Tokyo doesn’t need it
Lawrence Ho, the billionaire owner of Melco Resorts & Entertainment Ltd., says Osaka is the best choice for one of Japan’s first integrated resort licenses.
Ho is one of many global gaming bigwigs hoping to break into the maiden jurisdiction; others include Steve Wynn of Wynn Resorts and Sheldon Adelson of the Las Vegas Sands Corp. Other companies expected to get in the running include Galaxy Entertainment Group, Hard Rock International and MGM Resorts International.
After years of debate and conjecture, Japan’s parliament under Prime Minister Shinzo Abe finally passed an integrated resort bill in December 2016. CSLA Ltd. says a mature industry with two large integrated resorts and a handful of smaller casinos could generate as much as $25 billion per year, putting Japan second only to Macau in the high-stakes gaming industry.
Ho says Melco hasn’t ruled out Tokyo or Yokohama, the other big contenders in the Japan casino stakes. But he prefers Osaka and the Kansai region, which already feature attractions like Universal Studios Japan and the famous Buddhist temples of Kyoto.
“When you go to the Kansai region, it’s more fun, really, and we’re a company that focuses on fun and entertainment,” said Ho. “I’m not so sure Tokyo needs an integrated resort. Tokyo by itself is amazing.”
According to Bloomberg News, Osaka has other things going for it: it’s a major shopping center and a favored destination among Chinese tourists. Moreover, the news outlet reports, Tokyo’s higher costs may be a disadvantage.
“Tokyo’s inflated commercial land prices are higher than the rest of Japan,” Bloomberg Intelligence analysts Margaret Huang and Carmen Lee wrote last month. “That may dissuade casino operators from developing an integrated resort there, even with the city’s population and infrastructure.”
Ho recently elaborated on his split with fellow billionaire James Packer’s Crown Resorts in an interview with the Financial Times. Earlier this year, Packer sold his remaining stake in Melco back to the Hong Kong-listed operator for US$1.16 billion to concentrate on his domestic business, reported Barron’s. The move followed the October 2016 arrests of 18 Crown employees in China; they remain in custody on suspicion of “gambling crimes” in the country, where marketing the practice is illegal.
Ho seemed astounded at the Crown arrests and the arrests in 2015 of Korean casino marketers caught doing the same thing. “In all of those instances, you had casino sales people running around offering credit, talking about collection. It wasn’t discreet. That’s what caught their attention,” Ho said. “‘Like what the hell, you’re deliberately spitting on our faces.’”
He said he and Packer “are still great friends. But my view and his view on China and the world was different at that time. I wanted to double up and he wanted to focus more on his domestic Australian assets.”
After Packer’s withdrawal, Melco shares rose in value by 90 percent, making them the industry’s best-performing casino stock.
Meanwhile, the Asia Gaming Brief reports that the Japanese government plans to “strictly screen” casino operators before and after licensing. The second part of the legislation, laying out taxation, regulations, locations and licensees should be complete by the end of the year.
