INSIDE ASIAN GAMING | March 2014 4 Inside Asian Gaming is an official media partner of: www.gamingstandards.com Inside Asian Gaming is published by Must Read Publications Ltd 5A FIT Center Avenida Comercial de Macau Macau Tel: (853) 8294 6755 For subscription enquiries, please email
[email protected] For advertising enquiries, please email
[email protected] or call: (853) 6680 9419 www.asgam.com Publisher Kareem Jalal Associate Publisher Philip Annetta Director João Costeira Varela Editor James Rutherford Operations Manager Cheryl Kuok Contributors Richard Meyer, Juliette Boone, Paul Doocey, Keith Kefgen, I. Nelson Rose Graphic Designer Rui Gomes Photography Ike, Gary Wong, James Leong, Wong Kei Cheong James Rutherford We crave your feedback. Please email your comments to
[email protected] EDITORIAL From Tokyo, a Dispatch I nvestment brokers CLSA have published a new report on Japan that envisions a market of upwards of 12 casinos and US$40 billion in gaming revenue over the next decade. Novella in length at 136 pages, “It’s Raining Yen!” is its apt title, and Newsweek columnist and Le Figaro correspondent Régis Arnaud helped put it together. Mr Arnaud is editor-in-chief of France Japon Eco, the business and public affairs journal of the French Chamber of Commerce and Industry in Japan, and a seasoned observer of the Japanese political scene. His involvement has resulted in an exploration 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 anything yet published for general 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 unsettling glimpse into what awaits the Diet’s pro-casino forces once the debate on casino legalization gets under way, probably in May, and has to be sold to the Japanese people. For example, one in five respondents weren’t even aware a legalization effort is under way, and only 7% professed any awareness of the details. “Survey results such as these,” the report concluded, “are an indication of the scope of how uninformed the general Japanese populace is regarding IR/casino legalisation efforts.” Yet, it wasn’t this that made headlines when the report was released in conjunction with an investment conference CLSA hosted in Tokyo last month—instead it was Sheldon Adelson with his boast that Las Vegas Sands will spend “whatever it takes” to ensure it lands one of the two licenses earmarked forTokyo and Osaka, presumably the covetedTokyo license.“We can spend $10 billion without borrowing money,” he said, talking down his competition on the first day of the conference. “They can’t.” Not to be outdone, another of the A-listers in attendance, MGM Resorts’James Murren, vowed to call his rival’s bet when he presented the next day. MGM offers more in terms of non-gaming attractions than any operator in Las Vegas, he claimed, and he assured his Japanese audience,“We will overinvest early on to ensure, as we have done everywhere else, that we have properties that are built to last and that would stand additional competition.” Mr Murren had been in Osaka the week before, where CLSA expects one of the two largest and most expensive gaming resorts in the world will be built—the other will be in Tokyo—each commanding an investment in the realm of US$8 billion, and LVS, Genting Singapore, SJM and Caesars Entertainment have all made the pilgrimage to Japan’s second city in recent months to meet with the powers that be and scout locations. Nationwide, the market will be developed in two stages, as CLSA sees it. The first, dominated of course by Tokyo and Osaka, will likely include one smaller regional license as well, probably in Okinawa— “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 string of regional resorts will be licensed once government and the public have had an opportunity to assess the benefits and impacts of the first three. This will begin after 2020, the year Tokyo hosts the Summer Olympics. As in Okinawa it will proceed as a value-added political exercise in regenerating local economies in resort areas on Hokkaido and in the south on Shikoku and on the country’s westernmost main island of Kyushu, whose principal cities, Nagasaki and Fukuoka, are much closer to mainland China than they are to Tokyo. Pachinko giant Sega Sammy owns a golf resort on Kyushu, and they’ve made no secret of their desire for a piece of the action. In South Korea they’re partnering with Paradise Group, the country’s largest operator, on a destination casino in Incheon, and as of the end of the last financial year they were sitting on the equivalent of US$1 billion in cash. The report goes into detail about the role they’re likely to play and provides insight on a number of prospective Japanese partners, Konami Gaming, among them. It’s a wide field, implicitly at least, and certainly an interesting one. It includes Fuji Media, owners of the country’s largest terrestrial TV channel and a major 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- largest brewery are spearheading an alliance of corporate and government leaders, tourism officials and academics who will be working with lawmakers and making policy recommendations and advocating with the public. To this last point, while it’s difficult to know what to make of the glimpse “It’s Raining Yen!” provides into how removed the Japanese people are from the process, the industry should welcome all the buy-in it can get from mainstream business. It could prove critical when the battle for hearts and minds heats up this spring.