A strong Japanese gaming market cannot cater only to international patrons, but must include a strong base of local gamblers, say the experts.
“In almost all businesses, domestic customers represent the base market. Regardless of the proportion of its revenue contribution, it is always the most important segment of all,” said Daniel Cheng, former vice president of Hard Rock International, in comments made to Asia Gaming Brief. Hard Rock was once in the running for an integrated resort (IR) license in Japan, but later withdrew.
Cheng said domestic customers spend more than international visitors on non-gaming amenities. He said he expects the domestic market in Japan to drive between 20 percent and 40 percent of total turnover, with a little less than a third of this to come from non-gaming.
“This means that attracting the domestic customer will be of utmost importance,” Cheng added, particularly if the government places restrictions on junkets.
“The most difficult challenges IRs will face is the same story of what has happened in Yokohama,” said Takeki Furukubo, former vice president of retail and leasing at Okada Manila in the Philippine capital. Yokohama was a leading contender for a Japan IR license until the election of an anti-IR mayor. Furukubo said strong opposition to IRs “is born out of misconceptions” about the casino industry.
“Ninety-nine percent of Japanese have not visited a real integrated resort in Las Vegas, Macau, Singapore or South Korea,” Furukubo said. “They’re of the understanding that only the IR operators, the land owners, politicians, big corporate contractors and organized crime stand to gain from the construction and operation of an integrated resort.”
To win over skeptics, said Takeki, officials must “show how the profitability of an IR business is tied to the Japanese people and the local economy.” That means creating a network of local vendors, hotels and tourist attractions, all of which could benefit from the development of a multibillion-dollar resort. It also means showing residents where the new tax revenues from will be used.
Aside from vocal opponents, noted Jason Ayers, founder of specialist marketing and communications search firm Sector Five in Japan, “Japanese are pragmatic, realist people in general. The types of ‘anti-IR’ people have their own agenda. The masses don’t even know what an IR is yet. Once they do—they’ll be educated on the subject from every single little detail— and they will be very positive towards it.”
“IR representatives will have to tackle complicated issues with their opposers in a sincere and straightforward manner. For example, pachinko operators are worried that casinos will rob them of their customers. The communicators need to spend more time explaining the relatively stricter regulations forced on the IRs that make this nearly impossible, and to spend the time to really listen to what concerns them.” said Takeki.
“Let the Japanese explain to the Japanese,” said Ayers. “When they learn about the income and that Japan could immediately become the world’s second-largest gaming market, bringing in money like Sands or Sentosa in Singapore, then people will be fired up. It’s about tapping into the nationalistic nature, in a positive way.”
