In a recent Japan IR Forum, Goldman Sachs Managing Director Simon Cheung said that gamblers from China, Japan and South Korea will combine for 80% of Asia Pacific’s total addressable market in the future.

Cheung adds that players from those countries are underserved in their home markets. Japan approved IR but those venues are several years from opening, leaving pachinko as one of the dominant forms of gaming in Japan.

South Korean casinos are mainly accessible to foreign visitors, while Macau is the only Chinese territory where gambling is permitted.

“That is why structurally, for the last ten years, Singapore and Malaysia have been growing much slower than Macau or the Philippines,” said Cheung.

The Goldman director says casino spending as a percentage of disposable income among Chinese, Japanese, and Koreans is lower than their peers in countries such as Malaysia and Singapore.

Japanese IR may consume pachinoko’s market share

When Japan’s highly anticipated initial trio of IR opens, it’s likely those venues may not drive a significant increase in gaming numbers among domestic gamblers, but rather will eat into pachinko’s market share.

“Once IR are allowed to open in Japan, it may not drive a significant amount of local gaming spending but perhaps more of a dilution of market share from pachinko business,” said Goldman’s Cheung.

The low-stakes game will not be allowed in the IR when those venues open. Earlier this month, Japan’s Casino Regulatory Commission said slot machines and table games including baccarat, blackjack, craps, pai gow, and various forms of poker will be permitted.

Japan has yet to decide which cities will be homes to the first three casinos, though Nagasaki, Osaka, and Yokohama are among the leading contenders. Following a series of delays and snafus, it’s unlikely to open before 2026 or 2027.

Mass players rather than VIPs would be the key for recovery

In the years ahead, Cheung believes the Asian markets with the most devoted domestic gamblers will recover more rapidly from the effects of the pandemic than destination markets. Those slated for rapid rebounds in his opinion are Cambodia, Macau and Malaysia.

In general, Cheung predicts the Asia Pacific’s gaming figures returning to pre-pandemic levels next year, driven by pent-up demand from mass market gamblers.

His view on the 2022 time line to recovery accord with forecasts set forth by other analysts. Many believe Macau will rebound faster than Singapore and that it will be mass and premium mass players do the heavy lifting.

Editing by Rachel Hu