Caesars to MGM in Talks With Osaka on $4.8 Billion Casino Plan
Officials met with Caesars and Genting last year and are scheduled to sit down with MGM in the next few months as Japan’s second-biggest metropolis expects Japan to end its ban on casinos, Osaka Prefecture Governor Ichiro Matsui said in an interview. “It’s just a matter of time before casinos are legalized,” he said.
A gambling complex on reclaimed land Osaka owns would lure investment and tourists to a region battling for projects that may otherwise go to Tokyo, Matsui said. Lawmakers from the ruling Liberal Democratic Party and the Japan Restoration Party have said they aim to legalize casinos in a Diet session starting this month.
“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,” Matsui, 49, said in Osaka on Jan. 20. “We’d need global casino-operators’ involvement and expertise as the business is new to Japan,” said Matsui, who also is secretary-general of the Japan Restoration Party.
An Osaka gambling resort would probably reap annual gross gaming revenue of as much as $5 billion, according to a report compiled by CLSA Asia-Pacific Markets. Land in Osaka’s bayside area cost about one-10th as much as parcels in Tokyo’s Odaiba area, where Mitsui Fudosan Co., the country’s biggest developer, is among companies proposing entertainment resorts.
“Caesars takes its cues from both the local government as well as local partners, and accordingly, have toured some of the potential sites in Osaka Bay,” said Steven Tight, president for international development at Las Vegas-based Caesars. He confirmed that the casino operator met with Osaka officials last year and said they have been in talks to pursue an integrated resort in Tokyo and Osaka for more than 10 years.
Tight said in September the company was talking with potential local partners including gaming machine makers Sega Sammy Holdings Inc. (6460) and Konami Corp.
Osaka is close to selecting Yumeshima, a reclaimed island in Osaka Bay, as the proposed casino resort site, following discussions with Mayor Toru Hashimoto, Matsui said. The governor’s envisioned plan calls for completion of a casino resort before the 2020 Olympic Games in Tokyo.
Betting on horse, boat and bicycle races is legal in Japan, which also has state-run lotteries and pachinko, which is similar to slot machines and pinball, while casinos remain banned.
Union Gaming Group estimates Japan could turn into the world’s second-largest gambling hub with $10 billion in annual revenue. International gaming companies have been considering billions of dollars in investment as Tokyo’s selection to host the 2020 Games boosts confidence casinos will be legalized.
The success of gambling resorts in China’s Macau, where casino revenue is now seven times that of the Las Vegas Strip, and in Singapore has also encouraged supporters of creating competing casino complexes in Japan.
Tycoons from Sheldon Adelson, founder of Las Vegas Sands Corp., to Lawrence Ho, Chief Executive Officer of Melco Crown Entertainment Ltd. and Wynn Resorts Ltd. founder Steve Wynn are among those expressing interest in Japan.
Galaxy Entertainment Group Ltd. Deputy Chairman Francis Lui said in a November interview the casino operator would consider investing at least $5 billion in Japan and Taiwan if allowed. Wynn Resorts Ltd. said in September it will consider investing more than $4 billion in Japan casino resorts, while MGM Resorts International (MGM) President Bill Hornbuckle said his company would spend “several” billion dollars.
Genting Singapore President Tan Hee Teck didn’t answer calls to his office yesterday. Calls and e-mail to Alan Feldman, executive vice president of global government and industry affairs at MGM Resorts were not answered outside normal business hours.
Matsui’s vision for casino resorts includes entertainment facilities and train extensions to the reclaimed island, about 2 kilometers (1 mile) from the Universal Studios Japan theme park along the Osaka waterfront.
The casino plan also comes after slumps in the television and electronics industries that cut output at factories in the region, home to electronics makers including Panasonic Corp. and Sharp Corp. (6753)
Osaka’s population fell by 5,936 in December to 8.86 million, according to local government data. Tokyo has 13.3 million people, while neighboring Kanagawa prefecture, home to Yokohama, has about 9 million.
“To avoid an excess concentration of population and economic growth in the Tokyo area, Osaka is pushing for more infrastructure development and stimulating investment from overseas,” Matsui said. “That’s vital for Osaka’s future.”
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