Share

Billionaires bet on Japan casino resorts

Tokyo - Two US billionaires are betting on rival cities, Tokyo and Osaka, to be the first in Japan to open casino resorts - once the government gives the go-ahead to legalise gambling.

Japan is one of the world's last untapped gaming markets and could become the third largest gambling destination after Macau and the United States, with annual revenue of over $40bn according to broker CLSA.

Lawmakers who support legalising casino gambling hope to see initial draft legislation this year, with the first resort opening by 2020, when Tokyo hosts the Olympic Games.

In a race for first-mover advantage, 76-year-old Chicago real estate mogul Neil Bluhm has set his sights on the southern commercial hub of Osaka, while Las Vegas gaming tycoon Sheldon Adelson, four years his senior, is putting his weight behind a Tokyo flagship resort.

Bluhm, who owns casinos in Pennsylvania, Chicago and Niagara Falls, has a net worth of $2.6bn according to Forbes.

The former lawyer and now head of Rush Gaming believes Osaka, one of Chicago's 'sister cities', has the kind of flexible local government that will help drive this project and crucially has "shovel ready" casino sites.

He says the whole process - from approval to construction - in Tokyo will be more complex, more time-consuming, and more expensive.

While Adelson hasn't ruled out pitching for Osaka, too, he sees Tokyo as the main prize given its highly affluent 13.2 million population.

The CEO of Las Vegas Sands, who Forbes says is worth close to $39bn has pledged to spend $10bn as Japan opens up to legal gambling - an offer he says his rivals can't match.

Throwing big numbers

In a recent report, Morgan Stanley predicted that a Japanese casino resort costing more than $5bn would offer a return on investment of below 20% due to rising costs and a struggle to attract enough high-rolling Chinese Vip customers.

Sands, which has casinos in Macau, Singapore and Las Vegas, remains bullish on its Japan plans given the country's wealthy population and proximity to China.

"We are very confident in our ability to generate a return that would be satisfactory to our shareholders," George Tanasijevich, managing director for global development, said in a phone interview. He did not elaborate.

Bluhm shrugs off rivals' talk of big money spending.

"Sometimes people like to throw big numbers around in order to get picked...We have been more for Osaka in the $4bn to $5bn range," he told Reuters.

Bluhm also reckons he may have an edge over the big operators in Macau - who he thinks likely prefer Tokyo - by working alongside local partners.

"In reality, they are going to want to totally run the project. They are probably not used to having partnership relationships like we are," he said.

Osaka's government is keen for foreign operators to use Japanese firms in a consortium or joint venture, said Masayuki Inoue, director general of the city's economic strategy bureau, stressing Osaka wants a large casino resort with convention and entertainment facilities.

"Osaka city is flexible. We're ready to discuss anything."

The Kansai Keizai Doyukai, a leading local business lobby, reckons land costs in Osaka will be a tenth of those in the capital, some 250 kms to the northeast. And it says the city can offer a development area three times bigger than that occupied by Singapore's two casino resorts - Marina Bay Sands and Resorts World Sentosa.

Fifty-six percent of Osaka residents polled in April said they were positive about the city of 2.8 million people having a casino resort.

The city, located on Honshu island at the mouth of the Yodo River has a reputation for being more extrovert than Tokyo, and local authorities have designated a 170-acre plot of reclaimed land, known as Yumeshima, as the preferred resort site.

Osaka's Governor Ichiro Matsui told Reuters last month that casino operators would invest around $5bn for an integrated resort, and bear some of the infrastructure costs such as a potential rail link.

Tokyo tortoise

In comparison, officials in Tokyo, already setting about preparing for the 2020 Olympics, appear more tortoise than hare.

Industry executives worry privately that Tokyo is so focused on getting the Olympics right that there's little momentum driving the casino issue.

Tokyo Governor Yoichi Masuzoe, a former health minister, has yet to say whether he will seek a casino license for the capital or not.

"We're not like Osaka and Yokohama. We haven't stepped on the accelerator and said let's go," Yukimasa Saito, an official at the governor's office, told Reuters.

A waterfront area called Odaiba in Tokyo Bay has been touted by executives and officials as a preferred location for any casino resort in the capital, but securing enough land could prove a challenge.

At present, around 14 hectares are available for sale by the city behind the headquarters of TV broadcaster Fuji Media Holdings.

Doubling that would require re-zoning parks and buying land currently owned by a real estate developer and Toyota Motor, said an official in Tokyo's waterfront development division.

The department sparked concern among some casino watchers about Tokyo's intentions last month when it said it would auction a 2.7-hectare plot in the Odaiba area for a 10-year lease - effectively taking the lot out of the equation for casino resort developers.

Tourism spread

In Osaka, officials say a casino would help spur Japan's tourism beyond heavily populated Tokyo. Osaka is just half an hour from the former imperial capital Kyoto and trade hub Kobe.

Other regional hubs, such as Sasebo in the south and the ageing port city of Otaru, have also said they would welcome casino plans to boost tourism.

None are as far advanced in the process as Osaka - where a common local greeting is "mokari makka?" - are you making money?

While rival operators - including Melco Crown Entertainment , MGM Resorts International and Genting Singapore - are eyeing both Tokyo and Osaka, Bluhm says he's already in talks with Osaka-based Japanese companies across a range of industries.

For residents like Yusuke Sawada, a 30-year-old architect, a casino resort could be a boost for local Osaka businesses.

"If casinos come, it can bring more tourists to spend big money. Osaka has much less money (than Tokyo). We need it more."

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
18.94
-0.0%
Rand - Pound
23.90
-0.0%
Rand - Euro
20.41
+0.1%
Rand - Aus dollar
12.32
+0.1%
Rand - Yen
0.13
-0.0%
Platinum
908.05
+1.2%
Palladium
1,014.94
+1.3%
Gold
2,232.75
-0.0%
Silver
24.95
-0.1%
Brent Crude
87.00
+1.8%
Top 40
68,346
0.0%
All Share
74,536
0.0%
Resource 10
57,251
0.0%
Industrial 25
103,936
0.0%
Financial 15
16,502
0.0%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders