Singapore has just two casinos and an entry fee
Many of the world’s premier casino operators are preparing to make a play for Japan, which legalized integrated resorts with gaming in December.
Analyst Alex Bumazhny of Fitch Ratings says the industry may be limited to just two large operations, which could keep annual revenues between $5 billion and $10 billion annually, far less than the $20 billion to $40 billion estimates that have been floated in the past year.
“I don’t think Japan is going to catch up with Macau for the simple reason that Japanese lawmakers, when they’re making the bills, will limit the amount of gaming that could take place. What we’re talking about is two to three large integrated resorts, maybe a couple more regional type of small casinos, so limited amount of positions,” Bumazhny said.
He added that the country’s government “may even limit locals from gambling or have a fee like they do in Singapore where locals have to pay a fee to get into the casinos. So, all these things may constraint the actual amount of revenue that could be generated in Japan.”
Singapore’s first and only casinos, Marina Bay Sands and Resorts World Sentosa, opened in 2010. To curtail problem gambling, they impose entry fees of S$100 (US$70.90) on every citizen and permanent resident. The city-state also has a list of people barred from entering the casinos. Those names include those identified as having financial difficulties or put up by themselves or family members.
Interested operators include MGM Resorts International, Wynn Resorts, Hard Rock International and Galaxy Entertainment. Lawrence Ho, chairman and chief executive of Asian casino developer Melco Crown Entertainment Ltd., has said his firm will “spend whatever we need to win” one of the coveted licenses, and has already identified two possible locations in the city of Osaka, which along with Yokohama is most often named as a contender for one of the IR licenses.
According to Forbes, the Las Vegas Sands Corp. is willing to invest a minimum of $10 billion in a Japanese development to shore up its interests in Asia. “While Las Vegas Sands is a strong player in Macau, it appears to be losing ground in the region,” the publication stated. “In Q4 2016, the company’s revenues missed consensus estimates due to underperformance in Macau.” With five properties in the region, the Sands “carries the risk of cannibalization in Macau” and “faces intense competition from other players such as Wynn and MGM.”
As a new market opens up, the company that invested $6 billion in Singapore “is likely to increase this number for Japan. Investing heavily in the region will ensure that Las Vegas Sands captures this strong growth opportunity, which should diversify its revenues and drive growth in the long term.”
The government has until December to come up a regulatory framework as well as details of licensing, taxation and development. A competitive bidding process will follow. With all the hurdles yet ahead, Japan’s casinos are unlikely to be open in Japan before 2023.
