At one time, Japan was considered the “Holy Grail” of gaming and the next big casino market—big enough to rival Macau. But the economic contraction caused by Covid-19 has made investors far less willing to invest billions to develop an integrated resort (IR) in the country. Last week, another suitor bowed out of the race as Galaxy Entertainment Group (GEG) withdrew from the IR race in Yokohama.
In a statement issued May 17, GEG Vice Chairman Francis Lui said Galaxy and its partner, Monte-Carlo Société des Bains de Mer had been “actively pursuing discussion for several years with the Japan government and local communities, including Yokohama. The world and business climate continues to evolve which has been exacerbated by the Covid-19 pandemic.
“We greatly appreciate the opportunity to play an active role in Yokohama’s IR selection process,” Lui said, “but have decided to not participate at this time. We will continue our dialogue to support Japan in achieving its goal to develop a sustainable and world class IR industry.”
According to Asia Gaming Brief, Galaxy is not withdrawing from Japan altogether, and may return at a later date. According to the government’s original timeline, three IRs will be approved in the first round of legalization, with the possibility of more based on the success of the first phase. Galaxy’s exit came after both the Las Vegas Sands Corp. and Wynn Resorts announced their withdrawal from Yokohama’s RFP last year.
A week earlier, Suncity Group revealed it was withdrawing from Wakayama’s RFP. That leaves only one bidder in the prefecture: the Clairvest Neem Ventures. Osaka also has just one bidder: MGM Resorts International.
Per AGB, both Wakayama and Osaka are “now left with a single potential IR consortium against which (they have) little leverage,” and may see their bids “collapse altogether.”
Suncity Chairman Alvin Chau explained his firm’s departure in a statement. citing “the enormous impact on the industry due to the spread of the new coronavirus infection. Many companies anticipate a long period of uncertainty, and the IR certification process in Japan appears set to take a lot longer than expected. Many things remain unclear, but we must consider the risks as a business operator.”
Inside Asian Gaming reports that Wakayama will continue to pursue an IR, despite Suncity’s exit. A spokesperson for the prefecture wrote, “We are surprised at how sudden this was. It is very regrettable but we will continue with our examination of the other candidate currently under examination.” That would be Clairvest Neem, a subsidiary of Canadian investment giant Clairvest Group. But even with no competition, Clairvest isn’t a shoo-in.
“We will continue the selection procedure for our remaining candidate to decide if they will be selected or not,” the spokesperson wrote to IAG. “If they are selected, we will proceed to the next step. I cannot answer what will happen if they are not selected, as that is still a hypothetical question.”
In subsequent comments, Wakayama Governor Yoshinobu Nisaka suggested otherwise, saying the prefecture may withdraw from the IR race if Clairvest doesn’t pass muster. “It is not ideal that there is only one company and we just choose them or don’t,” Nisaka said at a May 18 press conference. “If it is very unlikely that the area development plan we propose to the national government will pass, then we will not select this operator.”
Nisaka added, “There are few investment projects of this size for employment and income. I think we should definitely take this chance for the future of Wakayama.”
Meantime, it seems to be all systems go in Osaka, with Hiroshi Mizohata, director of the Osaka Convention and Tourism Bureau, saying an IR there could be open as early as 2027.
“In 2022, tourism will return to pre-corona levels, with construction for the 2025 World Expo starting in 2023. The IR would then open later in 2027 or 2028. Although tourism has been suddenly limited, like going from an express to a local train, we are getting ready for our counter attack,” he said.
As for Yokohama, Maybank Research has said an IR there would generate around US$7 billion in annual gross gaming revenues, accounting for 60 percent of all industry GGR, with locals accounting for more than 80 percent of that. Analyst Samuel Yin Shao Yang said Genting Singapore appears well positioned to get the thumbs-up from Yokohama, vying for the opportunity with Melco Resorts, Sega Sammy and Shotoku.
