Analysts eye Japanese casino bonanza

Analysts eye Japanese casino bonanza

Thursday, December 22, 2016
Historic decision could herald birth of huge gaming market

Analysts believe the Japanese casino market could dwarf that of Las Vegas and would be second only to Macau after the parliament finally gave the nod to the Abe government’s plan to legalise casino gaming.

Writing in the wake of the 15 December vote in the upper house of the Diet, analysts at Morgan Stanley suggested the Japanese market would be worth over $20bn by 2025. That compares with gaming revenues figures of circa $9bn in Las Vegas and over $29bn for Macau.

The analysts suggested that the already existent Pachinko market – worth an estimated $200bn of buy-in in 2015 and around $35bn in customer losses – gives an indication of the potential.

“This is significantly larger than most markets that have opened in the past 20 years, including Singapore which achieved $4.8bn in gross gaming revenues in 2015,” the analysts wrote.

“Developed infrastructure, higher transparency, large high net-worth individual base and rising Chinese visitors should result in successful casino business in Japan. This could also force other neighbouring countries, like Korea, to relax restrictions on local participation.”

The analysts estimate that progress towards the opening of casino in Japan will be relatively slow. The Japanese parliament has yet to pass the implementation element of the IR promotion bill, and that is likely to take up to another 12 months.

The request-for-proposals process will likely take a further six months and only then would the construction begin which will likely take at least three years (going by the length of the construction period in Singapore) meaning the most likely opening date would be 2021/22.

The M Stanley team point out that if Japan performs in line with the trend across most other casino markets in Asia and the US in terms of the ratio of land casino win to the nominal GDP figure, then the Japanese casino market would be worth at least $15bn in gross gaming revenue. However, should it outperform in line with the ratio in Malaysia, which is substantially higher than average, then that figure might rise to $20bn.

Most of the big casino names have already shown an interest in getting involved on one of other of the two developments being proposed. Both Las Vegas Sands and MGM Resorts international have said they would be willing to commit up to $10bn in funds to be involved while Genting Singapore recently exited the South Korean market on the basis that it wished to save its firepower for a potential Japanese bid.

Totally Gaming says: As the estimated revenue figures from Morgan Stanley prove, the Japanese market is an exceptionally exciting development for the land-based casino industry. Guesses for potential market size will no doubt be as abundant as cherry tree blossom in the spring in Osaka, but whatever the numbers, it seems clear this is a huge slice of good news for both operators, suppliers and Japanese government tax revenues.

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