GMA calls on Japan to create “Osaka Strip” of integrated resorts

April 13, 2017 7:59 PM
  • Aaron Stanley
April 13, 2017 7:59 PM
  • Aaron Stanley

Global Market Advisors is calling on Japan to create a tourism destination – ala the Las Vegas Strip or Cotai Strip – to maximize the economic benefits from its forthcoming integrated casino resorts.

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The group, in a new white paper – the executive summary of which was released Wednesday evening – is calling for three such properties to be located on Osaka’s Yumeshima Island, thus creating an “Osaka Strip” tourism destination that could compete with the likes of Las Vegas, Macau and Singapore.

Situating multiple operators on the Osaka Strip, the report found, would create an estimated $10.9 billion in gaming revenue by the year 2025. Under this scenario, tourists – primarily from China and South Korea – would contribute 47 percent of total gaming revenues, a notable jump from the other possibilities GMA examined in which the customer bases would be primarily domestic.

“Developing the Osaka site, with multiple operators on the ‘Osaka Strip,’ would create critical mass and a true tourist destination. This would compete with Las Vegas, Macau, and Singapore in generating nearly $11.0 billion from that district alone,” said Steve Gallaway, Managing Partner for Global Market Advisors.

An Osaka Strip in conjunction with domestic-oriented sites in Tokyo, Sasebo, Sendai, Yokohama and Hokkaido would yield a projected market of more than twice that amount.

“Japan has the potential to be one of the largest gaming markets in the world, generating up to $24.2 billion at six different locations by 2030,” said Gallaway.

In December 2016, Japan passed a law paving the way for the construction of integrated resorts in the country. A second bill is underway and expected to pass by the end of 2017 that will lay out the regulatory structure and determine the number licenses issued.

“As the National Diet continues to evaluate the best structure for integrated resorts in Japan, it needs to consider the strong regulatory atmosphere that should be established,” said Brendan Bussmann, Director of Government Affairs with Global Market Advisors.

“The Diet needs to balance that regulatory structure with the desire of an operator to build an iconic facility that is representative of a specific site to maximize gaming and non-gaming revenue,” he continued.

Securing an integrated resort license in Japan has become a prime target for most, if not all, of the world’s household name casino companies.

Bussman said that he expects it to be the most competitive bidding process since Singapore over a decade ago, and that international operators will most likely need to find a local partner for their proposal to be seriously considered.

“I think operators going in there need to say ‘Who can I partner with that‘s going to help me understand this market? I may understand the gaming industry, but I don’t necessarily understand Japan,’” he said.

GMA also emphasized that further education is needed to help the Japanese government and general public better understand the gaming and non-gaming aspects of integrated resorts, and how they can serve as economic engines that drive tourism, investment, job creation and tax revenue.

Bidders must also be proactive and visible in helping address problem gambling concerns, Bussman also emphasized, particularly as Japanese President Shinzo Abe and the Diet have made this a high-priority issue to be addressed.

“One of the things that will make or break it for an operator is what their record is on responsible gaming, said Bussman. “That is probably their biggest concern.”

The full white paper will be released in early May.