The policy focus publicly of the Japanese government regarding casino resorts is likely to remain on social harm mitigation, with key variables for the global industry, such as the number and location of licences, and tax rates, worked out behind the scenes, said a Wednesday note from brokerage Union Gaming Securities Asia Ltd.
Prior to the enactment of the IR [Integrated Resorts] Promotion Bill in December – the enabling legislation to allow casino business to be legal in Japan – discussions regarding location for resorts had centred on a limited number of licences for large-scale venues in major metropolitan areas and possibly a few smaller casino resorts in less densely populated regions. Tokyo (pictured), Yokohama and Osaka are the main major metropolitan areas mentioned by investment analysts as possible locations for integrated resorts.
On April 4, the Japanese government began work on the second – regulatory –piece of legislation related to casino gaming in the country, Japanese newswire service Jiji Press reported.
“At least in public we would expect much of the focus to remain on the social aspects of IRs (e.g. problem gambling),” said Wednesday’s memo from Union Gaming analyst Grant Govertsen.
“Behind the scenes we would expect the relevant details to be hashed out, including number and locations of licences, tax rates, etc,” he added.
Mr Govertsen noted: “To date the government has given little indication of the regulatory nuts and bolts other than confirming it will follow international standards set in jurisdictions like Singapore or Las Vegas.”
A number of Japanese politicians and academics have suggested Japan might adopt a “Singapore-style” form of regulation for a home-grown industry, including the possibility of an entry levy.
Additionally, several international casino operators have already started generalised lobbying regarding location for such resorts. Sheldon Adelson, chairman and chief executive of Las Vegas Sands Corp, on February 21 at the CLSA Japan Forum 2017 in Tokyo, reaffirmed the group’s interest in building a casino resort in a major urban centre in Japan. At the same conference, Lawrence Ho Yau Lung, chairman of what is now Melco Resorts and Entertainment Ltd, reportedly described Tokyo as “the holy grail” for a casino resort.
Union Gaming’s Wednesday note added – referring to Dynam Japan Holdings Co Ltd, a Hong Kong-listed operator of Japanese pachinko halls: “Although we expect Dynam to be a strong contender for any regional smaller-scale IR licence, we do not necessarily expect them to be part of the two larger licenses issued for Tokyo or Osaka.”
As of September 30, Dynam operated 444 pachinko halls, according to company data.
The brokerage had said in a January report that Dynam had one of the largest consumer databases in the pachinko sector, and was “ripe for strategic investment on the part of an international integrated resort operator”.
Dynam had mentioned in a June 2015 filing it was interested in entering what it termed the “resort development business” in Japan. It added that a target site was land in Shimonoseki, the largest city of Yamaguchi prefecture on the island of Honshu in Japan.
“Recent media reports have suggested that Japan will pursue a bill that further restricts existing forms of gambling (e.g. horse racing), as well as pachinko, under the guise of stepping up problem-gambling measures,” said Mr Govertsen in his Wednesday memo.
“Ultimately we believe the [Japanese] legislature has enough on its hands in the form of the IR [implementation] bill and is unlikely to touch the existing frameworks of pachinko, horse racing, etc,” added the analyst.
Apr 26, 2018
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