Opportunities for growth in the U.S. and abroad may be tightening, but the introduction and expansion of new gaming opportunities in Japan, Brazil, and East Asia should be sufficient to serve as an engine for future industry growth, a panel of gaming executives said at a G2E panel Tuesday morning.
After engineering global growth by picking low-hanging fruit for nearly two decades, worldwide expansion opportunities have tightened because of the demographic makeup and governmental delays in the regions into which casino operators are looking to move.
“When we start going through the regions that are seriously considering casino development, a lot will be determined by what governments determine – the what, when and how much,” said Walter Bugno, an executive with IGT’s international division.
While markets in North America and Western Europe have largely reached maturity, there remains enough VIP and mass market demand from mainland China, despite its economic slowdown, and eventually from India, to stimulate gaming growth in the region for 30-40 years, said Alan Feldman, Executive Vice President at MGM Resorts.
Though Macau’s struggles continue because of China’s ongoing corruption crackdown, the general estimate is that the territory only penetrated one percent of the mainland Chinese market. Because of China’s enormous population, the supply of both VIP and mass market gamblers from China is far from being tapped out, said Bugno. There is plenty of room for growth in other peripheral East Asian jurisdictions like Australia, Cambodia, Saipan, Singapore, and South Korea, which have found other ways to attract Chinese VIPs and junket operators.
The panel pointed to Japan as the potential game-changer market in the region for new casinos. The country is the world’s third-largest economy, with a gross domestic product of $4.1 trillion, has a population of more than 125 million, is located in close proximity to major cities in northern China. It has the potential of being a $40 billion gambling market.
Legislation to legalize integrated resort casinos is under consideration in the Diet, Japan’s legislative body. There is a sense of urgency that approval must occur quickly for the proposed integrated resort casinos to be constructed in time for the 2020 Olympics in Tokyo.
Feldman said that while there exists the political will and momentum necessary for a legislative approval, the final outcome – which he expects to come within the next 90 days – remains a toss-up. A rejection by the Diet will likely prompt the major global casino operators, many of whom have been knocking on Japan’s door for two decades, to pack up shop and focus elsewhere. Said Feldman: “If it doesn’t work, it might be the last time for the foreseeable future.”
Brazil also remains very much on the radar as an expansion opportunity as legislation has progressed through the country’s Congress this summer. While details are still being hashed out, the options on the table include a privatization of the country’s lottery, legalization of bingo halls, online gambling, and more than 30 integrated resort casinos.
Michael Soll, president of the Innovation Group, said that in terms of sheer population and the breadth of offerings being proposed, Brazil could be the largest single gaming market ever to open, particularly because of the potentially unprecedented opportunity for both land-based and online gaming to be introduced simultaneously.
Both Feldman and Bugno said that their respective firms are highly intrigued by the possibility of a Brazil opening, but added the caveat that the Brazilian government can often be its own worst enemy on issues of economic growth and business climate.
The panel noted that other nations in Latin America, such as Chile and Colombia, could also see new gaming expansion opportunities coming in the near future, but concluded that the attraction of these markets is quite limited.
The panel also noted that casinos in some less-advanced European countries are gaining traction, pointing to nations like Cyprus and Slovenia, but these markets are fairly limited in size and scope.
