Sector Report

Gaming – It’s almost raining yen!

by Jay Defibaugh / May 8, 2019


Five years after putting our first cards on the table, with our seminal report, It’s Raining Yen!, we no longer question whether casinos will ever be built in Japan: at this juncture, Japan’s gaming market is set to be the world’s third largest – it’s time to leave those umbrellas at home and revel in the downpour. Looking at progress on legalisation, estimated revenue, potential integrated-resort locations and key players, we find the humidity is definitely rising. Meanwhile, our proprietary study compares prevailing local attitudes towards IRs to the mood we found five years ago.

We are now at a stage when we can ask the more interesting questions
After two decades of uncertainty as to whether Japan would ever legalise casino gambling, we need no longer worry about whether integrated resorts will ever be built. Today, we can pose much more interesting questions about the type of property, scale, location and major players in what will be a high-profile and highly lucrative new market, which has been described as the Holy Grail of the gaming industry.

Share-price catalysts are approaching
As early as this year and into 2020, local governments will choose the consortia that will represent their regions in a nationwide selection process. Late next year or maybe early in 2021, the national government will then choose three locations from among those put forward to build the first integrated resorts.

First-phase IRs in Japan will have an equity value of US$44bn
The first-phase integrated resorts will have an equity value of US$44bn, a scale material for any overseas operator or local company that is part of a winning consortium. The city of Osaka is the leading candidate at this point to win a licence for an integrated resort that we estimate will cost US$10bn to build, the world’s most expensive to date.
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