Dec. 15, 2016, may just go down as the final piece of the “Abenomics” puzzle. Early on that morning, Japan’s parliament passed a bill that would finally legalize casinos. This sets the stage for billions of dollars to pour into the country. More importantly, Japanese Prime Minister Shinzo Abe is putting real weight behind his economic revival campaign.
But before you dive into casino stocks to buy, consider the enormous political and cultural opposition that was leveled against Japan casinos.
According to national newscaster NHK, only 12% of the public is in favor of the bill. On the other hand, a whopping 44% opposed the development of gaming centers.
Exact details will still need to be worked out, which means that an actual opening may be several years away.
Nevertheless, this is the substantive piece of legislation that might just work for Japan, Inc. By now, we have a clear understanding of what doesn’t work. Powerful rhetoric hasn’t done it, nor have dovish monetary policies. In order for the Japanese economy to gain meaningful traction, it had to dig deep. Apparently, that meant offending cultural sensibilities.
But for that slide down the slippery slope, Japan — and let’s face it, casino stocks — will receive massive rewards. In a Bloomberg article, investment bank “CLSA estimates potential gaming revenue in Japan could eventually reach more than $25 billion a year.” By way of comparison, Singapore’s casino industry hauls in $4.8 billion annually, while the Las Vegas Strip accounts for $6.3 billion. Macau brings in just under $29 billion.
With Japan opening its doors, they would potentially come within 14% of the sales generated by the world’s biggest gambling locale. That’s not a mere change of scenery. Instead, it is a radical, paradigm-altering revolution that will challenge Japanese mores, but may be the only answer to chronic and debilitating economic deflation.
And yes, it’s an amazing opportunity for casino stocks, which have been lobbying for years for this day to come. Here are four stocks to buy that will rise on Japan’s legalization.