Were Japan to launch its integrated resort (IR) initiative today, the country would see economic incentives unrivaled by virtually any other activity. According to brokerage Sanford C. Bernstein, the Japanese IR industry, with just three IRs operational, is likely to see gross gaming revenue (GGR) ranging from $7 to $8 billion each year. However, as the country is still putting the final pieces of the gambling framework together, when that revenue could start to flow is not known.
In a report on the subject of Japanese IRs from yesterday, Bernstein analysts asserted, “We would estimate with two major properties (i.e., in Osaka and Yokohama) and one regional property, GGR at ramp up could be in the range of U.S. $7 billion to U.S. $8 billion.” The analysts – Vitaly Umansky, Eunice Lee and Kelsey Zhu – point out that the figures are not concrete and based on speculation and “guesstimation” of what could happen.
The analysts add, “Non-gaming revenue (which in Macau represents less than 10 percent of gross revenues and in Singapore 25 percent) would be a higher percentage in Japan and could be in the U.S. $2 billion to U.S. $3 billion range. Thus, total gross revenues for two metropolitan-city IRs and one regional IR could reach U.S. $9 billion to U.S. $11 billion.”
Once Japan’s IR market is alive and well, it will most likely “take some gaming market share” from other Asian gambling destinations, including South Korea and the Philippines, but most likely won’t impact operations in Macau and explain, “The three Japan IRs that will be authorised in the first round will be located across the country in three different municipalities. This is [a] very different market structure of creating a centrally located critical mass (like Macau, Manila, and Singapore which all benefit from their critical mass locations).”
While many had expected the bidding wars to take place this year, it now looks like casino operators are going to have to continue to schmooze local governments a little longer. The analysts believe that the bidding process “will likely take another 12 to 18 months” and this could mean that the first IR launches won’t be seen in 2024 as previously expected, but only as early as 2026.
