Japan IRs may disappoint: MS

The restrictions on casino floor space and high taxes may mean returns from a Japanese IR may not be as high as some had expected, Morgan Stanley wrote in a Friday note.

“Two of the key regulations (casino being only 3 percent of total [Ground Floor Area] and 30 percent revenue tax, on top of consumption, real estate, and income taxes) mean lower returns than many expected,” the analysts wrote.

On the brighter side, they asserted that they “expect the first Japan casino to open by 2025 and the market size could peg at a range of US$11 billion and U$20 billion gaming revenue.”

This Morgan Stanley estimate of total IR revenues is considerably higher, for example, than that of credit agency Fitch Ratings, which sees them in the US$6 billion range.

Also, Morgan Stanley’s analysis rests in part on one key assumption that is different from what Asia Gaming Brief currently understands to be the case. The report asserts that the gaming tax of 30 percent will be “on top of” consumption, real estate, and income taxes.

AGB’s reporting is that the ultimate combined tax burden that the IR operators will face has yet to be determined—it’s not yet clear whether or not all of these different taxes will be piled upon each other, or if the bureaucrats will design a special taxation system for IRs.