U.S. casino operators are lining up to open in Japan, ‘a bigger market than Las Vegas’

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American gambling companies are falling over themselves to win favour in Japan, where the government is preparing to allow casinos to open their doors in flashy resorts to rival Singapore and Macau.

Las Vegas Sands brought David Beckham, the British soccer star and ambassador for the casino company, to Tokyo Wednesday to talk about how much he loves uni, or sea urchin, and how much he’d love to see new sporting venues here. They even put Eagles guitarist Joe Walsh on stage at a showbiz-worthy news conference to lament the lack of top-notch performance venues in Japan.

Executives from Las Vegas Sands and MGM Resorts have repeatedly said they would each invest as much as $10 billon (U.S.) in Japan, while Lawrence Ho, president of Hong Kong-based Melco Resorts and Entertainment, said he would spend “whatever it takes” to get a foothold in Japan.

“We’ve been trying to come here for many years,” Robert G. Goldstein, the president and chief operating officer of Las Vegas Sands, said in an interview Wednesday. “It’s got huge appeal internationally. . . . It’s a very large gambling opportunity.”

Casinos were illegal in Japan until parliament passed a controversial “Integrated Resort Promotion Law” in December, and will be allowed only as part of a wider resort that will have to include a hotel, an international conference hall and other such entertainment facilities. Yokohama and Osaka, Japan’s second and third largest cities, are the most likely locations for the first two “integrated resorts,” once appropriate legislation is passed.

Yet many Japanese are concerned about the social harm that might come with casinos. A poll by the Jiji news agency conducted in August found that two-thirds of respondents were opposed to the introduction of casinos, with most worried about crime and gambling addictions.

Pachinko, a noisy, pinball-like slot machine game with parlours outside practically every train station in the country, is already associated with organized crime and money laundering.

But Prime Minister Shinzo Abe’s government argues that casinos will help boost Japan’s economy, which has been stuck in a funk for two decades. Casinos are a central part of its goal to increase the number of foreign tourists from a record 24 million last year to 40 million by 2020, when Tokyo will host the Summer Olympics, and then to 60 million by 2030.

Analysts at Nomura, a Japanese investment bank, say the country’s gambling business could be “significantly larger” than Singapore’s $7 billion and that integrated resorts in Japan could become the most profitable in the world. They expect it could be worth about $10 billion a year after the resorts open in 2023.

But CLSA, the Hong Kong-based brokerage, says the business could be worth as much as $25 billion a year once Japan has two integrated resorts and 10 regional casinos.

That could make Japan “the next Macau,” becoming a haven not just for local customers, but also for gamblers from South Korea and China, CLSA analysts wrote in a research note.

American companies have been aggressively preparing for the new opportunity.

MGM Resorts hired Jason Hyland, a career diplomat who was until August the United States’ deputy ambassador in Tokyo, as its president in Japan.

“Japan can be a bigger market than Las Vegas,” the chairperson of MGM Resorts International, James Murren, told a seminar in Tokyo earlier this year.

Steve Wynn, the chief executive of Wynn Resorts, told the Nikkei business newspaper in August that Japan was a “perfect” market because of its size and wealth.

Sheldon Adelson, the chairman of Las Vegas Sands, has called Singapore, where Las Vegas Sands invested $6 billion in the Marina Bay Sands resort, a “warm-up” for Japan.

“I turned Singapore into a city for conventions and shopping. [I did] the same thing for Vegas,” Adelson said during one of several trips to Japan this year, suggesting he would do the same here.

Adelson is a Republican backer who donated more than $20 million to Donald Trump’s presidential campaign. The Nikkei business newspaper reported that Trump asked Abe during their summit in February if he knew about Las Vegas Sands and MGM Resorts. Abe had his assistant jot down the companies’ names, according to the newspaper.

On his trips to Japan, Adelson visited the secretary general of the ruling Liberal Democratic Party in February, and in September met the governor and mayor of Osaka.

There is still plenty of influencing to be done.

Gambling companies are concerned that the Japanese government will over-regulate the industry. The government, for example, is considering limiting the size of the gambling floor in each resort to 161,500 square feet, the same as in Singapore.

In meetings in Japan, Adelson has said this would limit the casinos’ profitability and therefore the amount of money his company would invest, according to the Asahi newspaper.

Some critics are complaining about a suggestion that Japanese citizens would be required to show their new, government-issued identity cards and pay a fee of as much as $100 to enter casinos in Japan.

Among other proposed regulations: a ban on ATMs in the casinos, and a requirement that Japanese citizens will have to use cash to buy chips, although foreign citizens will be allowed to use credit cards.

Goldstein, of Las Vegas Sands, said his company wants “intelligent regulation.” But for now, gambling firms are so eager to set up in Japan that they are not likely to quibble.

“If we’re so fortunate that the government will award us a license and tells us, ‘You’re going here or there,’ we will be glad to take it,” Goldstein said. “We’re just very eager.”

Content & Image Credit: https://www.thestar.com/

 

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