National

Withdrawal by Las Vegas Sands a major setback for Japan's casino efforts

by Eric Johnston

Staff writer

The announcement last week by Las Vegas Sands Corp. that it was withdrawing from its quest to build an integrated casino resort is a major setback in Japan’s efforts to bring casino gambling to the country.

The decision by Sands and its founder, billionaire Sheldon Adelson, who is close to U.S. President Donald Trump, comes at a time when doubts are growing as to whether integrated resorts can open within the next few years, given the economic damage from the COVID-19 pandemic, continued concerns about problem gambling and the conditions Japan plans to impose on casino operators.

Adelson had been a particularly important figure in Japan’s efforts to grant a maximum of three casino licenses to three host areas. U.S. media reported that Abe and Trump met with Adelson in Washington in February 2017, during which time Trump mentioned Adelson’s efforts to build a casino in Japan. In addition, Adelson attended a breakfast with Abe and other American CEOs.

Asked about these reports by opposition lawmaker Kenji Eda in a January Diet session, Abe confirmed there were a number of casino heads at the breakfast meeting but denied Trump pressured him to give any operator favorable treatment.

Eda’s electoral district is in Yokohama, where the Sands had expressed an interest in building an integrated casino resort despite strong local opposition. Yokohama Mayor Fumiko Hayashi said after the Sands announcement that she was not surprised by the decision and that the city would continue to seek one of the three resorts.

But Hayashi’s term ends in August 2021, just a month after competing governments are supposed to have submitted their plans for hosting a casino resort to the central government. The controversy in Yokohama over whether to pursue a resort will thus be one of the key election issues just as the deadline approaches.

Joji Kokuryo, managing director of Tokyo-based Bay City Ventures and a casino gaming expert, says that for Yokohama and any other area seeking an integrated resort, there is no more important date than July 30, 2021.

“The submission period for IR implementation plans to the central government by local governments and their IR partners runs from Jan. 4, 2021, to July 30, 2021. This clear deadline affects every single timeline,” he wrote in an April report.

“Assuming that travel restrictions are eased enough within the next two months, there is just enough time for local governments to select their IR partner and come up with a reasonably sound business plan to submit to the central government,” he said in an email interview with The Japan Times.

However, the larger problem is whether it’s possible for interested resort entrants to first take part in the selection process with a full understanding of the requirements, and then work quickly and efficiently with the governments concerned under a tight deadline. Especially given all the logistical problems caused by the coronavirus.

“As long as the July 2021 deadline for IR implementation plans does not change, there will be no changes for the first round of IR implementation licenses,” Kokuryo told The Japan Times.

Political and corporate enthusiasm for casino resorts remains strongest in Osaka and in Wakayama Prefecture. In Osaka, a consortium led by MGM Resorts International and Orix Corp. is the lone bidder for a resort on Yumeshima, an island in Osaka Bay. Originally, Osaka wanted the casino to open before the 2025 World Expo, which will also be held on Yumeshima.

In March, however, the MGM-Orix consortium requested a three-month extension for submitting its proposal, to July, and Osaka officials then hoped it could open in 2026. But the nationwide shutdown due to the coronavirus means construction for access roads and a subway extension to Yumeshima have come to a halt, raising questions about how that will affect Osaka’s timeline.

MGM says it remains committed to Osaka. But with its casinos taking heavy losses from the pandemic, there are now questions in Osaka as to how that commitment might change.

“Depending on the financial results of its properties in Las Vegas and Macao, there’s a sufficient possibility that the integrated resort plan submitted by MGM will be reduced in size from the original plan,” said Takashi Kiso, CEO of the International Casino Institute, a Tokyo-based consultancy.

In Wakayama, plans are still moving forward for a casino project. Last week, the prefecture announced Canada-based Clairvest Neem Ventures and Suncity Group Holdings Japan Co. would submit formal proposals for building one on Marina City, an artificial island in Wakayama Bay. Similar plans for a casino resort are also moving forward in Nagasaki.

The next casino-related deadline is July 26, when the government is supposed to release its final version of the National Basic Policy, a draft of which was agreed to last year. At present, the government says the deadline is unchanged despite the social and economic effects of the pandemic.

Coronavirus banner