Japan’s government is unlikely to table a bill to restrict horse racing or its pachinko industry in tandem with regulation to introduce casinos into the country, Union Gaming said in a note.
The firm was responding to media speculation that the government would introduce new measures to be seen to be responding to problem gambling.
“Ultimately we believe the legislature has enough on its hands in the form of the IR bill and is unlikely to touch the existing frameworks of pachinko, horse racing, etc. Further, given that pachinko is a homegrown industry we are inclined to think it could actually get some form of legislative support (protection), especially in the context of the likelihood of foreign-owned IRs.”
The note added that the government has been introducing more stringent standards that have made pachinko more of a leisure pursuit and less like gambling with the gradual reduction in payout ratios. It said Dynam Japan, the focus of the research note, had been at the forefront of the industry in installing lower volatility machines.
It said Dynam, whose share price is up 22 percent since mid-January when it initiated coverage, is likely to be a strong contender for a regional smaller-scale IR, but not part of the two larger licenses expected for Tokyo and Osaka.
Prime Minister Shinzo Abe’s government has begun the process of drawing up a bill setting out the details to regulate casinos, after enabling legislation was pushed through late last year.
So far, few details have emerged with the public focus remaining on alleviating problem gaming.