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Ryan McQueeney

Here's Why Japan Could Become The Next Gambling Hotspot

LVS WYNN MGM

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Gambling revenues from the traditional hubs of Las Vegas and Macau have rebounded after a period of difficulty, but the big casinos are already shifting their attention away from these locations and on to Japan, which is currently debating legislation that would legalize gambling in the country.

The push to legalize gambling in Japan started this summer when the Liberal Democratic Party, led by President Shinzo Abe, won a decisive majority in the Japanese legislature. Unlike China, which limits gambling to Macau, Abe and the Liberal Democrats are looking to legalize the business throughout Japan.

The fate of Japan’s current gambling legislation is still up in the air, but we do know that top executives from Wynn Resorts (WYNN - Free Report) , Las Vegas Sands (LVS - Free Report) , MGM Resorts (MGM - Free Report) , and other casino powerhouses have made presentations to Japanese lawmakers recently.

MGM has been an outspoken proponent of Japanese gambling legalization, and CEO James Murren has promised that the company would spend anywhere from $5 billion to $10 billion on an integrated resort somewhere on the Japanese mainland.

Las Vegas Sands and its enigmatic CEO Sheldon Adelson have been advocating for gambling in Japan for years now, with Adelson pledging back in 2014 that his company would “spend whatever it takes” to get a foothold in the country.

Obviously these casino giants would be pleased to see any new gambling market open up, but their eagerness for Japan is due to the sheer size of the country’s potential market. Some analysts have estimated Japan’s casino market opportunity to be as high as $40 billion a year. That would make the country’s gambling business nearly 40% larger than Macau’s.

Japan has a population of about 126 million, and its negative birth rate means that its populace is comprised of adults who could be ready to gamble. Nearly 38% of the country is between the ages of 25 and 54, and that’s a prime target for the casinos.

It’s also worth noting that Tokyo is set to host the 2020 Summer Olympics. This is a factor for a pair of reasons. First of all, promoting additional tourism is advantageous for the Japanese government, as more tax revenue could help offset the enormous costs of preparing for the Games. Also, casinos will want to get in and start building as soon as possible because the Summer Olympics will see a massive influx of tourists to the country, and that’s good business.

There’s certainly no guarantee that the gambling legislation passes in this current round of voting, but the pro-gambling sentiment in Japan seems to be growing, and that could mean that the world will soon have another casino hotspot.

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