Vegas Sands (LVS) could be set to win big in Japan, with Morningstar analyst Chelsea Tam affirming that the American operator is the likely frontrunner for the country’s first casino permit.

After approving the IR Promotion Law last year, Japan authorised the development of an integrated resort (IR) – the first of its kind. As a result, a number of global casino operators are now competing for the most coveted Asian entry into the gaming market.

In an investment note by Morningstar, analyst Chelsey Tam opined: “In our view, narrow-moat Las Vegas Sands Corp is best positioned to win a gaming concession in the middle of 2019, due to its track record of managing global resorts with a strong balance sheet.

“Our $57 fair value estimate for Sands might increase by around a high-single-digit percentage, as we evaluate the impact from a Japanese gaming license over the coming weeks, which would leave shares slightly undervalued at current share prices.”

Morningstar analysts Chelsey Tam and Dan Wasiolek also added that they believed more casino licences would eventually be allocated once Japan’s new laws were finalised. “We believe four IRs (two urban and two regional) could be awarded.”

Morningstar estimates that return on investment capital could be 20% for these casinos, with EBITDA margins similar to those of integrated resorts in Singapore. They expect the market to generate about $25bn in revenue, with $19bn on gaming activities.

Alongside Sands, other bidders include MGM Resorts, Wynn Resorts, Genting Group, Melco Resorts and Hard Rock. The operators have been accosting Japanese firms in an effort to strengthen their prospective bids.

Licenses could be awarded in 2019, with the first integrated resorts opening their doors around 2024.