The integrated resort to be developed in Osaka by MGM Resorts and its partners will rely on local demand for the majority of its revenue, according to investment bank JP Morgan, with any negative impact on neighboring jurisdictions unlikely to be material.
Marking a momentous occasion that has been decades in the making, Japan’s central government announced Friday that it had certified Osaka’s area development plan for an IR, bringing legal casino gaming to the nation of 125 million people for the very first time. It is estimated the IR will cost around US$9 billion to build with opening tentatively pegged for 2029.
In a note issued shortly after the announcement, JP Morgan analysts DS Kim and Mufan Shi said the long lead time means any negative impact legalized casino gaming in Japan will have on other Asian jurisdictions remains many years away but suggested such impact was likely to be minimal.
“At this stage, we … conjecture that the majority of demand is likely to come from local Japanese demand (like any other major gaming jurisdictions globally), and this is likely to be created incrementally – ‘supply drives demand’ as the decade-old mantra in the industry goes.
“Hence, we do not foresee any material impact on existing jurisdictions in Asia. Time will tell, and we shall find out in 7 to 8 years.”
Under Japan’s casino legislation, the Osaka IR will be permitted a maximum 3% of its total floor area for gaming, with gross gaming revenue to be taxed at a flat 30% rate. Locals will also be required to pay a JPY6,000 (US$45) entry levy for every day they visit with those visits capped at three times a week and 10 times a month.
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