Two U.S. 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 legalize 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 $40 billion, according to broker CLSA.

Lawmakers who support legalizing 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 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 $2.6 billion, 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 Corp., who Forbes says is worth close to $39 billion, has pledged to spend $10 billion as Japan opens up to legal gambling — an offer he says his rivals can’t match.

In a recent report, Morgan Stanley predicted that a Japanese casino resort costing more than $5 billion would offer a return on investment of below 20 percent 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 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 his rivals’ talk of big spending.

“Sometimes people like to throw big numbers around in order to get picked. . . . We have been more for Osaka in the $4 to $5 billion range,” he said.

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 that Osaka wants a large casino resort with convention and entertainment facilities. “Osaka city is flexible. We’re ready to discuss anything.”

Kansai Keizai Doyukai, a leading local business lobby, reckons land costs in Osaka will be a tenth of those in the capital. 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 has a reputation for being more extroverted than Tokyo, and local authorities have designated a 170-acre (68-hectare) plot of reclaimed land known as Yumeshima, as the preferred resort site.

Osaka Gov. Ichiro Matsui said last month that casino operators would invest around $5 billion for an integrated resort, and bear some of the infrastructure costs, such as a potential rail link.

In comparison, officials in Tokyo, which is 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 Gov. Yoichi Masuzoe, a former health minister, has yet to say whether he will seek a casino license for the capital.

“We’re not like Osaka and Yokohama. We haven’t stepped on the accelerator and said let’s go,” said Yukimasa Saito, an official at the governor’s office.

Tokyo’s Odaiba waterfront area has been touted by executives and officials as a preferred location for any casino in the capital, but securing enough land could be a challenge.

Around 14 hectares (34.6 acres) are available behind the headquarters of TV broadcaster Fuji Media Holdings. Doubling that would require rezoning parks and buying land owned by a real estate developer and Toyota Motor Corp., 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.

In Osaka, officials say a casino would help spur tourism beyond heavily populated Tokyo. Osaka is just half an hour from Kyoto and Kobe.

Other regional hubs, such as Sasebo and the aging port city of Otaru, have said they would welcome casinos 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 firms in a range of industries.

“If casinos come, it can bring more tourists to spend big money. Osaka has much less money (than Tokyo). We need it more,” said architect Yusuke Sawada, 30.

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