Tuesday, January 02, 2007

Framing the Great Casino Debate as an Ethical Issue - Prelude

This was such a fun essay to write (over 2 days, little sleep, and hackneyed research done via the internet) that I thought it a waste not to put it on my blog. Here goes!


Singapore’s Great Casino Debate

An individual perspective of the ethical dilemma posed by the ‘Integrated Resorts’ proposal to Singapore as a society

Executive Summary

The purpose of this essay is to retrospectively analyze the debate over the proposal to build casinos in Singapore. The debate took place among the general public, the press and within Singapore’s ruling government (both within the Parliament and cabinet of ministers). The proposal was one by the Singapore Tourism Board to build casinos in Singapore in order to boost tourism revenue.

Beyond the economic benefits of the proposal, the public at large and many concerned public figures brought up the issue of social problems that can result from having a casino in Singapore. This essay aims to explore the dilemma between the obvious – and measurable – economic benefits that can be achieved through revenues from casino operations, and the subtle – and often subjective – social problems that arise from the introduction of such an ‘evil’.

Note: from time to time, the essay will utilize the phrase ‘Integrated Resort’ (IR). The IR is a resort concept synonymous with the model of casinos as seen in Las Vegas and Johannesburg, i.e. where the casinos are a component of a larger themed entertainment facility that is (sometimes) targeted towards the family. It is the author’s view that adoption of the IR concept (by the government in its proceedings) is meant to 1) de-emphasize the gaming aspect of the proposal, thus softening the perception that it might be condoning vice; and 2) target a broader market of tourists (and not just high-rolling punters or ‘whales’). The phrase IR will be used interchangeably to mean casino, and vice versa.

History of the Casino Debate

The Singapore Tourism Board (STB) was established in 1964 with the mandate to promote Singapore as a tourist destination. The STB undertakes projects such as the construction of theme parks and targeted overseas promotional activities to boost tourism-related visits to Singapore. For a long time now, it has advocated the development of a casino in Singapore to attract more tourists and increase Singapore’s share of the Asia-Pacific tourism market. Until recently, the government has always rejected the idea of building a casino. During the early phases of Singapore’s development as a nation, the government’s focus was on building Singapore’s manufacturing and industrial capabilities: there was no economic need for a casino given the growth in GDP and the prosperity enjoyed by the nation.

Lately, however, the government had decided to reconsider the decision. In 2004, the idea was once again mooted. The proposal was internally discussed by the Members of the Cabinet and the decision was announced to the general public in April 2005. A parliamentary debate was held in the same month to debate the issue, and opinions both in support of, and against, the proposal were aired. Similarly, a public debate also took place among concerned citizens, with opinions largely expressed in the press and on the Internet.

The Economic Rationale for the IRs

The STB’s invitation for IR concepts attracted 19 submissions, and out of that pool, it was estimated that if 2 IRs are built, SGD 5 billion will need to be invested and 35,000 jobs will be created for the whole economy. The economic impact is significant: when fully operational, the 2 IRs’ contribution will increase Singapore’s GDP by 1% annually. The construction of the IRs will thus contribute significantly to boosting Singapore’s economy through foreign direct investment, the construction sector during the ramp-up phase, and the services sector in its day-to-day operations when completed.

On a related note, Singapore’s tourism industry has been on the decline. Singapore’s dollar share of Asia-Pacific travel has been falling: between 1998 and 2002, Singapore’s share of East Asia Pacific tourism receipts fell from 8.2% to 5.8% ; between 1994 and 2003, Singapore’s Total Expenditure of Visitors (TEV) fell 38% from SGD 7 billion (See Table 1). In considering the proposed IRs, the Singapore government was hoping to boost its flagging tourism industry – previously, the STB had experimented with theme parks, coordinated promotional sales events and contrived festivals. All had failed to revive an industry that is in decline – the only key success area has been in the promotion of Singapore as a location for business travel and Meetings, Incentive Travel, Conventions and Exhibitions (MICE). In effect, the Singapore government recognizes that Singapore (on the whole) as a tourist attraction is not viable with its current offerings and it needs to seek new means of attracting visitors to Singapore.

