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Japan Could Generate $7bn in Gross Gaming Revenue

Japan Could Generate $7bn in Gross Gaming Revenue
Fitch Ratings-New York-13 February 2014: The potential Japanese casino legalization will be the most heavily followed political process in the industry this year, while Korea and Taiwan also consider gaming liberalization measures, Fitch Ratings says. We estimate two integrated resorts in Tokyo and Osaka could generate roughly $7 billion in gross gaming revenues.

Japan has the potential to rival if not surpass Singapore as the second largest gaming market in the APAC region. The country's pachinko industry currently generates roughly $30 billion in annual revenues.

Gaming liberalization and developments in South Korea may occur sooner than in Japan. Genting Singapore plc, subsidiary of Genting Berhad (both rated A-/Stable) announced last week an agreement with Hong Kong-listed Landing International Development Ltd for a $2.2 billion project on the South Korea island of Jeju. South Korea restricts gaming from locals except for one casino and may consider relaxing those restrictions while loosening other requirements to encourage investment including integrated casino resorts.

These gaming liberalization measures would intensify the Asia-Pacific (APAC) competitive landscape, posing risks and opportunities for all major global players, including Genting, Crown Ltd (BBB/Stable), Las Vegas Sands (BB+/Positive), Wynn (BB/Stable), and MGM (B/Positive).

Macau's next phase of development on the Cotai Strip will open in 2015-2017, while the Philippines gaming market will continue to ramp up materially over the next few years. Gaming exclusivity periods in Sydney, Australia and Singapore expire toward the end of the decade, which could result in additional supply. The Queensland, Australia government is also considering additional licenses in Brisbane.

Fitch released today the second installment of Eye in the Sky: Gaming Jurisdiction Surveillance Monitor - a series of reports that provide an overview of the gaming regulatory and market environment within specific jurisdictions. This installment focuses on the Asia-Pacific region, outlining the regulatory, legislative and market environments in Macau, Singapore, Australia, the Philippines, and Japan.