Consultant: lawmakers should not set capex minimums
Asia is likely to add several dozen new casinos in the next five years, and they’re going to be whoppers. According to the brokerage firm CLSA in a report cited by GGRAsia, most of the new casinos “will use the large-scale integrated resort model, which dwarfs many of the small existing operations in the region.”
“We ask whether Asia has too many casinos, and we’re pleased that their views are consistent with our findings that Asia remains an undersupplied gaming region,” said CLSA analysts Aaron Fischer, Marcus Liu and Jon Oh in the 200-page report.
Though Macau continues to struggle through its yearlong recession, the region remains a viable market “because of its large and growing middle class and the… high propensity to gamble,” said the CLSA report. “Asian countries also tend to limit gaming licenses to just a few operators who are willing to build massive integrated resorts.”
Among the 30 new casinos, the report counts the new resorts already in developing along Macau’s Cotai Strip. But CLSA is especially enthusiastic about Japan, calling it “the most lucrative market that has not awarded casino licenses.” The firm said it is “unlikely but not impossible that the IR promotion bill will be passed during an extraordinary Diet session during the late autumn of this year.”
David Green, chairman of Newpage Consulting Ltd., said governments should not specify “minimum capex for new IR developments,” as has been done in South Korea and Vietnam.
“Too high and either the offering will fail to attract interest or will fail to generate the income required to support that level of expenditure,” he said. “If the bar is set too low, a host jurisdiction risks getting less than it might reasonably have bargained for had it left the investment decision to market forces.”
