Packer will pass on casino bid
On October 22, Japan’s ruling Liberal Democratic Party and Prime Minister Shinzo Abe won a decisive victory in the country’s general election. The win bodes well for investors who want to break into Japan’s planned casino industry, which could generate up to $25 billion per year at maturity.
According to the Nikkei Asian Review, Abe and the LDP won big at the polls; the party won at least 283 seats, which will give it control over every standing committee in the lower house. The landslide is also seen as a win for gaming; Abe was behind the push for integrated resorts to boost the economy and stoke tourism to Japan. The Diet approved the legislation in December 2016.
With Abe’s power affirmed, the push to complete regulatory legislation, choose IR locations and choose operators should continue full bore. According to the Asia Gaming Brief, casino companies are going all out to ingratiate themselves with the local governments of Yokohama, Osaka and other cities that are considered contenders to host one of two to three multibillion-dollar resort complexes expected to be approved in the country.
MGM Resorts International, for example, stepped up to sponsor the Dotonbori River Festival in Osaka earlier this month. Ed Bowers, CEO of MGM Resorts Japan, told AGB, “We intend to partner with a number of small and medium-sized businesses in Osaka at various levels within the resort. Our sponsorship of the Dotonbori River Festival gave us the opportunity to meet local leaders and residents in the Minami area of Osaka to discuss ways for us to collaborate in the future.”
Melco Resorts & Entertainment is also wooing Osaka, and announced earlier this month that it had become an official partner with the city in its bid for the 2025 World Expo.
Not to be outdone, the Las Vegas Sands Corp. also came courting and brought soccer great David Beckham to talk up the benefit of arena entertainment in Japan. In September, Sands honcho Sheldon Adelson also paid a call on local authorities.
The courtship ritual works both ways. Norio Tomonaga, mayor of Sasebo city, Nagasaki Prefecture, visited Las Vegas recently as part of a week-long official tour of the United States. Sasebo is the location of the Huis Ten Bosch theme park, the proposed site for Nagasaki’s IR. Officials there say a total of 13 IR operators to scope out the area. Among them are Caesars Entertainment, Wynn Resorts, Boyd Gaming, Hard Rock International, Foxwoods Resort Casino and Rush Street Gaming.
Meanwhile, analysts from Global Market Advisors say Japan’s responsible gaming bill may be passed as early as the end of 2017. Passage of the bill will depend on the length of the extraordinary session, which could be extended through the end of the year. If the bill doesn’t pass this year, it will likely be pushed to spring 2018. Then the debate on the all-important IR implementation bill will begin.
According to GMA, gaming operators remain concerned that conservative Japanese officials will limit the profitability of gaming resorts by placing restrictions on casino space; requiring locals to pay entry fees; and curbing the use of credit. GMA said it “encourages the Diet to leave the specifics of many of the aforementioned items to the regulatory authority.”
“Many of these decisions should not be set strictly in law in the IR implementation bill,” the firm continued. “The law should offer the guiding principles and framework from which the regulatory board can implement and oversee the integrated resorts. This will allow for evidence-based research to serve as a guiding principle and allow for the regulatory authority to evolve with best practices in the future. The same principles should be applied as the responsible gaming bill is debated and passed.”
GMA noted that entry levies for locals “are not effective in preventing problem gaming” and should be viewed “as a tax by the government, rather than a deterrent to problem gamblers.” The firm said it expects the first casino resort to open in the second half of 2024 at the earliest.
Melco CEO Lawrence Ho and Sands chief Adelson have said they’ll spend billions to get into Japan. Another of gaming’s most famous billionaires has said he’ll sit this one out. In a candid interview with the Australian, Crown Resorts CEO James Packer said, “I don’t believe it is realistic for us to win a license in Japan.’’ Packer isn’t interested in any case. Following a turbulent year in which 19 of his employees were arrested for illegally promoting gaming in Mainland China, Crown has seen high roller revenues decline by half. Burdened by debt, Packer divesting of his stake in Melco Crown Entertainment and then dumped his plans to build a casino in Las Vegas. He has recommitted himself to the business at home, especially Crown’s AU$2.4 billion (US$1.9 billion) gaming resort in Sydney, which Packer says is the “most important building built in Australia for a long time.”
Packer seemed to shift responsibility for what happened to his China staff, including head of VIP operations Jason O’Connor. “I wasn’t on the board at the time,” Packer told the Australian. “But it is pretty clear Crown should not have been put in the position it found itself.”
Speaking of the arrests, he said, “It did rock my world. Reading in every newspaper around the world that Crown was a bad corporate citizen shook me to the core because I had put in so much effort over so many years to ensure Crown was a good corporate citizen. And it wasn’t just James Packer being attacked. All of a sudden Crown was being attacked, and that was putting the people who were in jail at risk.”
The employees, arrested in October 2016, were held in a Shanghai detention center for months awaiting court hearings. They were finally released and deported in July.
