The casino business in Japan is facing bigger risks than expected. There are new plans regarding the regulation of the casino industry in the country and if they become reality, this could lead to unnecessarily burdening the bidding process as a whole.
This Monday saw the issuing of a note with the title “Japan’s Integrated Resorts bill fiasco” written by Grant Govertsen from brokerage Union Gaming Securities Asia Ltd. In it, he stated that the government is aiming to make the regulatory framework more and more stringent and place bigger restrictions on the field. Moreover, the whole project is expected to cost an enormous amount of money, which can potentially lead to postponing some of the bigger operations for a future moment, until funding is found.
Grant Govertsen is raising some important questions about the development of the casino industry in Japan. In relation to Singapore casino resort operated by Las Vegas Sands Corp., he says that it is very likely that it will end up being a duplicate of Marina Bay Sands which costs US$10 billion. This amount of money is estimated before any of the land costs and the expected cost for infrastructure are paid by the developers. In addition to the inflation and Japan cost-premium, this will make the situation even more complicated.
The Japanese government is frequently looking towards the Singapore model and the way they regulate their casino industry. In its essence, this approach includes an entry levy for local gambling enthusiasts. It also implements the family factor with its self-referral and family-referral schemes. They help in case there are problematic gamblers who need to be effectively excluded. By doing this future issues can be prevented. Japan’s regulatory framework can learn a lot from the style of operation of the Singapore casino industry.
What needs to be taken into account is the scale of the two industries. It is very concerning that Japan’s government is aiming to duplicate the gaming style of Singapore without considering that the populations of Tokyo and Osaka are many multiples that of Singapore. They are trying to limit the size of gaming floors to that of the Singapore ones, which are 15,000 square meters. Also, the government wants to see bigger growth in the incremental tourists in comparison with what Singapore managed to reach, so taking the same measures does not make sense.
Another important factor is the said entry fees, which are also in the plans for Japan’s gambling industry. According to Steve Gallaway Managing Partner at Global Market Advisors LLC, if the government sets them too high this will make people walk away. What is necessary is money generated through gaming in order to make a profit and finish the already planned integrated resort.