill, the Government is
committed to a number of measures to provide greater certainty and
support to investors of our Integrated Resorts. This is because the
Integrated Resorts require heavy investments. We want them to
succeed after the investors have committed to spend billions of
dollars on the projects. For instance, the casino tax rates will
remain unchanged for 15 years. The two casino operators will also
enjoy an exclusivity period of 10 years. During this period, no new
casinos will be allowed. The lease of the land on which the
Integrated Resorts will be sited will be for 60 years and they be
allowed to operate a casino for 30 years, subject to the suitability
of the casino operators to run them.
We believe that all these measures will provide greater certainty
and enhance the competitiveness and attractiveness of our Integrated
Resorts and the investors¡¯ ability to raise funds for the project.
Foreign Regulators¡¯ Feedback
In addition to seeking comments from the public and the
investors, we also sought comments from casino regulators in other
jurisdictions. The objective was to tap their experience and
expertise as established casino regulators, to help address our own
lack of experience in managing the casino industry. I am happy to
say that their feedback has been very encouraging. Many cited the
Bill as a thorough and sound legal basis to launch a comprehensive
regulatory framework.
Casino Control Bill
Sir, the Casino Control Bill will provide the legislative and
regulatory framework to help to ensure that criminal activities
associated with casino operation do not take root in Singapore, and
to mitigate the potential negative consequences of the casinos on
our society.
The Bill comprises 13 Parts, and deals with the key aspects of
regulating casinos in Singapore.
It has 3 broad objectives. First, the Bill will provide for the
setting up of the casino regulator with the necessary powers to
enforce the regulatory regime. Second, the Bill will set out a
regulatory regime for the casino operator and related business
parties. Third, the Bill will provide for a number of social
safeguards to protect vulnerable persons from casino gaming.
I will now describe the key aspects of the Bill.
Casino Regulatory Authority
The Statutory Board
Sections 5 to 17 of the Bill will establish a new Statutory Board
called the Casino Regulatory Authority, or CRA for short. The CRA
will be supervised by the Ministry of Home Affairs.
As a statutory board, the CRA shall be subject to the same
governance standards as other Statutory Boards of the Government. In
particular, the CRA shall submit to the Minister for Home Affairs
its annual report and audited financial statements, which will be
presented to Parliament. The Board of the CRA shall comprise a
Chairman and 4 to 16 members, approved by the Minister for Home
Affairs. For transparency and accountability, board members are also
required by law to declare their interest in any particular project
or transaction concerning the CRA or the casino operator. These are
provided for under Sections 18 to 39 of the Bill.
The CRA will be formed 12 to 18 months before the first casino
starts operation. The casino operator can take this lead time to
seek approval from CRA and apply for the licences for various
aspects of the casino that are required under the Casino Control
Bill.
Regulatory Powers of the CRA
I shall now touch on the regulatory powers of the CRA. The CRA
will be responsible for enforcing the provisions in the Casino
Control Bill and regulating the casinos in Singapore. This is
consistent with overseas practices, where dedicated bodies are set
up to regulate casinos.
Firstly, the CRA shall have powers to investigate and probe into
the casino operator¡¯s background, accounts and business links (under
Sections 10, 15, 46, 63, 85). The investigations, which are very
thorough and often involve the key directors and management, are
standard practice in many well known overseas gaming jurisdictions.
Such comprehensive investigations are also being conducted for the
bidders of our Integrated Resorts.
When I visited the Nevada Gaming Commission in November 2005, the
Chairman of the Nevada Gaming Commission and Members of the Nevada
Gaming Control Board advised me to carefully scrutinise the
potential casino operators, as it is only through the selection of
suitable casino operators with the right people to manage its
operations would we be able to keep criminals and fraudsters away
from our casinos. This is the reason why we, like other leading
gaming jurisdictions, conduct probity investigations on potential
operators of our Integrated Resorts. Such checks will ensure that
only suitable persons are given the licence to operate casinos in
Singapore.
Having been exposed to similar investigations in other casino
jurisdictions, foreign bidders of our Integrated Resorts project
have cooperated fully with us in the process. However, such
comprehensive investigations are new to Singapore companies taking
part in the RFP for the Integrated Resort. Their management may not
be used to disclosing so much information about themselves and their
companies. These practices are nonetheless necessary to ensure that
our probity checks measure up to the standards of respected casino
jurisdictions in other parts of the world.
