Japan seen as important gaming prospect

07.06.2006, Lesen Sie hier den Bericht über «Japan seen as important gaming prospect»

Casinos are illegal, although pachislot and pachinko parlors are allowed (Japan).- Japan could be the gaming industry’s next frontier now that many development opportunities around the world are spoken for, a recent Deutsche Bank study found. With the most slot-machinelike gaming devices of any country in the world, Japan is a huge and growing market.

Brian Gordon, a partner in the Las Vegas-based financial consulting company Applied Analysis, said Japan has to be seen as a huge opportunity if only because of the size of the market and turnover in slotlike gaming devices.

Already, there are 5 million devices in Japan, compared with 830,000 in the United States, 240,000 in Russia and 200,000 in Australia. That includes 1.9 million pachislot machines, devices that look like slots, but that involve some skill to play and pay off in prizes that can be converted to cash off-property. It also includes 3.1 million pachinko machines, pinball-like machines that also pay off in prizes that are converted to cash off-property.

Casinos are illegal in Japan, although pachislot and pachinko parlors are allowed because of the skill or choice involved in playing the machines and because payoffs are not made in cash.

In addition to the number of machines, the average Japanese national gambles twice as much as the average American, although the country’s population is only half that of the United States. For gaming manufacturers, including IGT, Japan is already a huge market, more so because Japanese regulations require the frequent replacement of machines, Deutsche Bank analyst Marc Falcone said.

However, IGT Vice President of Marketing Ed Rogich said his company, through a partnership with Tokyo-based Sega Sammy Holdings, has a small share of the market, although a small share of such a huge market is considerable. For example, IGT’s international sales last year jumped 80 percent to us$ 139.7 million, mainly thanks to the sale of 18,500 units in Japan. Still, the Japanese market, because of its uncertainty and volatility, is not a major priority now for IGT, Rogich said.

In addition to the potential in the existing market, moves are afoot in Japan to legalize Las Vegas-style casino gambling. Given strong operator interest in Asian gaming, Falcone said the opening of Japan should seriously interest U.S. operators, including Harrah’s, MGM Mirage, Las Vegas Sands and Wynn Resorts.

Michael Chen, president of Harrah’s Asia Pacific Region, said his company sees Japan and the rest of Asia as an important market for future development. However, MGM Mirage spokesman Alan Feldman cautioned there have been discussions of gaming in Japan for years without it being legalized to date.

"While we’re continuously monitoring all Asian nations as they consider establishment or expansion, there’s not much further we can do until a government establishes something specific, as Singapore has just done," Feldman said.

Similarly, Las Vegas Sands spokesman Ron Reese said his company will pursue any new openings aggressively, including any in Japan. Underscoring MGM Mirage’s reservations, University of Nevada, Las Vegas professor Bill Thompson said legalizing casinos in the next three years is unlikely.

Expanded gaming in Macau, South Korea and Singapore, however, is likely to draw visitors from Japan. This, in turn, will encourage Japan, in defense, to legalize gaming, Thompson said. Besides the potential for manufacturers from the current market and the possibility of legalized casino gambling, Thompson said Las Vegas benefits from the spending of Japanese nationals who visit to gamble or shop.

Visitors from Japan account for about one-half of 1 percent of the total visitors to Las Vegas, a number Thompson said will increase as the Japan economy prospers. "They’re the baby boomers, just like here. They have incredible discretionary income and they come to spend," Thompson said. Review Journal

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