JAPANESE INDUSTRIES TO BENEFIT FROM RECENT CASINO APPROVAL
Japanese parliament’s recent enactment of legislation outlining a road map for casino resorts offers big opportunities for Japanese industries, as foreign operators can start to seek out partners in their bid to tap a gaming market that may be worth as much as $25 billion.
Foreign operators from Las Vegas Sands Corp. to MGM Resorts International are beginning to seek out partners in their bid to tap the Japanese gaming market, which may be worth as much as $25 billion. It could also be a boon for Japanese industries — from companies that oversee resort projects to construction giants building infrastructure.
There is still a long road ahead, but talks between Japanese companies and Western operators will become more serious now that the government has given the green light, Japanese Times reports. Municipalities will eventually start requesting proposals from consortium groups that want to pitch their plans.
“This business becomes a legitimate viable business after the bill passes,” said Masaru Sugiyama, an analyst at Goldman Sachs Group Inc. “Companies that weren’t willing to come public with their aspirations — we’ll see them be more active with press releases, briefings, blueprints coming out for what kind of projects they want to do and where, and who they want to partner with.”
Here are the companies that could play an active role in the build-out of casino resorts in Japan. Some of the names mentioned have yet to express an interest in getting involved in the gaming business. Unless otherwise noted, the companies either declined to comment or couldn’t be reached.
Casino Operators: Executives such as Las Vegas Sands’ Sheldon Adelson and MGM’s James Murren have said they’re willing to spend as much as $10 billion building an integrated resort in Japan. “Japan is known worldwide for a unique culture of customer-focused hospitality known as ‘omotenashi,’” Wynn Resorts Ltd. CEO Matt Maddox said in a statement. “This important Japanese tradition of creating a unique guest experience makes it clear to us that Japan will develop extraordinary integrated resorts that are not found in any other country.”
MGM, Sands and Melco Resorts & Entertainment want to operate a resort in a large city with easy transit options. Caesars Entertainment Corp. has said it’s flexible with location, and has unveiled mock-ups for large cities and smaller regional areas. MGM CEO Jim Murren said the company was going to “advance our relationships with key stakeholders and together create a coalition of Japanese business partners who will collectively define a vision for a uniquely Japanese, world-class integrated resort.”
Hard Rock Cafe International Inc. is also in the running, and has opened an office in Hokkaido. Other casino operators seeking inroads include Galaxy Entertainment Group and Genting Singapore.
Osaka, Yokohama and Tomakomai in Hokkaido are the leading cities to win government approval for the first three locations allowed to build integrated resorts.
Gaming: Sega Sammy Holdings Inc., widely known for its video games, has a business selling gaming machines. It’s also one of the few Japanese companies with experience running a casino — South Korea’s Paradise City. “We’ll be speaking with localities seriously about what kind of IR (integrated resort) they want to build and propose a plan that will best highlight the charms of the regions,” Chief Operating Officer Haruki Satomi said.
Konami Holdings Corp., a supplier of slot and gaming machines, has set up a panel to explore its stake in Japan casinos. It holds over 400 gaming licenses in North America, Australia, Singapore and South Africa.
Tourism: Travel agency HIS Co. has been actively trying to attract a firm to build a casino as part of its Nagasaki theme park Huis Ten Bosch, which recreates a Dutch town. “We are working on it with the prefecture and the city,” a theme park spokeswoman said.
Construction: Obayashi Corp. created a project team in May to participate in the building of a casino resort in the Osaka area. “We want to cooperate in making IRs a reality in Japan and offer our company’s expertise,” spokesman Junichi Ichikawa said.
Other major contractors that could play a role include Taisei Corp., Shimizu Corp. and Kajima Corp.
Infrastructure and transit: Orix Corp., the financial-services firm that operates hotels, parking garages as well as one of Osaka’s airport concessions, is seen as a contender for an Osaka resort. SMBC Nikko analysts cite its expertise in property management and financing as strengths. An Orix spokesman said no decisions had been made yet.
Transit companies operating in locations that win licenses should benefit. The selection of Yokohama would make Keikyu Corp. a winner. “We expect it could help boost the value of our railway line as it could increase the need for residences,” a spokesman said.
Airlines are likely to see a boost in travelers from home and abroad, particularly China where casinos expect to get an influx of wealthy gamblers. “We expect IRs to stimulate job creation and promote tourism in areas around Japan,” All Nippon Airways Co. spokeswoman Yuko Yoshimura said.
Financing: IRs are large projects that will take money to build, and money is cheap in Japan. Banks such as Sumitomo Mitsui Financial Group Inc., Mizuho Financial Group Inc., and Mitsubishi UFJ Financial Group Inc. are all possibilities for running the financing for a large consortium.