Any company that wants to be involved in the casino industry in
Singapore is expected to cooperate with the CRA and be subject to
probity investigation. This principle of having the industry
demonstrate that they can meet the regulatory objectives before
being allowed to operate a casino is succinctly captured by the
phrase ¡°Compliance first, Commerce later¡±, a policy adopted by the
Nevada Gaming Control Board.
Secondly, the CRA is empowered to deal with offences typically
committed in casinos. Cheating, forgery, tampering with gaming
equipment or attempting to exploit the casino chips as an
alternative currency are regarded as attempts to undermine the
integrity of the casinos¡¯ operations, which will lead to fines or
imprisonment or both. These are covered under sections 171 to 188
Apart from investigative and enforcement powers, CRA is also the
approving authority for various aspects of casino operations. It
will oversee the casinos¡¯ system of internal controls and accounting
procedures, such as those listed at Section 139. It can also receive
and investigate complaints from casino patrons about unfair gaming.
Sections 111 to 114 of the Bill empower the CRA to adjudicate
disputes between the casino operators and their patrons.
In addition, various sections of the Bill empowers the CRA to
collect licensing fees and to take disciplinary action against
casino operators, key employees and other parties licensed under the
Casino Control Bill for any regulatory breaches. Disciplinary
actions include fines or the variation, suspension and even
termination of their licenses. The Authority shall also work closely
with the Police to manage the law and order situation in and around
the casinos.
Casino Operator, Related Parties and its Operations
Let me now turn to the regulatory requirements of the Bill and
explain their policy intent.
Many crimes in the casinos are committed by persons who collude
with casino employees. They range from less sophisticated crimes,
such as cheating at tables, to high-level schemes between the casino
and criminal syndicates to say, launder money.
To ensure that the integrity of our casinos is not compromised
from within, Sections 43 to 56 and Sections 79 to 98 of the Bill
will require that the casino operators and their key employees be
licensed by the CRA. No one shall be allowed to work or hold key
positions within the casino without a licence.
Only suitable persons will be licensed to operate the casino or
to work in positions of influence in the casino. The considerations
of ¡°suitability¡± include whether the applicant is of good repute
with regard to character, honesty and integrity, and has the ability
to work in the capacity that he or she has applied for. For
applicants who wish to operate the casino, the applicant must also
demonstrate that he has a sound and stable financial background.
Having obtained the licence, the licencee must remain suitable
throughout the validity period of the licence. Where there are
material changes to the licencee¡¯s situation that could affect his
suitability, the licencee is required to report these changes
promptly to the CRA.
Organizing junkets is a specialised and highly lucrative business
that is important to the casinos¡¯ viability. Junket promoters bring
in high-rollers to the casinos and provide them with VIP treatment
in return for a commission. Junket promoters function as the middle
man between the casinos and the high-rollers, buying and encashing
chips on behalf of the high rollers. Because of the large sums of
money transacted between the junket promoters, their clients and the
casinos, it is important that junket promoters are well-regulated to
ensure that the junkets do not provide a cover for crime syndicates
to engage in criminal activities, such as money laundering. For this
reason, Section 110 of the Bill shall require junket operators to be
licensed before they can work with our casinos.
Shareholders and Business Associates
Apart from the casino operators and their employees, shareholders
and business associates can also be possible avenues that criminals
can exploit to infiltrate casino operations. Hence, in Nevada, eg,
share transfers of any amount would require approval from the
regulators if the casino is privately held. For publicly listed
casinos, regulators are to be kept informed of shareholders who
become 5% stakeholders and approval is required for stakes of 10% or
more.
As such, under the Casino Control Bill, the regulator will be
empowered to exercise control over such relationships. Shareholders
taking a 5%, 12% or 20% stake in the casino operator shall be
required under Sections 64 to 71 of the Bill to seek approval from
the Minister for Home Affairs. Such shareholder controls are to
ensure that persons owning significant stakes in the casino
operators are suitable persons to be associated with our casinos,
and to ensure that there is no undesirable influence over the
casinos¡¯ operations.
