Prominent gaming companies including MGM Resorts International (NYSE:MGM) and Las Vegas Sands (NYSE:LVS) are in talks with the governments of various Asian countries for relaxing restrictions and giving consent to the fully functional gaming industry. The success of the gaming industry in Macau and Singapore has led other Asian economies to consider allowing casinos to expand in their countries.
We have a Trefis price estimate of $11.10 for MGM, which is in-line with the current market price.
Factors Favoring Japan As A Prospective Gaming Hub
Developed economy with excellent infrastructure
- Japan is one the most advanced countries in the world in terms of technology, infrastructure, basic amenities and a robust economy. Macau, which has emerged as a prominent gaming location, is focusing on developing infrastructure to increase tourist visitation. (See our previous post: Wynn, LVS, MGM Cheer as Macau Makes Big Investments in Infrastructure) However, we believe Japan already has a well-developed infrastructure in place for prospective visitors.
- According to Grant Govertsen, Managing partner at Union Gaming Group, Japan has the potential to become the second-largest gaming market in the world, second only to Macau as it has world-class transportation infrastructure, high per-capita income and sophisticated consumers. 
Pachinko/Pachislot emerging stronger
- Pachinko and pachislot, which are the Japanese versions of slot machines featuring pinball and arcade games, have been very successful. Given the interest of Japanese people in gaming, we believe the introduction of slot machines and table games including blackjack and roulette would likely receive a strong response from the resident population.
- According to a report from CLSA Asia-Pacific Markets in conjunction with Credit Agricole Securities, Japanese have shown considerable interest in the gaming sector. There are about 12,652 pachinko/pachislot halls with approximately 4.6 million pachinko/pachislot machines installed. The reports estimates that these machines generate around $25 billion in revenues. 
Enjoys proximity to China
- Japan also enjoys close proximity to China, which has been a major contributor for the gaming industry in Macau. The approval of integrated resorts in Japan could attract more visitors from other Asian countries including China.
Gaming companies such as MGM Resorts and LVS have shown interest in establishing presence in the world’s fourth largest economy. They are eagerly awaiting a positive response from the regulators for the approval of the gaming industry.Notes: