Gaming | Fitch: Japan revenues may be capped at USD6 billion

Credit ratings agency Fitch Ratings considers that Japan’s annual gaming revenues may be capped at USD6 billion (MOP48.5 billion) once new regulations under review by lawmakers are taken into account.

The much-anticipated integrated resorts bill is expected by most analysts to transform Japan into one of the worlds’ most lucrative gambling jurisdictions. Some analysts have previously said that almost-virgin market might be worth USD40 billion, with many others concurring that there is at least USD10 billion in annual revenues up for grab.

However, Fitch Ratings, citing new media reports that suggest the Japanese government may only permit one license in a major metropolitan area, believes that revenues could be capped far lower.

Japan’s integrated resort bill is set to reach the country’s legislature today. It will contain some of the regulations proposed by Japan’s ruling coalition, including a 30 percent gaming tax, a 6,000-yen entrance fee and limits on visitation for residents, according to Reuters.

The government is also proposing just three locations for integrated resorts with – reportedly – just one to be based in a major metropolitan area.

Accordingly, Fitch believes that the metropolitan integrated resort might generate USD3 billion in gaming revenue. That would put it in line with other strong performers in Asia-based casino jurisdictions, such as Singapore’s Marina Bay Sands and Macau’s City of Dreams and The Venetian Macao.

Meanwhile, two additional remote resorts might generate around USD1.4 billion each; an estimate based on Korea’s remote Kangwon Land Casino, which is unique in allowing locals to gamble providing they pay an entrance fee.

Unlike other analysts, Fitch holds that the most accurate way to predict potential gaming revenue is to compare with other incumbent casinos in the region.

It holds this opinion with a view to the new regulations, which the firm says will inhibit the ability of casino operators to tap into the 127 million inhabitants and almost 30 million annual visitors.

Earlier this month, a new agreement between Prime Minister Shinzo Abe’s Liberal Democratic Party and its junior coalition partner Komeito outlined the basic parameters of the integrated resorts bill. The LDP has previously said that it wants to secure parliamentary approval for the bill by June 20, 2018.

Several companies linked to Macau have announced intentions to compete for Japanese licenses, including Melco Resorts & Entertainment, Las Vegas Sands Corp. and MGM Resorts International. DB