The casino operator¡¯s relationship with other business partners
will also be closely monitored. Under Sections 72 to 78 of the Bill,
the casino operator shall be required to seek approval for contracts
of significant monetary value or that provide critical services to
the casino, such as security and surveillance. Such contracts are
called ¡°controlled contracts¡±. The objective is to ensure that there
is no undesirable influence on the integrity of the casino
operations through these contracts. Details of the controlled
contract regime such as the exact value or specific types of
services that will render a contract as controlled will be
prescribed in the subsidiary legislation to be enacted under the
Casino Control Bill.
Operations of the Casinos and its Internal Controls
Casinos are highly complex operations. The gaming devices that a
casino employs, such as jackpot machines, are highly technical and
specialised, and are increasing in sophistication. Sections 57 and
99 to 105 of the Bill will enable the CRA to supervise casino
operations, including requiring the casino operators to seek
approval before a game can be conducted in the casino. CRA will
study the game rules closely to ensure that the odds are not overly
skewed in the casino operator¡¯s favour and the integrity of the game
is not easily compromised. Jackpot machines shall also be closely
regulated for the same reason.
Prostitution and illegal money lending are often associated with
casinos. Section 129 of the Bill will also require the casino
operator to take all appropriate steps to ensure that such
activities do not take place within its premises. The Police and the
CRA will work closely with the operators to keep the casinos clean
from such undesirable activities.
Huge amounts of cash and chips are constantly flowing within and
through the casinos. Strict internal controls and procedures are
therefore needed to protect the integrity of the games and the
financial transactions against cheats and other criminals. We shall
require the casino operator to put in place a robust anti-money
laundering programme which shall include know-your-customer
due-diligence, mandatory reporting for transactions above $10,000,
record keeping for transactions above $5,000, mandatory reporting of
suspicious transactions and anti-money laundering training for
employees. These measures, which will be prescribed in the
subsidiary legislation under the Casino Control Act, are in line
with international anti-money laundering standards set by the
Financial Action Task Force and other leading gaming jurisdictions.
Sections 138 to 145 of the Bill will also require the casino
operator to seek approval for its system of internal controls and
administrative and accounting procedures. Of importance would be a
comprehensive surveillance system throughout the casino to
facilitate the monitoring of operations and the gathering of
evidence.
Social Safeguards
What I have described thus far are measures to deal with the law
and order aspects of the casino operations. Another key objective of
the Casino Control Bill is to minimize the potential for casinos to
cause harm to minors, vulnerable persons and society at large. The
Bill shall enact the social safeguards that the Government had
announced in Parliament in April last year.
Problem Gambling
In deciding the appropriate social safeguards, we need to
understand how casual and recreational gambling can lead to problem
gambling. In a study conducted by the Commercial Affairs Department
on prison inmates who had committed commercial crimes, the
interviewees revealed that they got hooked on gambling after
experiencing the euphoric feeling when they won. Others gambled to
escape stress.
As they develop into problem gamblers, they get so consumed by it
that they lose interest in everything else, and their family and
work lives are affected. They also lie habitually about their
gambling habits and conceal their losses. When they lose, they tend
to chase after the losses and end up in deeper trouble. Many
eventually turn to crime to finance their habits.
Based on this study, there seems to be a point beyond which some
casual and recreational gamblers begin to slide down the slippery
slope to become compulsive and pathological gamblers It is therefore
vital that those who choose to gamble are aware of the vital signs
so that they can seek help before their habits get out of control.
Entry Levy
To discourage locals from developing into problem gamblers,
Section 116 of the Bill shall require the casino operators to
collect an entry levy from Singapore Citizens and Permanent
Residents for every consecutive 24 hours in the casinos or $2,000
for an annual membership. This levy will also underscore the message
that gambling is an expense and not a means to get rich.
Credit and Loss Limits
Problem gamblers have a tendency to gamble beyond what they can
afford. As a safeguard, Section 106 of the Bill shall require casino
operators to provide information about games to patrons as well as a
loss limit system that casino patrons may choose to use. This will
give patrons an option to commit upfront to a loss amount that they
can afford in their gaming.
Section 108 of the Bill shall prohibit casino and junket
operators from extending credit to Singapore Citizens and Permanent
Residents, unless they maintain a credit balance of at least
$100,000 with the casino operator at the start of their gaming which
would qualify them as premium players.
