Inside Asian Gaming

INSIDE ASIAN GAMING | July 2013 22 IN FOCUS parties could submit their bids.” The report continues: “The process of passing the promotion bill is relatively simple, but drafting the implementation bill will likely require an extensive amount of collaboration among different parties and between State and municipalities. On top of this, there will likely be a widespread effort to pick the best practices from other regions to suit Japan’s particular needs. We believe that there is a significant lack of understanding of other jurisdictions at this point, and thus we think it is too early to predict the nature of regulation in Japan.” “Japan is potentially one of the largest gaming destinations in the world,” stresses Morgan Stanley. “We expect it to invite bids from foreign operators in the next 2-3 years and open two integrated resorts by 2019-20.” Japan’s Potential There is no doubt that casino gaming would prove a big earner in what is the world’s second-largest developed economy and third- largest in terms of nominal GDP. Currently, the market for gaming- related activities in Japan is around US$56 billion annually and the primary speculative pastime is pachinko, a form of quasi-gaming played on pinball-style machines that generates about US$36 billion in net revenue. That suggests enormous untapped demand for purer forms of gaming. Among the main factors Morgan Stanley identifies as contributing to the success of future casino resorts in Japan are the country’s big concentration of high net-worth individuals—Japan has the largest number of HNWIs in Asia with a cumulative net worth of US$4.2 trillion—and its strong infrastructure and air connections. Japan also benefits from proximity to Beijing and Shanghai, China’s wealthiest cities and a major source of visitors to casinos in South Korea and Singapore. Furthermore, the continued development of gaming across Asia bodes well for Japan’s future casinos, which will offer players across the continent a fresh choice of destination come 2019-20. Despite Morgan Stanley’s optimism, the report does point to Number of HNWls in Japan Vs China Source: Capgemini Lorenz Curve Analysis, 2012 Million People Japan China 2.0 1.8 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 2007 1.52 0.41 1.37 0.36 1.65 0.46 1.74 0.54 1.82 0.56 2008 2009 2010 2011 - Number of Japanese Visitors to Major Asian Gaming Destinations, 2012 Source: CEIC, Morgan Stanley Research Note: Singapore data is available through Sept 2012 only; Morgan Stanley has projected the data for the remaining three months. Korea 4.0 3.52 0.76 0.47 0.41 0.40 Million People 3.5 3.0 2.5 2.0 1.5 1.0 0.5 - Singapore* Malaysia Phillipinnes Macau Advertise with Inside Asian Gaming For advertising enquiries, please email: ads@asgam.com or call +853 2832 9980 Japan’s Existing Gaming/Gambling Market Source: Leisure White Paper 2012, Presentation of Director & Visiting Professor, Center for Amusement Industry Studies, Osaka University of Commerce. * Takeout rate for Pachinko is approximately 15%. Total No. of Drop Players Take GGR GGR 2011 (bn Yen) (in‘000) Out Rate (bn Yen) (US$bn) Pachinko 18,900 12,600 15%* 2,835 35.7 Lottery 1,440 38,400 54% 542 6.8 Central Horse Racing 2,294 9,300 25% 573 7.2 Local Horse Racing 33 2,900 25% 83 1.0 Bicycle Racing 623 1,200 25% 156 2.0 Motor Boat Racing 920 2,000 25% 230 2.9 Motor Boat Racing 8 600 25% 21 0.3 Total 56.0