Inside Asian Gaming

INSIDE ASIAN GAMING | February 2014 10 COVER STORY Source: John D. Kasarda and Taoyuan Aerotropolis J apan is the story of 2014. The government of Prime Minister Shinzo Abe came to power promising to revitalize the country’s moribund economy with plans that include stimulating consumption through a range of quantitative-easing measures and opening up the world’s third-largest economy to resort casinos. The initiative to legalize casinos has been led in the Diet by the governing Liberal Democratic Party through a cross-party Alliance for the Promotion of International Tourism. A legalization bill was submitted by the LDP in December and is expected to pass with multi-party support. The talk now is centered onwhether it will pass in the legislature’s current session, which runs through June. An implementation bill also is being crafted to define the licensing process and establish a framework for regulating the industry. Two integrated resorts will be licensed in Tokyo and Osaka and are expected to be similar in size and scope to those in Singapore, and there is talk of two more in regional areas. Officials in Osaka began planning their IR in 2013 in anticipation of the bill’s passage and have spoken to Caesars Entertainment and Genting and are planning to hold talks with MGM Resorts International. The governor of Osaka Prefecture, Ichiro Matsui, who is also secretary-general of the right-wing Japan Restoration Party, has identified a reclaimed island called Yumeshima in Osaka Bay as ideal for a gaming complex and said his government is in discussions to that end with Osaka Mayor Toru Hashimoto. Hashimoto is co-leader of the JRP with Diet member and former Tokyo Governor Shintaro Ishihara. Once up and running, Japan’s casino industry could become the world’s second-largest, with analysts’ estimates ranging from US$10 billion-$15 billion in annual revenue. Given the country’s heavily urbanized population, level of affluence and propensity to gamble— current avenues include a pachinko industry estimated at more than US$35 billion by analysts, as well as horse racing, lotteries and other forms of gaming—this looks well within reach. Analysts also note the country’s concentration of high net-worth individuals—the largest number in Asia, with a cumulative net worth of US$4.2 trillion— and its strong infrastructure and transport connections. Japan is also close to Beijing and Shanghai, China’s wealthiest cities and major sources of visitors to the casinos in South Korea and Singapore, though recent strained relations with China could affect visitor numbers. Operators are understandably eager to exploreopportunities. Inaddition toCaesars, Genting and MGM, Las Vegas Sands, Galaxy Entertainment Group, Wynn Resorts, Melco Crown Entertainment and SJM Holdings are all expected to pitch multibillion-dollar resort proposals for Tokyo, Osaka and other major cities. All say they either plan to or are open to joining with Japanese companies. Reports in early 2014 stated that a range of Japanese businesses were lining up to support legalization and to share in the likely spoils. Mitsui & Co., Mitsubishi, Itochu Corp and Fuji Media Holdings have been mentioned as possible partners, together with gaming machine makers Sega Sammy Holdings and Konami. Supporters are hoping the Tokyo resort will be open in time for the 2020 Summer Olympics there, and Mr Matsui envisions completion of the Osaka resort beforehand. It is also likely, according to analysts, that the major locations could open before the regional ones. JAPAN The Key Player Once up and running, Japan’s casino industry could become the world’s second-largest, with analysts’ estimates ranging from US$10 billion-$15 billion in annual revenue. Japanese gamblers will have more to choose fromwith legalization.