Clubs still milking millions from jackpot cash cows

Tiong Bahru Football Clubhouse, for example, generated S$36.8m in revenue last FY

IT IS a quiet Saturday afternoon and the Automobile Association of Singapore’s office at Kallang Bahru, just adjacent to the Jalan Besar Town Council, is already closed for the day.

But it’s bustling inside a room on the ground floor of the building. Not only is the AA Winners’ Club open for business on weekends, it’s open 365 days a year from morning to night, even on public holidays.

Inside the hall are about 30 colourful slot machines, with half occupied by people – who look to be at least in their 40s or 50s – keen to try their luck in winning jackpots that are worth hundreds or even thousands of dollars.

The machines have bright lights, addictive tunes and fancy names such as Break The Bank, Fortune Meow and Grand Pharoah.

It might cost as little as 25 or 50 cents per spin, but those who crave bigger thrills can wager up to S$30 with each press of the button.

The jackpot operations of social clubs have been in the news lately after it was reported that the Tiong Bahru Football Clubhouse, at the basement of People’s Park Centre in Chinatown, generated an eye-popping S$36.8 million in revenue from its 29 slot machines in the last financial year.

That works out to roughly S$1.27 million for each machine, or just over S$100,000 per machine each month. The club paid out about S$23 million to punters in 2016, according to its annual report submitted to the Football Association of Singapore.

There are many social clubs that have jackpot rooms all over Singapore. For instance, AA has another Winners’ Club, also with around 30-odd machines, at its branch in Ang Mo Kio. The National University of Singapore Society (NUSS) has slot machines at its Kent Ridge and Suntec City locations, and it used to have a small number of machines at its now-closed Bukit Timah Guild House.

The Singapore Recreation Club has a room, called The Oasis, with 30 machines. Many golf and country clubs, including Keppel Club and Singapore Island Country Club, also have jackpot rooms of different sizes.

When integrated resorts Marina Bay Sands (MBS) and Resorts World Sentosa (RWS) opened their flashy casinos to much fanfare seven years ago, many thought that it would mark the downfall of the much smaller jackpot operations at social clubs. This has occurred to some extent.

The Chinese Swimming Club, for example, reported that its takings from jackpot machines dipped to S$2.47 million in 2016, from S$3.15 million in 2015.

The Singapore Cricket Club’s takings from these so-called fruit machines fell to S$124,850 in 2016, from S$175,840 the year before.

Singapore Polo Club president Rickard Hogberg, writing in his club’s annual report for 2016, stressed the need to “move away from our dependence” on jackpot machine earnings, and to create alternative pillars of income. The club saw a steep decline from S$1.1 million in 2015 to S$730,000 last year, a 35 per cent fall.

But the downward trend isn’t across the board. According to AA’s website, its income from the net takings of slot machines amounted to S$4.27 million in 2015. It was S$3.39 million in the previous year.

NUSS said its income from the machines went up by 4 per cent to S$1.91 million in 2015, with the Kent Ridge Guild House contributing the bulk of the revenue.

A 67-year-old retiree, who wanted to be known only as Mr Yeo, said he frequents a jackpot room near his home in Balestier for two reasons: It is convenient, and he doesn’t have to fork out the S$100 entry levy imposed at MBS or RWS casinos.

“It’s a relaxing place to spend a few hours with my friends. We know all the staff there, and there’s a fun atmosphere. We also get free food and drinks as we play, so what’s not to like?” he explained.

CIMB economist Song Seng Wun made the point that slot machines have been around in Singapore for decades, and gambling is an activity that is “second nature” to many people here.

“We continue to see slot machines, there are casinos, horse races and betting shops – all these continue to be a very strong source of revenue for the government. There was S$2.7 billion in tax collection for betting duties in 2016,” he said.

Chew Soo Hong, from the National University of Singapore’s Department of Economics, said that while many people see slot machines as a form of entertainment, the more pressing issue is it’s also a form of gambling, which brings about the problem of addiction.

“To what extent are the clubs proximate to the kind of gambling that we need to worry about?” Prof Chew asked The Business Times in a phone interview.

“There is that flavour of a loophole, that a club or association may end up making slot machines its primary generator of revenue. Even if it was not planned, there is the potential for that to happen.”

Article by: Lee U-Wen / Leila Lai

Source: http://www.businesstimes.com.sg