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Japan Is Getting Ready To Gamble: What This Means For Genting Singapore PLC And Casino Companies

Over the past decade, many countries in Asia have been making gaming legal, thereby challenging Macau’s status as a gaming hub in the region. You can now find casinos in many Asian countries as South Korea, Cambodia, Malaysia, Singapore and the Philippines.

Now it seems that one more major Asian economy is set to join the crowd. Today, the parliament of Japan made the opening of casinos legal in the country. It is a very controversial bill and was hotly debated in Japan.

This move by Japanese lawmakers would most likely attract the attention of many international gaming companies, including Singapore’s own Genting Singapore PLC (SGX: G13), to assess the opportunities of opening casinos in Japan.

Genting Singapore currently has only one operating asset, namely, the Singapore-based integrated resort, Resorts World Sentosa. The company had been working on its second integrated resort development – this time in Jeju, South Korea – but had sold its stake in the project last month.

Genting Singapore has previously mentioned that it was eyeing opportunities in Japan given the possibility of casinos being legalised in the country.

But, Japan’s new law on casinos does not mean that gaming companies would benefit instantly. When Singapore legalised gaming in 2004, it was not until 2010 – six years later – when the country’s first casino was opened to the public.

Similarly, industry experts are commenting that casinos in Japan might only start operating around 2022 as there are many issues – such as taxation, gambling addiction controls, and money laundering concerns – that are still unresolved.

According to media reports, Japan might follow the strategy of Singapore, in allowing only a few casinos to open (Singapore has only two casino licenses, one of which is held by Genting Singapore) instead of becoming the next Macau, which has an abundance of gaming facilities.

In Singapore, Genting Singapore is the only gaming company that is listed in the stock market here and it might stand a chance to gain a foothold in Japan. But, the company will also likely be competing directly with other international gaming companies such as Las Vegas Sands Corp (holder of the other casino license in Singapore), Wynn Resorts, and the Australia-based Crown Resorts.

Genting Singapore is now trading at 1.2 times its tangible book value and offers a 3.1% dividend yield.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim doesn’t own shares in any companies mentioned.