Japan.
Just how big of a casino market can it be?
That question is being asked increasingly as the Japanese Diet heads into the homestretch of legislation to legalize casinos by June.
If the Diet does that, the first casinos could open by 2020, though that date is optimistic.
The latest analyst to try his hand at quantifying the size of the Japanese market is Chris Jones of Telsey Advisory Group.
Assuming Japanese spent about as much in casinos as Americans—0.40 percent of GDP—that would total $23.8 million in gaming revenue, Jones calculates.
However, a figure of $16.5 billion is more likely, he says for a variety of reasons.
Jones thinks the Tokyo area can support two casinos with an $8 billion project in Tokyo generating $5.2 billion in revenue and a somewhat smaller casino across Tokyo Bay in Yokohama generating $4.7 billion.
A $6 billion Osaka project could generate $3.8 billion, and large regional casinos in Hokkaido and Kyushu could generate $1.8 billion each, Jones figures.
Other analysts have variously estimated that Tokyo and Osaka casinos could do $5 billion to $10 billion a year each in gaming revenue, and that the country could do $20 billion to $40 billion overall, depending on how many regional casinos would be authorized.
Perhaps the most interesting parts of Jones’ analysis are the dynamics of Japan and political issues that go beyond win-per-capita and similar numbers that are in all such reports.
Here are some points worth considering:
• Japan’s population is about to decline steeply, from 128 million today to an estimated 97 million in 2050.
• Developing tourism is a key motivator. The government wants 18 million foreign visitors by 2016 and 25 million by 2020. Yet tourism, though rebounding since the recession, has failed to reach the government’s goal of 10 million persons a year.
• Tourism priorities. About 40 percent of Japan’s population lives in the Golden Route that includes Tokyo and Osaka metropolitan areas. It is one of the few regions in Japan not suffering a big population decline.
Government policy is to give tourism development priority to the outlying regions in efforts to boost their economies.
As such, emphasizing big resorts in Tokyo and Osaka would run counter to existing policy of not putting new tourism attractions in those metropolitan areas.
• Korea. Japanese casinos would cost Korean casinos about one-third of their business, Jones thinks. That, in turn, might motivate Korea to loosen its gaming regulations and allow its citizens to gamble in the country and thus crimp Japan’s potential.
• Singapore comparison. Much analysis to date has been in comparing Japan to Singapore on the assumption that the country will adopt the Singapore model of just a couple super mega resorts.
However, a big difference between the two is that the city-state of Singapore draws 15 million visitors a year. All of Japan draws less than 10 million.
• Sophisticated travelers. Japan, Jones notes, is not the Philippines or China. Its people are among the most sophisticated and discerning travelers. The country has more Michelin star restaurants than any other country in the world.
Given that, including local partners who have greater sensitivity to Japanese tastes will be important, Jones says.
• Japanese spend a lot on entertainment—12 percent of their income compared to 5.9 for Americans, making non-gaming amenities that much more important for resorts in Japan, Jones said.
