Slot machine maker says Japan casinos need Vegas-style rules

Konami Holdings Corp., which supplies slot machines to some of the world’s biggest casinos, will participate in Japan’s gaming industry if the regulations are as strict as those in Las Vegas.

Satoshi Sakamoto, a senior executive director at Konami, said an industry with a good reputation will attract more Japanese visitors and turn resorts into destinations for events other than gambling, such as school reunions. At the same time, it wouldn’t threaten Konami’s licenses to operate in Nevada and other U.S. states.

“In Las Vegas, if you have a license they’ll take it away if you start getting involved in strange things, and that would be a big problem,” Sakamoto said in a March 30 interview in Tokyo. “If Japan is too loose, then we’d have to remove ourselves.”

Las Vegas Sands Corp., Wynn Resorts Ltd. and MGM Resorts International are among the companies interested in building resorts in Japan after lawmakers passed a bill in December to legalize casinos. Legislators are due to vote on a second bill and decide on the number of resorts and locations this year, with CLSA predicting the industry could generate as much as USD25 billion in annual revenue. The first casinos are likely to start operating in 2023.

Tokyo-based Konami, whose customers include MGM and the Hard Rock Cafe International Inc., has more than 400 licenses in the U.S., Europe, Australia, Singapore and South Africa. In addition to selling slot machines, it signs agreements to share profits from leased machines. Konami had licenses in 45 U.S. states as of December.

The regulation overseeing casino operators in Nevada calls for checks once every two years and examinations of the finances of top executives as well as their spouses.

“The most important thing is to have compliance and rules at the same level as Nevada,” Sakamoto said. “We want a clean casino and entertainment.”

In Japan, the legalization of casinos in December has divided Prime Minister Shinzo Abe’s Buddhist-backed coalition partner Komeito amid concerns about compulsive gambling. The government is considering restrictions on existing gambling establishments, including pachinko parlors and race tracks, in a bid to tackle addiction.

Konami, which also operates health and fitness clubs, wants to see the details of the next bill advancing casino plans before deciding on its level of involvement in integrated resorts.

“We’re not going to compete with our customers,” Sakamoto said. “If our customers ask us, then we’ll look at the details and decide. First, the rules should be decided.

Konami is targeting about 12 percent of the slot-machine market in Japan casinos, in line with its current share in the U.S., Sakamoto said. He predicts there could be about 10,000 machines with three large, integrated resorts.

Konami forecast its net income more than doubled about 24 billion yen ($215 million) for the year ended March 31, as it restructured and cut costs. Its shares have risen about 16 percent since Japan legalized casinos in December, compared with a 1.7 percent decline in the Topix index.

The company developed casino management software called Synkros to help customers, including Norwegian Cruise Lines, manage their marketing, cash, slots and tables. It’s also rolling out a new series of gaming machines called Concerto.

“With much of the development cost of these new products now past, there may be room for margin to expand with sales,” Bloomberg Intelligence analyst Matthew Kanterman said in a March 23 report. Chris Cooper, Grace Huang, Bloomberg