Gaming operators got the green light they’ve been waiting for after Japan’s parliament approved yesterday an “integrated resorts” law that is a first step toward allowing casino gambling.
Passage of the new law left its opponents in tears, but big players said they were keen to get started.
“Today’s announcement allows us to advance our relationships with key stakeholders and together create a coalition of Japanese business partners who will collectively define a vision for a uniquely Japanese, world-class integrated resort,” MGM Resorts International said in a statement.
It said it had a full-time development team in Tokyo working on potential projects.
“The reason why everyone’s spending the time on this is that the potential is absolutely enormous,” James Murren, chairman of Las Vegas-based MGM Resorts International, said in a recent conference call with analysts.
Wynn Resorts said it was “extremely pleased” by the law’s passage.
Casino operators view Japan as a lucrative “final frontier.” In a report this month, analysts at investment bank CLSA estimated the potential market at $30 billion a year in gross revenue. Supporters of the casino plan say it will create jobs and make Japan a more alluring tourism destination.
Many in Japan fear an expansion of legalized gaming will fuel organized crime and encourage gambling addiction. Surveys have shown a majority of Japanese oppose the plan.
Casinos are unlikely to start operating in Japan until 2021 or beyond, after the Tokyo 2020 Olympic Games. The new legislation authorizes drafting of regulations dictating the number and location of casinos, entry restrictions for Japanese and tax rates. That process is expected to take up to a year.
The new legislation got final approval in the wee hours yesterday, after a failed attempt by opposition lawmakers to pass a no-confidence motion against its top supporter, Prime Minister Shinzo Abe. Abe has sought passage of the long-delayed legislation for years, over objections from some in his own ruling Liberal Democratic Party.
Tokyo, Osaka, Yokohama and a city on the northern island of Hokkaido are said to be planning bids for casino licenses.
“This is a landmark occasion and should be a shot in the arm as it relates to investor sentiment in all gaming names that could be players in Japan,” Grant Govertsen, a Macau-based analyst at investment firm Union Gaming, said in a commentary.
Japan’s existing forms of gambling include lotteries, pachinko — a kind of pin-ball machine — and wagering on horse, auto, bicycle and power boat racing. It could become the world’s second largest gambling market behind No. 1 Macau, Govertsen said.
“Quite simply, it represents the next and perhaps only other large opportunity to develop large-scale integrated resorts in Asia for a lot of these companies,” he said. “Some of these companies, their revenues and cash flow are so large today that it would take an opportunity like Japan to move the needle for them.” AP
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