The regulated casino industry is well versed in dealing with the issue of problem gambling and will address any concerns that might be raised in Japan as that country moves toward legalising casino business.
So said Andrew Klebanow (pictured), senior partner at business consultancy Global Market Advisors LLC (GMA) in comments to GGRAsia.
“Our industry has always been proactive in dealing with the problem gambling issue: it has demonstrated this in North America – in Canada and the United States – and the industry will devote resources to it – certainly a lot more than the pachinko industry has contributed to that topic,” stated Mr Klebanow, referring latterly to Japan’s home-grown wagering pastime.
He was speaking on the sidelines of the recent MGS Entertainment Show, a casino industry trade exhibition and conference held in Macau.
Japan’s governing Liberal Democratic Party and its ally Komeito have reportedly submitted a bill tackling gambling addiction to the country’s parliament.
It has been widely reported that passing such an anti-addiction measure would be a pre-condition for consideration of the country’s Integrated Resorts (IR) Implementation Bill, following the coming into force nearly a year ago of the IR Promotion Bill, which made a regulated casino industry legal in principle in Japan.
Brokerage Deutsche Bank Securities Inc said in a November 21 note – citing talks with management – that Japan suitor Wynn Resorts Ltd expected an update on outstanding legislation for Japan’s nascent casino industry only in the spring. Matt Maddox, president of Wynn Resorts, had mentioned on the firm’s third-quarter earnings call in October there was likely to be a “long process” before Japan could open its first casino resorts.
GMA’s Mr Klebanow described the emergence of Japan as a casino market as something of a “go-slow process”.
But he added: “Hopefully we will see something being announced in the first quarter next year, to get a better understanding of what it is going to look like.”
“My company issued a white paper in May on gaming revenue forecasts for the Japanese market under a variety of scenarios. We continue to participate in that market, we observe it,” stated Mr Klebanow.
GMA – a U.S.-based consultant to the casino gaming, hotel and airline industries, with offices in Taiwan and Thailand – has also been tracking developments in other emerging or expanding Asia-Pacific casino markets.
“Cambodia remains a work in progress. It requires a more robust regulatory regime. It is still overly dependent on live-dealer online gaming entertainment,” noted Mr Klebanow, referring first to a widely anticipated casino regulatory law for the kingdom, and second to the existence in the Cambodia market of online streaming of live-dealer casino games aimed at customers outside the country.
“GMA’s primary role so far in Cambodia has been conducting feasibility analyses, gaming market assessments, and forecasting what the market potential is for individual operators in terms of gaming revenue and hotel revenue,” said Mr Klebanow.
He also noted the interest among operators and investors across the globe regarding the possibility that locals would be allowed – on a trial basis – to gamble in the Vietnam market.
“Vietnam’s going to be an interesting story. I think something’s going to be emerging in the next few weeks. It remains to be seen what it is,” stated the consultant.
Two Vietnam gaming resorts are likely to be in the first wave of permits under a trial scheme to allow economically-qualified locals to gamble in casinos in the Southeast Asia nation, a panel moderated by GGRAsia was told during MGS Entertainment Show 2017.
It had been reported in the Vietnamese media last month that locals would be allowed to gamble at some Vietnamese casinos starting from this month, after a follow-up government decree on the topic in October.
But Mr Klebanow said that Vietnam would need to balance its domestic policy expectations regarding what the casino industry could deliver in terms of inward investment, with the commercial needs of the operators.
He stated: “I hope the central authority of Vietnam understands that one really cannot dictate to hotel-casino developers a minimum capital investment. Operators build what they build to meet the needs of the market. And placing an artificially high number – an unrealistic number – whether it is US$2 billion or US$4 billion, is ludicrous.”
That was a reference to reports that Vietnam had halved its demand that investors seeking a new licence for a so-called integrated resort would need to commit US$4 billion in capital spending.
Referring to the city-state of Singapore and its introduction in 2010 of two casino resorts, Mr Klebanow stated: “Singapore was able to demand a certain amount of capital investment because the market could absorb it, could support it. Vietnam could not.”
He added: “That coupled with a very high tax rate, makes Vietnam a very difficult place… There is an abundant tax rate, in the area of 32 percent on GGR [gross gaming revenue] – although with junkets you are allowed to deduct marketing expenses, which lowers the effective tax rate – but it’s still a high-tax-rate environment… Coupled with restrictions on allowing locals to play, and minimum capital requirements to get a licence, it makes it a very difficult place to do business.”
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Dec 13, 2018
Dec 13, 2018
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Lionel Leong Vai Tac
Macau’s Secretary for Economy and Finance