Japan’s casino gaming revenues may not exceed $6 billion after taking into account regulations being considered by lawmakers, according to Fitch Ratings.

This is well below consensus estimates, which are generally above $10 billion, and is at the low end of the $6 billion-$9 billion range that Fitch had previously estimated. One of the primary reasons for this lower estimate: recent media reports suggest that the Japanese government will opt for only one license in a major metropolitan area, whereas Fitch had previously assumed two or three licenses.

According to Reuters, an integrated resort (IR) implementation bill was to reach the Diet late last month. Some of the regulations agreed upon by government coalition parties include a 30 percent gaming tax, a ¥6,000 entrance fee (approximately US$55) and limits on visitations for residents. A cap on the size of the casino floor has reportedly been eliminated from the bill but could be implemented later by the regulator.

Fitch’s $6 billion estimate factors in approximately $3 billion of gaming revenue for one largescale IR in a major metropolitan area and two remote resorts with revenues of about $1.4 billion each. The major metro IR forecast is largely based on comparisons to other large-scale IRs in gateway markets such as Macau and Singapore with regard to revenues per gaming position and the number of positions. Singapore’s Marina Bay Sands (MBS) is likely to be the most comparable to a Japanese IR. MBS generated $2.9 billion of gross gaming revenue (GGR) in 2017, on par with the larger Macau resorts such as City of Dreams and Venetian Macao.

For the remote locations, Fitch used Korea’s Kangwon Land, with $1.4 billion GGR in 2017, as a proxy. Kangwon Land is the only casino in Korea that allows locals to gamble, charges an entrance fee and is remote (160kms/100 miles from Seoul). Fitch believes estimating Japan’sgaming revenue potential based on comparisons to other resorts versus other methodologies such as per capita estimates makes more sense in context of the limited capacity that will be allowed by regulations.

Most large-cap global gaming companies have expressed strong interest in developing in Japan, with some expressing the willingness to spend $10 billion or more.