Green Light for Japan Casinos Offers Jackpot to Businesses

(Bloomberg) -- Let the competition begin.

Now that Japan has passed a law outlining a road map for casino resorts, foreign operators from Las Vegas Sands Corp. to MGM Resorts International can start to seek out partners in their bid to tap a gaming market that may be worth as much as $25 billion. It could also be a boon for Japanese industries -- from companies that oversee a resort project to construction giants building infrastructure.

There is still a long road ahead, but talks between Japanese companies and Western operators will become more serious now that the government has given the green light. Local municipalities will eventually start requesting proposals from consortium groups that want to pitch their plans.

“This business becomes a legitimate viable business after the bill passes,” said Masaru Sugiyama, an analyst at Goldman Sachs Group Inc. “Companies that weren’t willing to come public with their aspirations -- we’ll see them be more active with press releases, briefings, blue prints coming out for what kind of projects they want to do and where, and who they want to partner with.”

Read more: Japanese Lawmakers Approve Landmark Bill Legalizing Casinos

Estimated Time FrameSteps Remaining Before Casino Debut
July 2018Passage of bill allowing integrated resorts
July 2019Formation of Casino Control Commission
August 2019Basic guidelines issued by central government
September 2019Localities issue request for proposals from companies
June 2020Locations and consortium selected
January 2021IR design is submitted for approval
June 2021Certification of IR development plan
December 2021Conclusion of implementation agreement
January 2022IR development breaks ground

NOTE: Time frame for rollout of casinos based on consultant estimates
Source: Ernst & Young; David Bonnet, Delta State Holdings

Here are the companies that could play an active role in the build out of casino resorts in Japan. Some of the names mentioned have yet to express an interest in getting involved in the gaming business. Unless otherwise noted, the companies either declined to comment or couldn’t be reached.

Casino Operators

Green Light for Japan Casinos Offers Jackpot to Businesses

  • Executives such as Las Vegas Sands’ Sheldon Adelson and MGM’s James Murren have said they’re willing to spend as much as $10 billion building an integrated resort in Japan. “Japan is known worldwide for a unique culture of customer-focused hospitality known as ‘omotenashi,’” Wynn Resorts Ltd. Chief Executive Officer Matt Maddox said in a statement. “This important Japanese tradition of creating a unique guest experience makes it clear to us that Japan will develop extraordinary integrated resorts that are not found in any other country.”
  • MGM, Sands and Melco Resorts & Entertainment Ltd. want to operate a resort in a large city with easy transit options. Caesars Entertainment Corp. has said it’s flexible with location, and has unveiled mock-ups for large cities and smaller regional areas. MGM CEO Jim Murren said the company was going 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.”
  • Hard Rock Cafe International Inc. is also in the running, and has opened a local office in Hokkaido. Other casino operators seeking inroads in Japan include Galaxy Entertainment Group Ltd. and Genting Singapore Ltd.
  • Osaka, Yokohama and Tomakomai in Hokkaido are the leading cities to win government approval for the first three locations allowed to build integrated resorts.

Gaming

Green Light for Japan Casinos Offers Jackpot to Businesses
  • Sega Sammy Holdings Inc., widely known for its video games, has a business selling gaming machines. It’s also one of the few Japanese companies with experience running a casino -- South Korea’s Paradise City. “We’ll be speaking with localities seriously about what kind of IR they want to build and propose a plan that will best highlight the charms of the regions,” Chief Operating Officer Haruki Satomi said.
  • Konami Holdings Corp., a supplier of slot and gaming machines, has set up a committee to explore its stake in Japan casinos. It holds more than 400 gaming licenses in North America, Australia, Singapore and South Africa.

Tourism

Green Light for Japan Casinos Offers Jackpot to Businesses
  • Travel agency HIS Co. has been active in trying to attract an operator to build a casino as part of its Nagasaki theme park Huis Ten Bosch, which recreates a Dutch town. “We are working on it with the prefecture and the city,” a theme park spokeswoman said.

Construction

  • Obayashi Corp.: The construction giant created a project team in May to participate in the building of a casino resort in the Osaka area. “We want to cooperate in making IRs a reality in Japan and offer our company’s expertise,” spokesman Junichi Ichikawa said.
  • Other large Japanese companies that could play a role include Taisei Corp., Shimizu Corp. and Kajima Corp. A spokesman said Kajima would keep a close watch on any construction opportunities.

Infrastructure and Transit

  • ORIX Corp., the financial-services company that operates hotels, parking garages as well as one of Osaka’s airport concessions, is seen as a contender for an Osaka resort. SMBC Nikko analysts cite the company’s expertise in property management and financing as strengths. An Orix spokesman said the company hasn’t made any decisions yet.
  • Transit companies operating in locations that win licenses should benefit. The selection of Yokohama, a city next to Tokyo, would make Keikyu Corp. a winner. “We expect it could help boost the value of our railway line as it could increase the need for residences,” a spokesman said.
  • Airlines are likely to see a boost in travelers from home and abroad, particularly China where casinos expect to get an influx of wealthy gamblers. “We expect IRs to stimulate job creation and promote tourism in areas around Japan,” All Nippon Airways Co. spokeswoman Yuko Yoshimura said.

Financing

  • Integrated resorts are large infrastructure projects that will take money to build, and money is cheap in Japan. Banks such as Sumitomo Mitsui Financial Group Inc., Mizuho Financial Group Inc., and Mitsubishi UFJ Financial Group Inc. are all possibilities for running the financing for a large consortium.

Technology

  • Panasonic Corp. already provides TV monitors and security solutions for Genting’s Resorts World Sentosa casino in Singapore. Company executive Yasuyuki Higuchi said in June he would consider casino opportunities in Japan.

©2018 Bloomberg L.P.