Japan is not likely to pass the Casino IR Introduction BIll in the current Diet session, due to time constraints and the US Presidential election, according to Morgan Stanley analysts.
The brokerage said it recently met with members of the House of Representatives in Japan to assess potential casino legalization, but said it does not foresee a passing of the bill in the current Diet session.
“First, the current session which ends at end-November does not leave much time for it to pass in both houses,” said MS.
“Second, after LDP pushed through the Trans Pacific Partnership (TPP) without consensus, it is unlikely to do this with the Casino IR Introduction Bill. Finally, uncertainty following the US Presidential election could divert attention away from the Bill.”
If the Casino IR Introduction Bill does not pass this session, it is possible to table the Bill again in the next spring season, said the brokerage.
On the other hand, “the momentum loss could push the timeline by another 2-3 years and lawmakers are hoping to have a casino open just after the 2020 Olympics to support the economic activities and visitation.”
Regarding the bill itself, the brokerage says a casino revenue tax similar to that observed in Macau and Singapore is unlikely, but there may be required contributions to cultural / public interest / education sectors. However, an entry fee is likely to be imposed on locals.
“Japan has a lower visitors to population ratio compared to most gaming destinations, thus it is important for integrated resorts to appeal to locals,” said Morgan Stanley, commenting on Japan’s potential.
“On the bright side, we think the Japanese market has higher transparency, higher population of high net worth individuals, and higher volume of Chinese visitors (just behind Macau, HK and South Korea). It has a proven and consistent size of its leisure and entertainment market, and developed infrastructure.”
According to the brokerage, Japan’s casino market size is estimated to be in the range of $7 billion to $20 billion.