Caesars still bullish on Japan
With the release of Japan’s report on the gaming regulations planned for its casino industry, analysts and investors have a more realistic view of a market that once was valued in the $25 billion range.
According to GGRAsia, brokerage Nomura says a Japanese casino industry with “two major integrated resorts” could eventually generate gross gaming revenues of $7 billion per year—far short of the highest estimate. Nevertheless, said Nomura, “We are bullish on the prospects of the Japan gaming industry (if they were to receive the necessary legislative approval).” And of course, Nomura noted in its report that additional casinos would mean additional revenues.
The brokerage said each of the casinos could generate EBITDA of US$1.6 billion per year, “making them the most profitable casino resorts globally” with a VIP and mass GGR tax rate of 13 percent and 23 percent, respectively “largely in line with that of Singapore,” said the Nomura analysts.
Nomura’s estimate is based on the licensing of two integrated resorts to be built in Yokohama and Osaka, considered the front-runners for the first two casino developments. “Both of these cities are ideal locations for integrated resort development considering their: significant local population (about 9 million); sizeable inbound tourist flow (10 million to 18 million per annum); and strong infrastructure support (with international airports and world-class theme parks within close proximity),” said the analysts. They also based their figures on locals being able to gamble.
Public opposition to casinos in the country remains high. According to a new poll from the Jiji Press 66.8 percent of Japanese oppose casinos and only 22.8 percent are in favor. Women are especially resistant to the idea; 14.3 percent favor the new industry and 74.7 percent are opposed. The Asia Gaming Brief reports that the opposition is due to concerns about social ills like gambling addiction; the possibility of gambling among young people; and safety issues. Seventy-six percent of those polled said they would not visit a casino even if it was in their neighborhood.
The government has said it will hold a series of public hearings on the matter. LDP Chairman for the project team Takeshi Iwaya told reporters, “After we have held our hearings and received the results of the public comments, then finally, in a positive sense, we will need to make our political judgments.”
He said the IR Implementation Bill should be passed into law “in the next Diet,” probably sometime between spring and summer 2018.
If the bill is passed in June 2018, “the resorts will be on track for opening in 2023,” said the Nomura team.
In a note last month, Union Gaming Securities Asia Ltd. said in a note that Japan may “snatch defeat from the jaws of victory” if its regulatory structure is too burdensome.
At least one global operator is still keen on getting into the new market, reported AGB. Caesars Entertainment sees Japan as a great way to expand in Asia. “Caesars is committed to pursuing this market aggressively. We think there will be opportunities for very successful integrated resorts,” said Steven Tight, president of International Development for the Las Vegas-based company.
“I think there’s strong evidence that this market will be extremely successful,” said Tight, “and I think that when you look at the analysts’ studies of the size of that market, it puts it probably the second-largest in the world behind Macau.”
