Analysts: Japanese Casino Market Will ‘Underwhelm’
Posted on: March 21, 2019, 07:03h.
Last updated on: March 21, 2019, 07:03h.
The Japanese casino market appears to be shrinking and it’s still several years away from opening its first resort.
The country has for the past decade been touted by analysts as the sleeping giant of casino gaming, with the potential to quickly surpass Las Vegas as the second biggest market in the world, after Macau.
Now, with legislation to legalize casinos finally passed, they’re not so sure.
At the ASEAN Gaming Summit in the Philippines this week, Asia Gaming Brief reports the consensus was that revenue could fall short of expectations — and will certainly be far, far less than the $40 billion investment group CSLA was projecting back in 2016.
That estimate has been tempered since. In April last year, Morgan Stanley suggested the market would be worth $15 billion per year by 2025. The reassessment had been informed by recently drafted regulations concerning key issues like restrictions on the size of the market and taxation.
Smaller Than Nevada?
But speaking as part of a panel discussion at the summit on Thursday, managing director of Morgan Stanley Asia Praveen Choudhary said he now expects the market to be worth around $9 billion — that’s less than Nevada’s, which generated $11.9 billion in 2018.
Choudhary concedes that even this figure may be optimistic, as it’s based on two large cities and one smaller one picking up licenses.
Japan’s third biggest city, Osaka, has fully embraced the idea of hosting an integrated resort and remains a frontrunner, but its first and second biggest cities, Tokyo and Yokohama, are less enthused.
Casinos are unpopular with the public — a poll commissioned by Yokohama’s municipal government last year revealed that an incredible 97 percent of the city’s residents were averse to the idea of a casino in their city.
As well as limiting the number of initial licenses to three, policymakers have agreed that gaming space must be restricted to just three percent of resort’s total floorspace. Meanwhile, locals — but not tourists — will be charged an entry fee and will have limits placed on the frequency of their visits.
Junkets Frozen Out
But perhaps the main reason for analysts’ newfound pessimism is that the junket industry will not be permitted to operate legally within the Japanese market, a factor that will restrict the Chinese VIP segment, worth billions each year to other Asian markets like Macau, Singapore and the Philippines.
The junket industry allows high rollers to swerve strict rules on the outflow of cash from the Chinese mainland by lending them money so they can gamble freely, before settling up, usually when they return home.
Analysts also cited the level of foreign ownership as a concern for operators. While LVS, for example, has vowed it will spend “whatever it takes” to gain a foothold in the market — and is seen as a frontrunner — it is unlikely get involved unless it has full control.
The panel said it expects policymakers to stipulate resorts must be developed by a consortium involving Japanese companies.
Related News Articles
Related News Articles
October 7, 2021 — 7 Comments—
September 30, 2021 — 7 Comments—
October 4, 2021 — 6 Comments—
September 18, 2021 — 4 Comments—