Automated Teller Machines or ATMs shall be prohibited within the
casinos under Section 109 of the Bill so that patrons will not have
easy access to their savings accounts to gamble continuously.
Minors
Minors are also another potentially vulnerable group who may fall
prey to the glamour of the casino, without realising the possible
dangers of gambling. Sections 130 to 137 of the Bill will prohibit
persons below the age of 21 years from entering the casinos.
Exclusion orders
Under the Casino Control Bill, various bodies shall be empowered
to impose exclusion orders. These are statutory orders that will
prohibit a member of the public from entering the casino. The
objective is to ensure that certain persons who may be more
vulnerable or are undesirable from stepping into the casino.
Sections 121 and 122 of the Bill will empower the CRA to impose
exclusion orders in general. In addition, the Commissioner of Police
can also impose exclusion orders on criminals or suspected
criminals, to deny them the use of casinos as a place to perpetrate
their illegal activities.
As Members may be aware, the National Council on Problem Gambling
was launched on 31 August 2005 and has started its public awareness
campaigns on problem gambling as well as specific initiatives to
help problem gamblers. The Council will also be empowered under
Sections 155 to 168 of the Bill to issue exclusion orders to stop
problem gamblers from entering the casinos.
Family members of problem gamblers can apply to the Council for
exclusion orders to be imposed on their loved ones. The Council may
also issue the order on persons who have poor credit records or are
on social assistance programmes. This process will help prevent
problem gamblers from getting deeper into trouble.
Persons who have a gambling problem can also make a personal
application to be excluded. These voluntary exclusion orders can be
lodged with the casino operators under Section 120 or with the
National Council on Problem Gambling under Section 165. This is an
additional service to help those who know that they are vulnerable.
The CRA will work closely with the Ministry of Community
Development, Youth and Sports to ensure that the social safeguards,
such as entry levy collection and the exclusion orders, are
effectively implemented in the casinos.
Casino Tax and Enforceability of Gaming Contracts
Let me now turn to the casino tax and enforceability of gaming
contracts. Section 146 to 152 of Bill shall provide for tax rates of
5% and 15% to be levied on the gross gaming revenue from premium
players and non-premium players respectively. This is on top of the
existing corporate and goods and services taxes that the casino
operator shall have to pay. As mentioned earlier, the tax rates will
remain unchanged for 15 years as part of our commitments to the
Integrated Resorts.
Section 202 of the Bill shall also make a related amendment to
the Income Tax Act to impose a withholding tax of 3% of the
commissions earned by the junket promoters.
Separately, the Section 40 of the Bill will allow gambling
contracts made in casinos enforceable in courts. To put it simply,
the winner can take the loser to court if the loser does not pay his
dues. Similarly, credit extended by casino and licensed junket
promoters to patrons for the purpose of casino gaming in a manner
that complies with the Casino Control Bill are also enforceable.
This is needed to provide assurance to our casino operators that
they will have legal recourse to recover their earnings.
62. For consistency, Section 201 of the Bill will make a related
amendment to the Civil Law Act to also make enforceable, gambling
contracts between patrons and other legal gambling operators in
Singapore, such as Singapore Pools and Singapore Turf Club. However,
unlike the casinos and junket operators, gambling contracts issued
by the other legal operators that are based on credit shall continue
to be unenforceable. This means that if Pools or Turf Club decide to
take bets based on credit and if the patron subsequently defaults in
payment, Pools or Turf Club will not be able to take the patron to
court to reclaim the payment. This is to ensure that the local
gambling operators do not promote gambling to locals by giving out
credit.
Conclusion
Sir, the Government decided to allow two integrated resorts with
casinos to be built in Singapore because we assessed that there are
significant economic and tourism benefits if the integrated resorts
succeed and take off in a big way. We will help provide the
environment to help the industry succeed. However, this must not and
need not come with heavy costs to our society or the law and order
situation. MHA, in working with the relevant ministries and
agencies, have tried our best to strike that delicate balance in
drafting this Bill.
A sound and comprehensive legislative framework, based on
international best practices and with the appropriate safeguards, is
therefore necessary to protect our interests and hard earned
reputation. We will take a strict but fair approach in working with
the future casino operators. We shall do our best to ensure that the
Casino Control Bill provides a conducive environment for the
integrated resorts to develop and operate successfully in Singapore.
Sir, I beg to move.
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