Japan’s casino market would be worth around US$15 billion annually, of which Tokyo would account for almost half, under recently agreed regulations between the ruling Liberal Democratic Party (LDP) and its coalition partner Komeito.
The US$15 billion figure is an updated estimate by financial services firm Morgan Stanley in the wake of much greater clarity on key issues such as casino size, entry fees and taxation.
The LDP and Komeito last week settled on the development of three new integrated resorts upon passing of the IR Implementation Bill, with a flat tax rate of 30%, entry fee for residents of ¥6,000 (US$56) and maximum casino size of 3% of total IR floor space.
Taking those measures into account, Morgan Stanley estimates Japan GGR of US$15 billion by 2025 and EBITDA per city in the range of US$1 billion to US$2 billion assuming an IR investment of no more than US$10 billion.
Morgan Stanley analysts also predict that Tokyo would provide the greatest return should it be awarded one of Japan’s IR licenses, including 50% of foreign spend and 40% of the total.
“Based on foreign visitation numbers in each city, we estimate roughly 50% of US$3.9 billion foreign GGR goes to Tokyo, 30% to Osaka and 10% to the third city,” it said.
“Based on the income level/GDP, infrastructure development and tourism attraction, we would expect Tokyo to take around 40% of the total US$15 billion GGR at US$6 billion market size and Osaka’s market size to be slightly smaller at US$4 billion.”
However, analysts note that while Osaka seems to be a lock for one of the licenses, Tokyo is no guarantee given it “seems to be busy with the [2020] Olympics.”
“While Osaka seems to have all its stars aligned, there is no certainty around other locations,” the report says. “Tokyo seems to be busy with the Olympics, leaving Yokohama as one of the candidates. Tomakomai, a resort city in Hokkaido, Wakayama and Nagasaki are other interested locations.”
Morgan Stanley said it would be difficult for any new IR to open before 2023 – pointing to Las Vegas Sands and Genting Singapore’s three to four year timeline for construction before opening their Singapore resorts in 2010 as a guide. It added that it could still be another six to 12 months before the implementation bill can be passed through the Japanese Diet.
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