LAST WORD 54
Curbing enthusiasm Sharon Singleton
Managing Editor, AGB
After two decades of trying, Japan has finally bulldozered its IR Implementation Bill into law, paving the way for casinos at some point in the next decade.
I
nternational operators have been salivating at of casino area, GGR of US$4 billion, VIP and mass the prospect of access to a large and wealthy table yield of US$36,500 and US$8,500, respectively, domestic market, with a propensity to gamble, are necessary. That’s much higher than Singapore,” combined with a vibrant tourism market. The the firm says. There are also many other issues that still have not purpose of the legislation was initially to attract more tourists, though Japan pulled in 16 million visitors been determined, such as the level of foreign ownership. David Bonnet, managing partner at Delta State in the first half of this year, up 16 percent, without Holdings, reckons foreign operators may only wind the help of casinos. Forecasts are for Japan to rapidly become Asia’s up holding a minority stake in the first round of resorts, which is unlikely to sit well with some. second-biggest gaming market after Macau. To date, few Japanese companies have put their heads However, the irrational exuberance shown by above the parapet to suggest an many towards gaining a license interest in stepping into the IR in Japan may now need to meet business. Though that’s expected a hard dose of reality. Forecasts are to change now the bill has actually Many operators have been passed, perhaps giving a working on the ground for years for Japan to rapidly been clearer picture of the potential to build up a network and base become Asia’s shape of the industry. for a license push, already having Another element not to be spent many millions of dollars in second-biggest underestimated in the rush to the process. But at the end of the gaming market open up an IR in Japan is the level day, in the first round of bidding of public opposition. Although only three IRs will be permitted, after Macau. trillions of yen are spent each which will leave a great many year on pachinko, the industry disappointed stakeholders. has not yet won over hearts and Add to that, the industry will be tightly regulated and highly taxed, with a minds when it comes to the idea of casinos. Three opinion polls taken by major media maximum ratio of casino floor size to total IR set at just 3 percent. Visits by locals will be restricted to outlets the weekend after the bill was passed showed three times a week, or ten times over four weeks, while disapproval levels running at 60 percent and above. operators will need to pay 30 percent revenue tax, Prime Minister Shinzo Abe and his cabinet have also on top of consumption, property and income taxes. raised public ire in the way they have handled the As a result, some analysts are cautioning that the bill, showing little regard for public opinion or tact returns may not be as high as had initially been expected. in pushing on with debate on the legislation despite Morgan Stanley has run the numbers on what it deadly flooding. These factors may come back to haunt the industry will take for a resort in Osaka to make a reasonable return of 14 percent (EBITDA/total investment) on if IR friendly local politicians are unseated in the an US$8 billion investment. “Assuming 15,000 sq. m next round of local elections.
“
”
Asia Gaming Briefings | August 2018
