Pachinko should be unaffected by IRs
In a research report compiled by Las Vegas-based research firm Global Market Advisors, Japan would be well served to develop one site that would host multiple casinos. The white paper entitled, “White Paper: Japan Integrated Resorts,” suggests that the concept of allowing multiple operators to develop integrated resorts on the Yumeshima Island in Osaka would create critical mass and a true tourist destination.
“This would compete with Las Vegas, Macau, and Singapore in generating nearly $11.0 billion from that district alone,” said Steve Gallaway, managing partner of GMA.
As the Japanese government works to complete legislation that will bring casino resorts to the country, it’s making clear that the facilities will be resorts first, and casinos second.
The two to three integrated resorts expected to be approved in the country “will greatly benefit tourism, regional promotion and job creation” and help make Japan an international destination, Chief Cabinet Secretary Yoshihide Suga told reporters at a press conference on April 6.
According to the Nikkei Asian Review, the legislation would strictly limit gaming space and require profits to partly cover management fees for connected facilities. The Review reports that Japan hopes to use its new resorts as “growth engines” in case the economy declines after a planned consumption tax hike in October 2019 and the 2020 Tokyo Olympics.
According to Gallaway, Japan “has the potential to be one of the largest gaming markets in the world, generating up to $24.2 billion at six different locations by 2030.”
Existing forms of gaming, like pachinko parlors, should be unaffected by the introduction of casino resorts, said Union Gaming in a note.
“Ultimately we believe the legislature has enough on its hands in the form of the IR bill and is unlikely to touch the existing frameworks of pachinko, horse racing, etc. Further, given that pachinko is a homegrown industry we are inclined to think it could actually get some form of legislative support, especially in the context of the likelihood of foreign-owned IRs.”
Problem gambling will be a major focus of lawmakers as they formulatePart II of the casino legislation, the regulatory bill. “At least in public,” observed Union Gaming analyst Grant Govertsen, “we would expect much of the focus to remain on the social aspects of IRs.”
In the GMA reports, UNLV’s Bo Bernhard says responsible gaming will be a key element of the regulatory bill.
“In writing the legislation and creating a responsible gaming structure, the government can benefit from the best evidence-based and research-based solutions that other jurisdictions have implemented worldwide,” he says.
Beyond that, the details will be worked out “behind the scenes,” he added. “To date the government has given little indication of the regulatory nuts and bolts other than confirming it will follow international standards set in jurisdictions like Singapore or Las Vegas.”
Japan is expected to open two to three casinos with the locations and operators to be chosen by 2019, however at the moment, the number of licenses that will be awarded is unknown.
Hong Kong-listed pachinko hall operator Dynam Japan Holdings Co. Ltd. appears to be “a strong contender” for a regional smaller-scale IR license, according to Govertsen. The company is looking for a license to operate in the Yamaguchi prefecture, where it has strong ties, the website reported.