Table 1: Total Expenditure of Visitors (S$ Million), Yearly (Source: STB Website)
Year TEV (SGD Million)
1994 7049.8
1995 7350
1996 6755.5
1997 6207.4
1998 5493.6
1999 6033.3
2000 6292.6
2001 5699.3
2002 5425.8
2003 4315.6
Additionally, the Singapore government has recognized that its position as a desirable manufacturing base is no longer tenable. Investments in the manufacturing sector have stagnated at around SGD 8 billion and MNC capital expenditure have migrated to low cost countries in recent years. A recent case is California-based Maxtor Corp, a hard-disk drive manufacturer. In 2006 it closed two plants in Singapore and moved the operations to China – in addition to the retrenchment of 5,500 Singaporean workers, the move also affected small local suppliers of Maxtor Corp . The slow decline of the manufacturing sector has prompted the government to pursue growth in more lucrative sectors – in particular, a key growth area for Singapore is the services sector, within which the IRs are expected to generate investments, income and jobs when they are built.

Another compelling reason for setting up the IRs is that tourism within East Asia Pacific is booming. In particular, with China easing travel restrictions on its citizens there will be increasing demand for gaming facilities within a reasonable distance (in the future, the majority of Chinese travellers are most likely to be punters seeking to gamble, and current legislation in China forbids the construction and operation of casinos). Whether or not Singapore went ahead with the decision to build casinos, the surge in demand for such services will compel regional countries to compete and offer such services. The competitive situation is such that supply will rise to meet demand, whether or not Singapore chooses to compete for that particular tourist dollar.

While Singapore is able to attract investors due to its various advantages over its South East Asian neighbours, prospective investors are just as likely to set up casino resorts in locations such as Phuket and Bali – locations which are not far from Singapore in any case. As such, a pre-emptive measure to build IRs in Singapore might minimize the eventual impact of subsequent competition in the South East Asian region.

The Gambling Landscape in Singapore

The officially legal gambling channel comes in the guise of the Singapore Totalisator Board. It operates two businesses: the Singapore Turf Club, whose main source of revenue come from betting proceeds earned from horse-racing and totalisator operations; and Singapore Pools, whose revenue comes from running lotteries (operated via 3 distinct and separate means, namely 4D, Toto, and Singapore Sweep) and football betting. The proceeds from the operation of the two entities are channelled to charitable causes, the arts, community development and are generally meant to benefit other worthwhile causes in Singapore .

Other than the officially sanctioned means of gambling, Singaporeans also have access to ‘jackpot rooms’ in some country clubs and semi-union based clubhouses. These gaming facilities often take up a small area and only provide slot machines. Elsewhere, Singaporeans also punt on gambling sites on the internet, without regulation or restriction by the government.

Beyond the locally available options, Singaporeans also travel overseas for the purpose of gambling. The two most popular (and accessible) modes are Genting Resort in Malaysia and cruise ships to nowhere. Genting Resort is within a 5-hr coach ride from Singapore and offers full casino facilities along with a resort and theme park. Cruise operators in Singapore run cruise ships which operate casinos onboard (once they have sailed to international waters and are, legally, not within Singapore’s jurisdiction). The ships typically depart and return to Singapore without calling at any other ports.

It is thus a fact that Singaporeans can access gambling facilities easily. In a ministerial statement by the Prime Minister during the IR debate in parliament, he said that “Every year, Singaporeans spend $6 billion on legal gambling in Singapore, and another $1.5 billion in cruises and offshore casinos.” It appears to be clear that there is profit to be made from the $1.5 billion in gambling proceeds that go overseas.

The Social Problems

The first and foremost question in the debate was whether the casino components of the IRs will undermine societal values. As a society, the government perceived Singaporeans as valuing fairness, meritocracy, integrity and hard work. In some quarters, it is feared that the presence of a casino will erode the Singapore work ethic: the casinos might promote the idea of dependence on gambling and luck as a means of making money (as opposed to hard work). The prevailing view on this issue is that the government needed to act as custodian and enforcer of Singapore’s core values: in allowing IRs, it might be seen to compromise on this stance. The contrary view is that the government should not act in such a paternalistic manner, since such core values are hardly perceived to be accepted nationwide nor are they necessarily applicable to each and every Singaporean individual.

