In a new research paper, Global Market Advisors (GMA) says the Japanese government will not delay the official application period (January-July 2021) for local governments seeking to host an integrated resort (IR).
One reason is that if the process is postponed, it’s less likely that Prime Minister Shinzo Abe, cheerleader-in-chief of the long-awaited industry, will be spearheading the project.
The global gaming consultancy also expects Tokyo—Japan’s capital and the largest city in the world—to be among the IR applicants. To date, Tokyo has not declared for an IR, but GMA says it’s “not a matter of if but when” Tokyo announces that it’s a contender.
A maximum of three IRs will be permitted nationally in the first phase of market liberalization, with more to be added in seven years at the government’s discretion. Local governments who want to host one of the megaresorts must identify a private-sector partner, then apply to the national government for permission.
As reported by GGRAsia, Japan is under a state of emergency to try to contain the Covid-19 pandemic. The Tokyo Olympics, which were to have taken place this summer, have been delayed until next year. But the IR process will likely roll out without major interruption, according to GMA, though not without ongoing opposition.
The GMA paper noted: “With public opinion still not in favor of IR implementation, as the public has not been appropriately educated on the subject through a targeted education campaign that highlights the IRs, there is still a bill in the Diet [parliament] that would abolish the IR policy entirely.”
GMA believes Nagoya and Tokyo should be in the mix, though they have “yet to formally raise their hands in the process.” The other four prefectures expected to bid are Nagasaki/Sasebo, Osaka, Wakayama and Yokohama.”
The GMA report described the Japan market as “a ship worth sailing,” even as Japan suitors tighten their belts during the global economic crisis. Operators such as Melco and Las Vegas Sands had expressed the willingness to spend as much as US$10 billion for a single resort, but that enthusiasm may have waned somewhat due to questions about the regulations and the size of gaming operations the government will allow. “While it is more expensive to build an integrated resort in Japan, the US$10 billion figure was already in question as operators and prefectures were trying to fully understand the opportunity from a financial perspective,” stated GMA.
“While not an original part of any process, the stress test on balance sheets that has not occurred in previous RFI (request for information) or RFC (request for concept) efforts will now likely be added,” said the consultancy. It was referring latterly to preliminary phases of discussion between Japanese local governments and private-sector firms.
GMA said one of the biggest hurdles for would-be investors was that they were being asked for their ideas – and in the case of Osaka even to participate in a request-for-proposal (RFP) phase – before knowing the firm details of national government policy. The consultancy described that as “putting the cart before the horse”.
“Operators that are bidding in each of the prefectures are now being asked to provide commitments to the market when they still do not know the full rules that will be implemented and, therefore, cannot yet fully understand the market opportunity,” stated the consultancy.
Several prefectures have already announced the postponement of their preparation timetable to host a casino scheme. GMA said there’s a risk of “killing the golden goose” in terms of the burden of regulation, citing as an example an idea that emerged last year, that foreign visitors should be taxed on any winnings earned in a Japan casino, and limits on the size of gaming areas.
“If this tax would be implemented, it would destroy the market opportunity on foreign gamblers,” GMA said.
