Japan the next big gaming market
Prominent gaming analysts say future growth in the Asian casino industry will be fueled by small operators.
“The future as it relates to the growth of gaming in Asia—and the development of gaming in Asia—belongs to second-, third- and fourth-tier companies,” said Grant Govertsen of Union Gaming Securities Asia Ltd., speaking at the Macao Gaming Show.
“The reality is that there are only a couple of really significant opportunities in Asia for major resorts that will move the needle” for global giants, he added. “If you are an investor, there’s probably more money to be made investing in those second-, third-, fourth-tier stocks than there might be investing in the stocks of large casino firms.”
Analyst Marcus Liu of brokerage CLSA Ltd., agreed that small gaming jurisdictions in Asia will be populated by smaller casino firms. “I don’t think large international operators would be interested in a casino in Vietnam or Taiwan,” he said. “South Korea could have potential if they allowed locals to gamble.” Presently, South Koreans may gamble at only one of that country’s 17 casinos, Kangwon Land.
Chelsey Tam of Morningstar Investment Management Asia Ltd. said big operators would bypass smaller markets to avoid regulatory hassles and also because “in the end it really doesn’t move the needle for you.”
But there is plenty of room to grow, said Liu, who noted that the estimated 200 casinos now operating in Asia are “servicing a population of about 4 billion people,” compared to the United States, where more than 1,000 casinos serve about 300 million people.
“We still think the supply dynamics in Asia are very favorable,” he said. “There are large concentrations of casinos in pocket spaces, but there are also places where you need to fly for several hours before you get to a casino. But there are a lot of political impediments to opening casinos in a lot of these places.”
The one big untapped market is Japan, where gaming legislation has been stalled for several years, but now is being advanced by Prime Minister Shinzo Abe and a formidable group of supporters including TK. Japan is a “ready-made market,” Lui said. “Every big hitter in the world would want a piece of that.”