A concomitant danger was that the setting up of a casino might lead to increase in incidences of organized crime and law and order issues. Activities associated with the operations of casinos run the gamut of illegal money lending, prostitution, money laundering and criminal gangs. It has been observed that such a situation had already occurred in Macau: the involvement of triads in Macau’s casinos has led to rampant prostitution and other criminal activities. There is much concern that Singapore’s reputation as a safe and secure place might be ruined if the IRs ever degenerate to that level.

The third concern is that the presence of casinos in Singapore might lead to an increase in cases of problem gambling. This is particularly so in the case of pathological gambling, which is a mental health disorder much akin to a gambling disorder. Sufferers become preoccupied with gambling and are compelled to bet frequently and with increasingly higher stakes. Sufferers also experience withdrawal symptoms if prevented from gambling. Pathological gamblers have been known to gamble too much: to the point of both causing harm to self and family.

Two high profile cases during the period of the debate highlight the extent of the problems created by problem gamblers. Chia Teck Leng, 45, was formerly a finance manager at Asia Pacific Breweries. He got addicted to gambling in 1994 after going for a cruise and was taking on severe debt to finance his gambling habit. Later, he falsified documents purportedly from his company and cheated banks of a total of SGD 117 million. He was caught and subsequently sentenced to 42 years in jail. While in prison, Chia Teck Leng wrote a paper entitled ‘Taming the Casino Dragon’ exhorting the Singapore government to institute seemingly discriminatory measures to prevent Singaporeans from being addicted to gambling. This is a case of a problem gambler who took to crime as a solution to his problems – these are the kind of gamblers which opponents of the IR proposal have been most vocal in warning about.

On a more tragic (and also extreme) note, Simon Lee, 40, jumped to his death from his high-rise flat after killing his wife and two young children in a murder-cum-suicide pact. Simon Lee was found to have crippling gambling debts despite earning SGD 2,000 a month. He had also been gambling for more than 10 years on horses, numbers, soccer, and in casinos. Apparently seeing no solution to his plight, he decided to end his misery by killing himself and his family. This is an extreme case of a problem gambler who took his own life – most of them go into financial ruin but rarely go so far as to commit suicide. Unfortunately for proponents of the IR proposal, such high-profile cases make sensational news. Opponents of the IRs, whether they are religious groups or other social concern, argue that the IRs will accentuate the number of such incidents if left unaddressed.

The Decision

On 18 Apr 2005, the government announced the decision that the IR proposal will go ahead and planned to evaluate bids for two sites in the months to follow. A debate in parliament brought about opinions both for and against the proposal, but since the decision had already been made by the cabinet, the parliamentary debates in no way changed the outcome of the decision.

What it did achieve though was that it highlighted the divisive nature of the casino issue: on the one hand, proponents of the proposal tended to be biased towards their views of the economic realities of Singapore and recognize the potential upsides in building the IRs. Opponents of the proposal, though, tended to hark upon the social ills associated with casinos, but often do not have substantive evidence or data to support their claim – information on other cities which are exposed to similar issues were inconclusive as to the full impact, and mitigating factors, of the proposal to build an IR.

Preventive Measures Adopted

In addressing fears over the erosion of the Singapore work ethic and core values, it is perhaps notable that the Prime Minister made a mention towards a less paternalistic approach. Lee Hsien Loong, in his speech during the parliamentary debate, mentioned the role of schools, the family and religious and social groups, in the inculcation of values, and the transmission of civics and moral education . It is a clear signal from the government that, whether or not the IRs are built, the onus is on society to build its own value systems and transmit them to future generations of Singaporeans. The evils associated with gambling as a vice already exist (in its various guises) and values as they are now will not be significantly degenerated as a result of the IRs.

