Nomura Forecasts Casino Revenue Of $7bn For Japan

August 8, 2017 by Paul Butcher

Analysts from brokerage firm Nomura have said that Japan will be able to record gross gaming revenue of around $7 billion per year with the development of two major integrated resorts.

The brokerage firm’s estimates assume that there will be one full scale casino set up in Yokohama and another in Osaka.

Nomura analysts mentioned in their report that both the locations were ideal for integrated resorts citing reasons like large local population, strong tourist inflows and robust infrastructure support.

In a statement analysts from Nomura said

We are bullish on the prospects of the Japan gaming industry (if they were to receive the necessary legislative approval). We believe a US$7 billion gaming market would allow the two IRs to each generate annual property EBITDA of nearly US$1.6 billion (16 percent return on invested capital), assuming VIP and mass GGR tax rate of 13 percent and 23 percent, respectively (largely in line with that of Singapore).

The report noted that an urban integrated resort is likely to require an investment of at least JPY500 billion (US$4.5 billion). Nomura is also expecting gaming regulations to allow Japanese nationals to able to enter the casinos on payment of an entry fee, similar to the
Singaporean model.

Currently Singapore residents need to pay either SGD100 ($73.5) per day or SGD2,000 per year to gamble. Nomura analysts pointed out that if the Japanese regulations levy a higher entry fee than this, the projected mass gambling revenue could be far lesser since the assumption is that the mass market will be driven by local residents.

The Japanese government is currently working on a second bill that will cover the regulatory framework to be applied to the country’s newly opened gambling industry. Public hearings are being planned across nine cities nationwide during the course of this month in order to discuss citizens’ concerns regarding the risk of problem gambling and other social ills arising from legalized gambling.

Nomura analysts said that if the Japanese government allowed the development of regional casinos, then the gaming market would be much bigger than $7 billion. However they pointed out that local government officials were quickly moving away from the idea.

The analysts expect the mass-market segment to form the bulk of the revenue – mass gaming tables are likely generate revenue of $1.7 billion while slot machine GGR will reach $1.0 billion per property. VIP gaming could climb up to $750 million per year per casino. Industry experts expect the IR Implementation Bill to be presented for legislative approval in an extraordinary session this autumn.