Analysts and industry heavyweights are largely in agreement when it comes to the potential value of Japan's casino industry.
The global gaming industry ended the year on a high note, after it was announced that the wheels were finally in motion for the development of resort-style casinos in Japan. However, while the approval of the Integrated Resort Promotion Bill has opened the doors to one of the world’s largest untapped gambling markets, the establishment of casinos in the Land of the Rising Sun will not happen overnight.
After more than a decade of deliberation, Japan has finally paved the way for the development of a fully-fledged casino industry, after the upper house of the country’s parliament – the Diet – approved a bill to legalise integrated resorts.
The 11th-hour vote, which came on the final day of the Diet’s extraordinary autumn session on 14 December, has set the wheels in motion for the establishment of a gaming industry that has the potential to dwarf that of Las Vegas.
Yet while analysts and other industry observers are largely in agreement when it comes to the potential value of Japan’s casino industry, there is little consensus regarding the timeline of the development of integrated resorts in the country
The recently-passed measure – the so-called Integrated Resort Promotion Bill – approves, in principle, that resorts will be constructed in an as-yet-unidentified Special Economic Zone. A second piece of legislation is due to be discussed by the Diet within the next 12 months.
After declaring 14 December an “historic day” for the global gaming industry, Akiyoshi Tsuruoka, general manager of Gaming Capital Management, a Tokyo-based gaming consultancy firm, said the development of mixed-use leisure and gaming destinations will not happen before 2024 – two or three years later than many analysts’ predictions.
“After the first bill passed, the government disclosed that it is ready to establish, in January 2017, the Promotion Team for Zone Preparation of Integrated Resorts, led by Prime Minister Shinzo Abe,” Tsuruoka told TotallyGaming.com. “This team will be tasked with formulating the second piece of legislation – the Implementation Bill – and institutional design work.
“A maximum of 100 persons – approximately double the current number – will be hired to the Integrated Resorts Promotion Team, as the government and regulatory authorities decide on the location of the Special Economic Zone.”
He added: “The designated local government will select a private operator and will oversee the urban planning and environmental assessments.”
Discussing Japan’s constitutional process, Mikio Tanji, chairman of Gaming Capital Management, said: “It may take up to a year to finalise these regulations, which would need to be discussed, once again, by the government. This might require one or two Diet sessions.”
Although Japan’s IR legislation could be ratified as early as 2018 or 2019, Tanji noted that the government would still have to decide upon the location of the casino and conduct a selection process to determine who would operate the resort.
The fact that the country lies in an earthquake zone and has strict building regulations would further impact the developmental timeline
“It would take at least six months for the basic design, and one or two years will be necessary for authorisation of construction,” Tsuruoka stated. “Therefore, the year 2024 is the earliest for opening because at least additional a few years will be taken for its foundation and construction.”
As the Japanese government prepares to take the next step to realise integrated resorts and spell out the conditions under which they will operate, several major global operators have already expressed a desire to enter the market. According to reports, Las Vegas Sands is willing to spend as much as $10bn to develop a mixed-use leisure facility in the country, while Melco Crown Entertainment and Wynn Resorts have also thrown their hats in the ring.
This is unsurprising, as for many years Japan has been viewed as the world’s largest untapped gambling market. Writing in the wake of the December vote, analysts at Morgan Stanley suggested the market would be worth over $20bn by 2025. That compares with gaming revenues figures of around $9bn in Las Vegas and over $29bn for Macau. Billy Ng, gaming analyst at Bank of America Merrill Lynch, forecasts annual industry-wide revenues of $40bn.
Regardless of the timing, the landmark decision to bring integrated resorts to Japan will present no shortage of new opportunities for many within the industry – not only the operators and their contractors, but also the ancillary businesses and service providers that are vital to the success of such large-scale leisure projects.
As the industry awaits a more definitive timeline, Clarion Events, organisers of ICE Totally Gaming, announced that the second edition of the Japan Gaming Congress will take place in Tokyo on 10-12 May. And this will be the ideal platform for all those looking to enter this lucrative new market.
“Japan has taken a major step forward which will see it become one of the next gambling superpowers,” said Kate Chambers, managing director of Clarion’s gaming division. “The opportunity to bring leading industry figures together represents a truly unique opportunity for dialogue with key government officials and international stakeholders on the proposed requirements.”
Totally Gaming says: While analysts have put forward a range of timeline projections, it is unlikely we will see the first integrated resorts in Japan until well after the dust has settled on the 2020 Summer Olympics in Tokyo. However, considering the fact that the idea to establish a casino industry in the country was first mooted 17 years ago, both operators and suppliers will be satisfied with the news that the doors are now certain to open on the world’s largest untapped gambling markets – whenever that may be