Morgan Stanley Releases Bearish Note on Japan IRs

On Friday, the multinational investment bank and financial services company Morgan Stanley released a research note that suggested a degree of disappointment about the financial terms of the IR Implementation Act.

“Two of the key regulations (casino being only 3% of total [Ground Floor Area] and 30% 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$11bn and U$20bn 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 AGB Nippon currently understands to be the case. The report asserts that the gaming tax of 30% will be “on top of” consumption, real estate, and income taxes.

AGB Nippon’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. (AGB Nippon)