Exactly which facilities count towards total casino floor space will be the primary factor in determining the level of investment operators are willing to make in a Japanese IR.
So says Global Market Advisors’ Brendan D. Bussmann in a column appearing in the September edition of Inside Asian Gaming, to be released next week.
Discussing the key issues facing operators as they step up their bid preparations following passage of the IR Implementation Bill through the Diet in July, Bussmann pointed to measurement of the area for a gaming facility as the number one question those operators are asking – a question that will ultimately determine if the US$10 million figure previously touted by the likes of Las Vegas Sands boss Sheldon Adelson and Melco Resorts’ Lawrence Ho becomes a reality.
“The first of these questions is the calculation of square area,” Bussmann says in reference to the government’s stipulation that the casino gaming area will be limited to 3% of each IR’s total facility.
“Does the calculation include parking structures, outdoor plazas or other amenities? This serves as the baseline to determine the ultimate calculation, based on the 3% limitation on casino area.
“Just as important as the gross square area metric is the casino square area calculation and what elements count, or do not count, into that equation.
“Under a Singapore model that might be followed, major walkways between non-gaming amenities do not count, but areas such as the pit and operational areas are considered as part of the total 15,000 square meter limitation imposed on Resorts World Singapore and Marina Bays Sands.”
Adelson addressed this very issue in LVS’ second quarter earnings call, stating that there were “a lot of variables” related to the 3% gaming space cap that will determine his company’s investment.
More importantly, Adelson hinted that Japan may not require certain back-of-house casino space to be included in the 3% – potentially a huge win for operators.
“We normally count front-of-house and back-of-house in our casino allocation or space but over there, we will count only front-of-house,” he said. “And, as we understand it, we won’t have to count the aisles and the food and beverage space as part of the 3%.
“So it’s a matter of how many gaming positions we put in but I think it’s too early now. This Implementation Bill will take at least a year for any city that wants to be involved to come up with their requirements and their criteria.”
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