Inside Asian Gaming

September 2012 | INSIDE ASIAN GAMING 15 This herculean task has consumed the better part of his four years at the helm. To his credit, though, he’s displayed more than financial wizardry over this time. His strengths as a strategic thinker have kept the company as innovative and opportunistic as it is big. Its MGM Hospitality arm has progressed from vision to reality in the form of a new luxury resort onChina’sHainan Islandand the scheduled opening early next year of MGM Grand Ho Tram on Vietnam’s South China Sea coast. MGMGrand, Bellagio and SkyLofts hotels are planned or in various stages of development in North Africa, in Dubai and Abu Dhabi and in India, and a number of five-star properties are being mapped in cities across China in partnership with the renowned Diaoyutai State Guesthouse. In North America, Murren & Co have been first on the ground in Toronto, which is considering hosting a resort-scale casino, they appear to have the pole position for a casino in the US state of Maryland, and they’ve submitted plans for a resort casino in Massachusetts. They’ve been no less ambitious in pursuing a stake in Macau’s burgeoning Cotai resort district, where MGM China has applied for permission to develop 17 acres into a 1,600-room luxury hotel with 500 table games and 2,500 slots, a three-year project priced at US$2.56 billion. Asian Gaming 50 – 2012 10 Kazuo Okada Chairman Universal Entertainment Corp Kazuo Okada is playing for very high stakes in developing a casino project in the Philippines. As The Wall Street Journal noted recently, “Success would make him a formidable player in the Asian casinomarket. … But failure would pummel his company, Universal Entertainment Corp, which already has put US$500 million, equivalent to some nine years of earnings, into the Philippines project.” Manila Bay Resorts, the US$2 billion complex being developed by Tiger Resorts Leisure and Entertainment Inc, a subsidiary of Universal Entertainment, broke ground on 26th January and is slated to open in 2014—requiring Mr Okada to soon pump at least $1 billion more into the project—and is expected to include 500 gaming tables, 3,000 slots, 2,000 hotel rooms, various entertainment facilities and the world’s largest oceanarium. Mr Okada’s decision to pursue it has also losthimhislongtimefriendandpartner,Steve Wynn. Mr Okada had originally wanted to develop the project together with Mr Wynn, and the pair had traveled to the Philippines in 2010 to explore the possibility of making an investment there, but Mr Wynn and his company’s board balked, concerned about the Philippines’ reputation for corruption. Mr Okada, who made his fortune the hard way, via the tough, competitive— and in the past murky—world of Japan’s pachinko machine manufacturing, is known for following his own gut instincts. He chose to ignore the concerns of his partner and go it alone in the Philippines, setting off on a path to becoming a competitor to Wynn Macau in luring wealthy Chinese gamblers. This sparked a bitter feud involving lawsuits, countersuits, corruption accusations, insults, the ouster of Mr Okada from the board of Wynn Macau, and the forced redemption of his shares in parent company Wynn Resorts (which accounted for the largest single holding in the company at around 20%) at a steep discount and payable over 10 years— one of the many issues Mr Okada is currently contesting in court. Although one could question whether Mr Okada may have lost too much in going ahead in the Philippines, it could be a reasonable gambit if his ultimate goal is to get his hands on one of the proposed integrated resort licenses in Japan that many think will soon be approved after nearly two decades of debate. Considering the grey-area pachinko industry in Japan brings in roughly US$27 billion per year, a legal casino industry in the country could easily eclipse most of the world’s gaming destinations. At one time it seemed as though Mr Okada was Mr Wynn’s meal ticket in Japan if that happy and much talked about day of casino liberalization ever dawned. It now appears Mr Okada is attempting to position himself to savor that meal himself. Although Steve Wynn and Sheldon Adelson have legitimate grounds for their aversion to getting involved in the Philippines, they have proven track records for developing internationally renowned casino resorts, while Mr Okada has only provided financial backing. Although his Manila Bay project offers uncertain returns, it is an opportunity to prove he is equally capable of building and operating an impressive IR. In addition to Manila Bay Resorts, he is busily working to create a gaming and entertainment empire across Asia under his Universal Entertainment brand. Ranked by Forbes as the 17th wealthiest person in Japan with a net worth of US$1.8 billion as of March this year, he announced numerous new ventures and investments in the first half of 2012. He met with officials in South Korea in June and pledged to contribute 60% of the budget for a proposed US$4.21 billion integrated resort in the city of Incheon. He also opened three high-end restaurants in Hong Kong and is looking to open more in Shanghai and Japan. As proof of his acumen in serving casino players, his gaming machine development unit, Aruze Gaming America, which he took private in 2009, has leveraged his decades of insight into player behavior and player preferences from the pachinko market to create some of the most sought-after games on casino floors around the world. If Mr Okada pulls off his projects in the Philippines and South Korea and goes on to secure rights to develop a casino resort in his homeland, his current courtroom dramas involving Mr Wynn will likely amount to little more than a slight bump in the road to a regional gaming empire.