IAG JANUARY 2017 WEB - page 11

January2017
inside
asiangaming
11
consensus is that the authorities will grant two or three licenses
initially. Spectrum’s Paul Bromberg thinks it will be two licenses
from among Osaka, where local authorities have exhibited great
enthusiasm for an IR, Tokyo, where they’ve been preoccupied with
Olympic preparations, and Yokohama across Tokyo Bay. An initial
third licensewould likelygo toa touristdestinationsuchasHokkaido
in the north or Okinawa in the south. Union Gaming Head of Asia
Equity Research Grant Govertsen believes there could be multiple
licenses in themajormetropolises.
“Given the size of the local population and significant interest
from nearly all of the world’s top IR operators, there will be plenty
of demand to justify, if not necessitate, at least three IRs from the
outset,”MrGallaway says.
Japan’s regulatory framework is leaning away fromMacau and
toward Singapore, Mr Bromberg, a specialist in regulatory issues,
says. That could mean tight controls on junket promoters and an
entry tax for Japan residents, both likely crimping potential profits
and thus IR investment. Given Japan’s mountain of government
debt, lawmakersmay also set a high tax rate, another constraint on
profitability.
LOCALTOUCH
As Japan’s flirtation with IRs dragged on, sentiment grew for
ownershipgroups to include Japanesepartners.
“Inenteringanynew jurisdiction, it isadvantageous toanybidder
to have local partners,” Mr Gallaway says. “I would suspect that
Las Vegas Sands:
Founder Sheldon Adelson declared LVS would
spend a stunning US$10 billion on a Japan IR. Marina Bay Sands
President and CEO George Tanasijevich, bombastic Mr Adelson’s
polaropposite,spearheadedLVS’ssuccessfulSingaporeoddcoupling
and, as the longtime faceof LVS Japanefforts, hasbuilt relationships
withpotential localpartners.Perhapsonlya requirement for Japanese
majority IRownershipwouldderail LVS.
Genting Singapore:
“LVS and Genting Singapore are Japan
frontrunners by amile,” an industry executive declares. “What they
did inSingapore is exactlywhat Japanwants.” Pulling out of Resorts
World Jeju removesadistractionandResortsWorldLasVegasshould
be substantially completed before any Japan construction would
start. A cashedup local partnerwouldbe aperfect fit.
WynnResorts:
Wynn has the premium cachet Japan craves and
founder Steve Wynn has laid groundwork there as long as anyone.
ButWynnResorts’ oustingof former vice chairman, pachinkomogul
KazuoOkada, likelydoomsanybid. “It’snot thatpeople loveOkada,”
a sourcedeclares. “They don’t likehowWynn treatedhim.”
MGM Resorts International:
“MGM believes they’ve got
Osaka lockedup,”a topWesternexecutive inAsiasays. A Japanese
source also links the two. Chairman and CEO James Murren has
tried to overcome questions about MGM’s financial wherewithal
by promising to spend up to US$10 billion through a REIT [real
estate investment trust] structure. After opening acclaimed
National Harbor outside Washington DC, the company’s hopes
ride onMGMCotai.
Galaxy Entertainment:
The best chance among Macau based
operators but still a longshot. A Japanese source insists authorities
don’t want companies closely associated with China. Galaxy’s
successful Macau relationship with Hotel Okura plus its minority
stake inMonteCarlo’s casino are aces in thehole.
MelcoCrown:
TheOctoberarrestofCrownemployees inmainland
China for illegal gambling promotion likely sinks Japan chances
for the partnership and Crown individually. Lawrence Ho’s Melco
International partnershipwithHardRockonaCyprus IR couldprove
itsway forward in Japan.
SJMHoldings:
Patriarch Stanley Ho’s legacy takes SJM out of
the running.
Paradise Group:
Paradise City, a US$1 billion IR developed with
Japan’s Sega Sammy, puts South Korea’s top foreigner casino
operator in the Japan conversation.
Japan’spachinkoparlors turnover
more thanUS$200billionannually
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