US-based banking group Morgan Stanley commented on the current situation with the Japanese Integrated Resorts Casinos (IRCs), saying that foreign gaming operators could avoid making too large investments in future IRCs provided the fact that the Japanese Government is considering further restrictions on the resorts.
As Casino Guardian reported earlier, the Government has been planning to introduce further restrictions to IRCs in the country’s Integrated Resorts Implementation Bill. As it was already revealed, no final decision has been made, but still, Morgan Stanley cited Bloomberg as saying that the Government’s intention to apply a progressive tax on gaming revenue could discourage potential casino operators from making large investments on capital expenditure.
According to the US banking group, the probability of generating lower return on invested capital could fend off foreign investors. In a Tuesday note, the institution suggested that the new Integrated Resorts Implementation Bill and a special gambling addiction bill may be tabled at the same time. Morgan Stanley further shared projections that Japan could see its first Integrated Resort Casino opening in 2023 or 2024.
The afore-mentioned anti-gambling addiction measure is known as “Basic Bill on Gambling Addiction Countermeasures”. It still needs to be passed by the parliament, but Morgan Stanley predicted that could happen at the same time with the IR Implementation Bill.
Tighter Regulatory Measures Considered by Government
Morgan Stanley’s note follows last week’s Government officials’ meeting with governors of four prefectures including Nagasaki, Osaka, Wakayama and Hokkaido, as well as with members of the local Liberal Democratic Party and its partner Komeito which form the country’s governing coalition.
At the meeting, Government officials discussed some restrictions that could be implemented in the new IR bill. According to local media reports, a plan to limit the casino visits of local residents and visitors of the country to a maximum of three times a week and ten times in 28 consecutive days was unveiled during the meeting. What is more, the Government is discussing certain limits of the gross floor area, with the officials considering to put a limit of 15,000 square metres of the entire resort.
Apart from that, the Japanese Government needs to make a decision on some major issues, such as the tax rate and the possible statutory entry levy for casino access, Morgan Stanley cited some Bloomberg information that a progressive tax on gaming revenue starting with 30% could be applied to operators by the local authorities. According to Bloomberg, the amount of the gaming revenue tax could go up to 40% for gaming revenue in the range from JPY300 billion and JPY400 billion, and to 50% for gambling revenue which exceeds JPY400 billion.
As mentioned above, this tax rates made the US banking group share its concerns that foreign investors’ intentions of making large investments in Integrated Resort Casinos could be shaken provided the tighter tax regime.
- Author
Daniel Williams
