Let The Games Begin

The soul of the Japanese gambling resort industry, which is not yet legalized but probably will be by the end of the year, at least in draft bill form, is being fought over by two non-Japanese casino moguls.

Photo: AP Photo
Meeting with Madrid officials at the site of the new EuroVegas casino project.

The heavyweight bout appears to be between Sheldon Adelson of Las Vegas Sands Corporation and Neil Bluhm of Rush Gaming.

One of the main points of contention is where the first gambling resort will be built. Adelson is betting on Tokyo, while Bluhm has his sights set on Osaka, which happens to be in a sister-city relationship with Chicago, where Bluhm has a casino.

Owing to its density, local legal structure and highly organized construction industry, building a resort in Tokyo will be more “complex, time-consuming and … expensive,” says Reuters, and while Adelson thinks Osaka is a good possibility, too, he feels Tokyo is the prize because of its more affluent population.

He also thinks he is the best person to break into the field in the capital because of his money reserves. He has already pledged $10 billion to a Tokyo resort project, an amount his rivals can’t match.

Morgan Stanley recently analyzed the prospects and figures that an investment of $5 billion in a casino resort in Tokyo would return less than 20 percent due to “rising costs” and competition from Macau for high-rolling Chinese VIP customers, who are seen as Asia’s main market for the gaming industry.

Nevertheless, Adelson remains “bullish” on Tokyo and Japan in general.

Bluhm, however, is not intimidated, and thinks Adelson is just “throw[ing] big numbers around in order to get picked.” His pledge for Osaka is more in the “$4 billion to $5 billion range.” He also implies that Adelson will have to compete with operators from Macau, who are also interested in Tokyo. That would leave him the sole interested foreign party in Osaka and allow him to work more readily with local partners, though he admits “they are probably not used to having partnership relationships like we are.”

Osaka’s government wants any foreign firm who comes into the city to form a consortium or a joint venture with local businesses. Another advantage that Osaka has is that its land prices are about 10 percent of Tokyo’s, and the local business lobby told Reuters that it can offer a development area “three times bigger than that occupied by Singapore’s two casino resorts.”

More significantly, Osaka has a reputation, at least within Japan, of being more business savvy than Tokyo, which would probably translate as more flexibility in the adoption and development of casino gambling. Also, Tokyo is busy preparing for the 2020 Summer Olympics.