Japan’s potential casino industry is luring major investors and Las Vegas Sands is willing to spend $10 million on a new resort.
Over the past decade, Asia has been the centre of attention in international gambling news. While casinos in the US are losing customers, Asia’s land-based venues are becoming increasingly popular among gamblers world-wide.
Financial reports for 2013 show that Macau is the undisputed champion of the international gambling industry, worth $45 billion and registering a 20% year-to-year growth. While the former Portuguese colony continues to develop, Filipino lawmakers also have plans to expand the country’s casino industry.
The entire Asian gambling market is flourishing, but industry experts are convinced that Japan will be the next big thing. If their predictions are accurate, the Land of the Rising Sun will become the world’s second-biggest gambling destination.
Betting on the Olympics
Several conservative countries have embraced the casino industry during the past few years and the strategy has proved extremely profitable. Until recently, Japan has stubbornly refused to join their ranks. It wasn’t until recently that state lawmakers started considering the benefits of legalizing casinos.
The country’s capital will have the honor of hosting the 2020 Summer Olympics and local authorities are looking to cash in on the popular event. In order to help finance the event, they might change current Japanese gambling laws to hand out four casino licenses in Tokyo and Osaka.
Osaka officials are trying to get a head start and tempt investors with cheaper property. Governor Ichiro Matsui told reporters: “Even before the casino bill is passed, Osaka is crafting details of the resort plan so that we could embark on the project at any time. We’d need global casino-operators’ involvement and expertise as the business is new to Japan.”
The world’s biggest casino developers are now preparing to compete for the valuable Japanese casino licenses. Executives of Caesars Entertainment have already met with Osaka officials to discuss investment opportunities. The company is having a hard time being accepted on the Asian gambling market due to its unpaid debts, so many believe Caesars might have a hard time convincing Japanese authorities to grant it a license.
MGM Resorts International and Wynn Resorts have also courted the local authorities with impressive proposals. The two companies have offered to invest and estimated $4.8 billion in their Japanese casino resorts, should officials give the green light for gambling in the area. Both are already present on the Asian market and running profitable businesses in Macau.
The three American companies face tough competition from Malaysian developer Genting – owner of casinos in Singapore, New York, and soon Las Vegas – but their biggest battle will be against Las Vegas Sands.
Prepared for “whatever it takes”
Raking in massive profits from its operations in Macau, Las Vegas Sands has learned that the Asian gambling market is pure gold. According to a financial report released by company officials, 86% of Las Vegas Sands’ revenues come from the Asian market, compared to a modest 14% made by its properties in America.
The company’s chairman and chief executive officer, Sheldon Adelson, seems determined to blow away all competition, with an unbeatable offer of $10 billion. “We will spend whatever it takes,” he told reporters at a media briefing held in Tokyo. “We could pay all cash. We don’t have to, but we will borrow money in a typical mortgage-to-value ratio.”
According to Adelson, Las Vegas Sands is already settling in, opening an office in Japan and hiring people. The casino developer is also considering working with a local partner, but further details have not been revealed yet.
It’s no surprise the company’s chairman is so eager to invest in Japan, as Union Gaming Group estimated the country’s casino market to be worth $10 billion in annual revenue. State officials are expected to pass a new gambling bill soon and construction of the new casinos could begin in the following years. It remains to be seen if the Japanese market will live up to expectations.