Japan GGR expected to reach US$6 to 9 billion: Fitch

The Japanese gaming industry is expected to produce gross gaming revenues of $6-9 billion, depending on whether two or three integrated resorts are opened initially, according to Fitch Rating’s All in: Global Gaming Handbook, published on Friday,

While other analysts and operators have placed Japan’s GGR estimates in the $20 billion range, Fitch says that these predictions fail to take into account “the limited footprint of the initial casinos relative to other jurisdictions that are more liberal in terms of gaming positions (e.g. U.S. and Macau).”

“Given the likely physical restrictions, we do not think that estimates based on Japan’s GDP or loosely regulated pachinko industry are practical,” said the ratings agency.

"All eyes are on the Japanese gaming market," said Alex Bumazhny, senior director, U.S. Corporates. "For gaming operators, Japan provides an opportunity diversify their holdings and capitalize on the market's solid supply/demand dynamics. However those benefits come at a cost - any Japanese project would likely be expensive and may pressure credit metrics."

“Fitch would view the winning bidders’ credit profiles cautiously through the development phase, especially when the projects are not fully funded,” it wrote.

Looking at other regions, Fitch says it projects 17 percent gaming growth for Macau in 2017, noting that recovery so far has been largely driven by the VIP segment.

Past 2017, Fitch says it expects Macau revenue growth to be in the high single digit range, led largely by the mass market segment.

“Fitch maintains a positive long-term outlook on Macau, which should benefit from the rising middle class in China and surrounding infrastructure development.”

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