On the issue of increased criminal activity, it is no doubt that the authorities in Singapore will be strict in this regard: historically, Singapore’s enforcement agencies have been tough on vice and related activities. There will be the formation of a special police unit to supervise law enforcement in all activities related to casinos. A casino regulatory body will also be established to help manage some of the social impact of the casinos: for example, the regulatory authority will screen principal shareholders, directors, and employees to minimize any infiltration of criminal elements into casinos. The regulator will also monitor supplier relationships to ensure that all transactions are above board, and also seek international best practices for dealing with money laundering and other associated criminal activities.

Most of the debate focused on measures to curb incidences of problem gambling, and to proactively help gamblers and affected family members cope with such problems. Firstly, the IRs will put in place an entrance levy fee of SGD 100 per visit, or SGD 2,000 for visits over a calendar year. The entry levy is designed to signal to the public at large that gambling is to be considered an expense, and not a money-making enterprise. It is also meant to discourage casual gambling. The minimum age limit for entry is 21 years so as to prevent children and teens from being unduly exposed.

Another measure to limit the exposure of compulsive gamblers is in the institution of exclusion measures. Compulsive gamblers may voluntarily opt for self-exclusion, or they can be coaxed by concerned family members to be counselled and apply for self-exclusion with the National Council on Gambling (the authority set up by the government to regulate the gambling industry). The Council goes further: it will bar those also in poor financial health such as bankrupts, people with poor credit records and people on welfare, from entering the IRs in the future. The voluntary exclusion and other exclusionary measures are already used in other casinos around the world.

To deal with the problem of pathological gamblers, Singapore’s Institute of Mental Health runs a Community Addictions Management Program (CAMP). CAMP acts as a centre for treating addictions (among which are gambling addictions and substance abuse related addictions) and also conduct public education messages to that effect. With the spotlight now on measures for dealing with gambling addiction, CAMP now has the mandate to improve facilities and meet world-class benchmarks as set by experienced addiction centres in the US.

In addition to a treatment facility, the Ministry of Health also focused on public awareness campaigns in the mass media, investment in research on treatment practices, and working with voluntary welfare organisations to deal with problem gambling. Despite the small number of cases (an estimated 100 patients were treated for gambling addiction in 2004), the Singapore government has demonstrated an ample commitment towards dealing with the potential ills that might be introduced with the IRs.

A Personal Point of View

Singapore’s Great Casino Debate highlights the case of an ethical dilemma faced by the Singapore government. The decision to build the IRs was based on economic rationality: the IRs will bring in foreign investment, create jobs and spur the growth of the economy. In its decision making process, the government sought the feedback of its citizens and various social groups: however, no one other than the members of the cabinet had the voting ability to influence the decision – even when the issue was debated in parliament, the cabinet had already made the decision to go ahead with the IRs (having internally considered the issue over several months).

A more populist approach might be to hold a referendum on the issue (as advocated by a particular opposition party). In that way, the rational actor (in this instance the Cabinet of Ministers) can transfer the responsibility for making the decision to society as a whole, rather than bear the burden of the decision alone. However, this argument detracts from the fact that the government had been democratically elected by its people, and is thus given the mandate to act on their behalf on issues of macroeconomics (as far as the economic rationality of it is concerned).

What a referendum might have served to do though is to allow the public to shape the outcome of the decision based on its own values system. The argument goes that the government might not fully represent society’s values or moral concerns, and a general referendum will serve to better reflect the moral pulse of the country. On this note, I am somewhat more supportive of the notion that the public should be allowed to decide, although the imperative economic urgency of the situation did not warrant the government allowing a possibility of the motion being defeated.

Of more interest to myself as the author are the types of ethical values espoused during the debate itself. The majority of the opponents’ arguments centred on the effects that the IRs will have on society and the individual. The particular worries about erosion of societal values, crime and individual gambling problems stem from the adoption of a deontological point of view. Deontological ethics holds that decisions should be made solely by considering one’s duty and rules within which one operates. It is an approach with an emphasis on the how things are done rather than what things are achieved. The call among opponents to the IRs has been for the government to address issues of possible social problems and the measures adopted.

Another subset of the opponents comes from a religious context and they espouse a ‘virtue ethics’ perspective. The major religions in Singapore are Islamism, Christianity, Buddhism, Taoism, and Hinduism. Vocal opponents of the IR proposal have come mainly from among Muslims and Christians opposed to the immoral principle of allowing vice on what is viewed as a grand scale.

