Settling in for the long haul
MGM Resorts is ready to lay out $9 billion to build an integrated resort in Osaka, Japan, said President & CEO Jim Murren last week. Murren said the IR would reflect Japanese culture and could result in Osaka becoming the Japanese center for the MICE business. Murren made his comments following a meeting with Osaka Governor Ichiro Matsui.
Murren said Osaka’s Yumeshima site would fit the company’s plans.
Japan’s October 22 general election reinstated a number of House of Representatives lawmakers who support Prime Minister Shinzo Abe’s push for casinos in the country. According to the Mainichi Shimbun, 261 of the elected officials, or 57 percent, are behind the country’s Integrated Resort legislation—far more than the 33 percent opposed.
Despite that leverage, it may take a while before the first casino opens in Japan. First, the implementation bill that was expected to pass this year is likely to be stalled into 2018. Jim Murren, chairman of MGM Resorts International, recently visited Tokyo and said it could be 2025 at least before a casino resort opens in the country.
Matt Maddox, president of Wynn Resorts Ltd., said it will likely be a while before the industry is up and running. In a third-quarter earnings call last month, Maddox said, “It looks like the political environment is continuing to be—is—stable now after this last election. And we think that there is gaining momentum for the IR legislation for some time next year.”
He added, “Once legislation is passed, there’s a long process of setting everything up. So we’re monitoring it carefully and spending time there and developing relationships. And over the next couple of years, we’ll understand the potential opportunity.”
To take advantage of the opportunities in Japan, Deutsche Bank AG has announced it’s re-launching its Japan real estate lending business, reported Reuters. “We are definitely bullish on the continued strength of the tourism market,” said Geoff Crum, head of real estate in Tokyo. Gaming bigwigs like Sheldon Adelson of the Las Vegas Sands Corp. and MGM’s Murren have said a single resort in Japan could cost as much as US$10 billion. “Even at relatively low leverage rate, that’s a huge amount of debt capital,” Crum said.
