IAG MAR 2014 - page 4

March 2014
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Kareem Jalal
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Rui Gomes
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FromTokyo, aDispatch
nvestment brokersCLSAhavepublishedanew report on Japan that envisions amarket of upwardsof
12casinosandUS$40billion ingaming revenueover thenextdecade.
Novella in length at 136 pages, “It’s Raining Yen!” is its apt title, and Newsweek columnist and Le
Figaro correspondent RégisArnaudhelpedput it together.MrArnaud is editor-in-chief of France Japon
Eco, thebusiness andpublic affairs journal of theFrenchChamber of Commerce and Industry in Japan,
anda seasonedobserver of the Japanesepolitical scene. His involvement has resulted inanexploration
of the processes likely to govern approvals and licensing at the national and local levels—and the
complexities operators will have to navigate to get under construction—that digs a bit deeper than
anythingyetpublished forgeneral consumption.
It also features the results of an opinion survey CLSA conducted in January among 1,000 adults
across a range of age groups that provides a somewhat unsettlingglimpse intowhat awaits theDiet’s
pro-casino forces once the debate on casino legalization gets under way, probably inMay, and has to
be sold to the Japanesepeople. For example, one infive respondentsweren’t evenawarea legalization
effort isunderway, andonly7%professedanyawarenessof thedetails.
“Survey results such as these,” the report concluded, “are an indication of the scope of how
uninformed thegeneral Japanesepopulace is regarding IR/casino legalisationefforts.”
Yet, it wasn’t this that made headlines when the report was released in conjunction with an
investmentconferenceCLSAhosted inTokyo lastmonth—instead itwasSheldonAdelsonwithhisboast
that LasVegas Sandswill spend“whatever it takes”toensure it landsoneof the two licenses earmarked
forTokyoandOsaka,presumablythecovetedTokyo license.“Wecanspend$10billionwithoutborrowing
money,”he said, talkingdownhis competitionon thefirstdayof theconference.“Theycan’t.”
Not tobeoutdone, anotherof theA-listers inattendance,MGMResorts’JamesMurren, vowed tocall
his rival’sbetwhenhepresented thenextday.MGMoffersmore in termsofnon-gamingattractions than
anyoperator inLasVegas,heclaimed, andheassuredhis Japaneseaudience,“Wewilloverinvestearlyon
toensure, aswehavedoneeverywhereelse, thatwehaveproperties thatarebuilt to lastand thatwould
standadditional competition.”
MrMurrenhadbeen inOsaka theweekbefore,whereCLSAexpectsoneof the two largestandmost
expensivegaming resorts in theworldwill bebuilt—theotherwill be inTokyo—each commanding an
investment in the realm of US$8 billion, and LVS, Genting Singapore, SJM and Caesars Entertainment
have allmade thepilgrimage to Japan’s second city in recentmonths tomeetwith thepowers that be
and scout locations.
Nationwide, themarket will be developed in two stages, as CLSA sees it. The first, dominated of
coursebyTokyoandOsaka,will likely includeonesmaller regional licenseaswell,probably inOkinawa—
“smaller” in this regard being a relative term as CLSA expects the investment there to total $2 billion,
which makes sense, considering the island’s proximity to Taipei and other prime target markets like
Shanghai. From there, a stringof regional resortswill be licensedoncegovernment and thepublichave
had anopportunity to assess the benefits and impacts of the first three. Thiswill begin after 2020, the
yearTokyohosts theSummerOlympics. As inOkinawa itwill proceedasavalue-addedpolitical exercise
in regenerating local economies in resort areas onHokkaido and in the south on Shikoku and on the
country’swesternmostmain islandof Kyushu, whose principal cities, Nagasaki and Fukuoka, aremuch
closer tomainlandChina than theyare toTokyo.
PachinkogiantSegaSammyownsagolf resortonKyushu, and they’vemadenosecretof theirdesire
for a piece of the action. In South Korea they’re partneringwith Paradise Group, the country’s largest
operator, onadestinationcasino in Incheon, andasof theendof the lastfinancial year theywere sitting
on theequivalent ofUS$1billion in cash. The report goes intodetail about the role they’re likely toplay
andprovides insightonanumberofprospective Japanesepartners, KonamiGaming, among them.
It’s awidefield, implicitlyat least, and certainlyan interestingone. It includes FujiMedia, ownersof
the country’s largest terrestrial TV channel and amajor play in film production and concert and event
promotion. Property giant Mitsui Fudosan and two of the biggest names in construction, Kajima and
Obayashi, are looking in as well, as are Mitsubishi and the Mitsui and Itochu conglomerates. Lawson
and Suntory, owners, respectively, of Japan’s second-largest convenience store chain and its third-
largestbreweryare spearheadinganallianceof corporateandgovernment leaders, tourismofficialsand
academicswhowill beworkingwith lawmakers andmakingpolicy recommendations and advocating
with thepublic.
To this last point,while it’sdifficult toknowwhat tomakeof theglimpse“It’sRainingYen!”provides
intohow removed the Japanesepeopleare from theprocess, the industryshouldwelcomeall thebuy-in
it canget frommainstreambusiness. It couldprove critical when thebattle for hearts andminds heats
up this spring.
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