The proponents adopt a more utilitarian approach instead. Utilitarianism is an ethical dogma that holds that the right action is the one that produces the most utility for the whole of society (in our context), i.e. the ends justify the means, so long as most of the people benefit from it. As for what measure to adopt in the case of measuring the utility, the proponents of the proposal point to the obvious economic benefits, and look upon the social costs as somewhat minuscule in comparison to the huge benefits to society that the IRs will bring.

For the case of the IR proposal, the utilitarian argument won out in the end: the IR proposal makes good economic sense. As for the social costs associated with gambling and the presence of a casino, the measures seem to be substantial enough. On a more reassuring note, the government has promised that it will continually monitor and improve any social programs aimed at curbing problems stemming from the IRs.

Personally, in considering the various perspectives adopted in the Great Casino Debate, my research has drawn mainly on publicly available information, particularly from governmental sources. I am not personally an advocate of the actions of the PAP government, but with regards to the IR debate, I have found the speeches and statements made by various government ministers and MPs to contain concrete well thought out arguments for their case. From a civic perspective, I have also drawn upon information from other sources such as local news sites and other grassroots political commentary sites which are not regulated by governmental agencies.

Finally, to reiterate, I am of the view that the IRs, or the casino component of the IRs, will bring significant economic benefits to Singapore. The social costs as a consequence of the IRs will probably not be significant enough to overwhelm the benefits achieved, though this is something that can only be known in the future. As of now, the preventive measures put in place to curb the erosion of societal values, crime and problem gambling seem to me to be substantial and are ethically the right thing to do: in a sense, these actions are the social responsibility of the government given the economic action (the IRs) they have undertaken.

From my own moral standpoint, I do not think that gambling is immoral. I believe that gambling has the ability to ruin lives, but I believe in the right of the individual to exercise the freedom of using his financial resources as he pleased (provided it does no harm to others – here I adopt the deontological view). Researching the Great Singapore Debate has shaped my perspectives on gambling, the IRs, the ills, and the leadership exhibited by the Singaporean government.

Notes (Ed: Originally appearing as footnotes to the essay - I didn't have the time to figure out how to do it in Blogger):
  1. ‘Whale’ is a gaming industry parlance for serious gamblers who are heavily funded and high-rollers, with the ability to stake millions in gambling transactions.
  2. The Cabinet is composed of elected Members of Parliament (MPs) who are chosen by the Prime Minister to be Ministers. The Cabinet is responsible for all Government policies and the day-to-day administration of the affairs of the state. It is collectively responsible to the Parliament. Source
  3. Total Expenditure of Visitors (TEV) is one of the key performance indicators of Singapore's Tourism Sector. TEV measures the total revenue received by Singapore from tourism activity. It includes all payments and prepayments for goods and services made by visitors, as well as high yield shopping expenditure.
  4. Chia Teck Leng's paper also mentions his experiences, and details expounding why the ‘house’ always wins.
  5. In May 2006 Las Vegas Sands won the bid to operate the IR on the Marina Bay site. Recently, in Dec 2006 Genting Resorts won the bid to operate the second IR on the Sentosa site.
Articles referenced (I've lost my bookmarks for these pages, so no links here):
  • Alex Au, ‘Casino Decision: A Bigger Question Looms’, The Straits Times, 12 Nov 2004
  • Seah Chiang Nee, ‘Tragedy and the Casino Debate’, Little Speck
  • James Gomez, Workers’ Party Policy Statement on the PAP Government’s Casino Proposal

Parliamentary speeches referenced (I've lost my bookmarks for these pages, so no links here):
  • Speech by Dr Vivian Balakrishnan, Minister for Community Development, Youth and Sports, on 21 Apr 2005 at Parliament House
  • Speech by Prof S Jayakumar, Minister for Home Affairs, on 18 Apr 2005 at Parliament House
  • Speech by Prime Minister Lee Hsien Loong, on 21 Apr 2005 at Parliament House
  • Speech by Mr Khaw Boon Wan, Minister for Health, 19 Apr 2005 at Parliament House