Morningstar: Japan’s Integrated Casino Resort Market Should Be Less Restricted

Morningstar: Japan’s Integrated Casino Resort Market Should Be Less Restricted

Japan’s forthcoming integrated casino market won’t be able to achieve its maximum revenue potential should the federal government implement various restrictions as expected.

That’s according to global investment firm Morningstar, which voiced various concerns over the regulations in a note issued this week.

Equity analysts Chelsey Tam and Dan Wasiolek point to a likely 15,000-square-meter (161,458 square feet) cap on casino floor size, as well as a potential limit on the number of times a Japanese citizen can enter the gambling venues, as the predominant policies that will curb revenue.

“We think recent recommendations proposed by Japan’s government-appointed integrated resort panel could restrict gaming demand on the island nation, if stringently enacted, leading to reduced capital expenditure and lower tourism (one of Japan’s main goals is increasing tourism),” the Morningstar analysts stated.

Main Problem: Problem Gambling

Regulating gaming floors to 161,500 square feet would make the Japanese integrated casino spaces much smaller than those found in Macau. For카지노사이트 example, The Venetian Macau is 546,000 square feet.

But while Japanese lawmakers in President Shinzo Abe’s ruling Liberal Democratic Party want to increase tourism through the IR properties, they want to do everything in their power to make sure they also don’t increase problem gambling rates.

Many Japanese residents frequent pachinko halls, a game that’s played for ultra-low stakes. The machines resemble inverted pinball games. Nearly every other form of gambling is presently outlawed. That, of course, will change with the integrated casino bill.

A 2014 study from the Ministry of Health, Labor and Welfare found that 5.36 million Japanese, or nearly five percent of the adult population, are at risk of becoming a problem gambler.

With the public largely opposed to commercial gambling, a 2016 national poll finding just 12 percent of citizens in support of legalizing casinos, politicians are trying to have it both ways.

Probable Outcome

The Japan legislature, known as the National Diet, will unveil the final terms of its gambling bill in December. The body has released few details on what it might entail, but plenty of rumors have surfaced.

Here’s the general consensus:

The locations of the two casino resorts are expected to be in Tokyo, and the other in either Osaka or Yokohama. Mass market gaming will be taxed at 22 percent, and VIP play at 12 percent. Japanese citizens will be restricted to a number of annual visits, and will pay an entrance fee that could be as much as $100.

Las Vegas Sands and MGM Resorts are the leading candidates for the coveted licenses, and will likely construct complexes that will cost in the neighborhood of $4-5 billion. That’s according to Sands’ billionaire founder and CEO Sheldon Adelson. Companies had earlier pledged investments as high as $10 billion, but have reduced those numbers as potential strict regulations surface.

Japan is basing its casino industry off Singapore, “given its success in controlling gambling addiction while aiding economic growth,” Tam and Wasiolek explained. But the analysts feel the bigger populations in Tokyo, Osaka, and Yokohama warrant much larger casino floors than in the less-populated Singapore.

“The population within a 41-mile radius of Tokyo and Yokohama is 4.7 times larger than Singapore. The density in these cities could require more tables to satisfy demand,” they concluded.

Atlantic City Casino Tax Appeal Settlements Covered Through Municipal Bonds

Atlantic City reached property tax appeal settlements with numerous casinos last month, and the state government says it’s funding the payments through the issuance of municipal bonds.

Bally’s, Caesars, Golden Nugget, Harrah’s, Tropicana, and the former Trump Taj Mahal and Trump Plaza all reached tax deals that totaled $68 million, a staggering바카라사이트 sum, but also one that saved many millions for Atlantic City. New Jersey says it has already sold $68 million in state bonds to cover the disbursements, and even better, the debt investments were issued on relatively low interest rates.

State-appointed takeover leader Jeff Chiesa, a former US senator for New Jersey, revealed that the bonds have a 4.1 interest rate, which will save the city and state millions.

“The fact that the city obtained bond insurance and sold the bonds at a low-interest cost means it is well-positioned to responsibly pay down the tax refunds it owes to casinos while preserving critical public services,” Chiesa explained in a statement. He went on to say that the fiscal turnaround is excellent considering the city “was contemplating bankruptcy before we stepped in to manage its finances.”

Under the current PILOT (Payment In Lieu of Taxes) program, casinos guarantee the city $120 million annually. In exchange, the town cannot increase property taxes on the resorts, but the resorts also cannot appeal the fee in the future.

Tax Refund

Beginning in 2009, as the US recession was firmly felt across the nation, Atlantic City casinos began appealing the valuations of their resorts. The local government, in desperate need of revenue as gaming and tourism plummeted, decided to instead increase the assessed values of the properties in order to gain additional taxes.

A legal fight ensued over the course of many years, with courts eventually siding with the resorts that they had indeed been paying far too much for several years.

The Borgata, the city’s biggest revenue earner, sent in $165 million more than it should have between 2009 and 2015, a court deemed. On the hook for the return, Chiesa’s takeover office managed to swindle a sweet deal by settling with the MGM-owned resort for just $72 million.

Cleared for Recovery

The looming appeals was a leading reason New Jersey Governor Chris Christie (R) and the state legislature decided to take control of Atlantic City’s finances. The former presidential candidate said Mayor Don Guardian’s inability to settle the property tax disputes forced the state to intervene.

Uncertain as to just how much property tax money Atlantic City was going to be forced to return impeded the beachfront gambling town’s financial future, Christie explained.

“The settlements reached with these casinos are the culmination of my administration’s successful efforts to address one of the most significant and vexing challenges that had been facing the city,” Christie said last month.

Chiesa has the authority to govern the city’s finances for up to five years. Both the state and Atlantic City government hope the recovery is executed much faster.