Investment analysts are far less optimistic about the prospects for the casino market in Japan than the operators who are pushing hard for a licence.
The analysts are warning that returns and gross gambling revenue may fall far short of early high expectations.
Speaking on a panel at the ASEAN Gaming Summit, the analysts pointed to the government restrictions placed on the industry, the high operating costs and sizeable pledges of initial investment as all being factors that will hold back both the market potential and shareholder returns.
Tokyo is planning to limit the number of licences initially to three, with the total maximum floor space permitted for a casino at three per cent of the total. Locals will be charged an entry fee of about 6,000 yen and will have restrictions placed on the frequency of visits to the casino.
Praveen Choudhary, managing director of Morgan Stanley Asia, says he expects a market of about $9bn, based on two large cities and one smaller, though he added that this may be an optimistic number.
As well as the high build cost and operational costs, the casinos are unlikely to be able to work with junkets to bring in the VIP business and although the local pachinko industry generates sky-high revenues, the individual bets placed by Japanese are only about $20, he said.
Source: Asia Gaming Brief