Japan’s long-awaited IR Implementation Bill is looking increasingly likely to be delayed until 2018, according to financial services firm Morgan Stanley.
Revelations this week that the gambling addiction bill – a key component in progressing any casino legislation to the next stage – would likely not be passed this Diet session by 18 June places huge time pressure on the government if it hopes to set in place the necessary framework for the IR Implementation Bill by the fall.
“It appears difficult for the gambling addiction bill to be passed in this Diet session by 18 June,” Morgan Stanley analysts Praveen Choudhary, Alex Poon and Thomas Allen said in a report released early today.
“This could push the IR Implementation Bill to Diet sessions in 2018.”
It follows a series of new suggestions released this week by the IR Promotion Secretariat proposing even tighter restrictions on Japanese IR operators than originally thought.
They include the likelihood that Macau-style junkets won’t be allowed, much like in Singapore, which Morgan Stanley warns “would mean either much smaller VIP business, or very high bad debt provisions.”
Other measures mooted include limiting casino floor space to 3% of the total resort area, restricting locals to buying chips with cash only and neither sports betting nor online gaming being allowed.
If implemented, these measures would likely restrict the ability of Japanese IRs to fulfil their full potential, with Morgan Stanley noting the ban on sports betting “is similar to Macau and Singapore somewhat, but explosive growth, like in the Philippines, may not occur in the absence of proxy betting and junkets.”
The report also notes that Singapore casinos restrict their casino floor space on size rather than percentage, with the 15,000 square meter limit amounting to 3% in Singapore as opposed to 5% or higher in Macau’s casinos.
Morgan Stanley had previously listed its concerns for foreign operators as being stiff competition with only a few winners, low equity stakes and uncertain regulations. It said that this week’s proposed measures were not surprising “but they would mean more stringent regulation.”
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