Las Vegas Sands Ready to Invest $10 Billion in Japan Casino
“We will spend whatever it takes,” billionaire Chairman and Chief Executive Officer Sheldon Adelson said at a media briefing in Tokyo. “We could pay all cash. We don’t have to, but we will borrow money in a typical mortgage-to-value ratio.”
Sands is opening offices and hiring in Japan, said Adelson, who’s attending a conference on investing in Japan today. The company would also consider working with a local partner that could make more than a financial contribution, he said, without elaborating or naming any companies.
While betting on horse, boat and bicycle races is allowed in the world’s third-largest economy, casinos are currently banned. Its potential as a gambling market has drawn the interest of Sands, MGM Resorts International (MGM) and Wynn Resorts Ltd. After a decade of discussions by politicians, Tokyo’s selection to host the 2020 Olympic Games has boosted confidence that a law legalizing casinos will be passed.
Union Gaming Group estimates Japan’s casino market will generate $10 billion in annual revenue, making it Asia’s second biggest, trailing the southern Chinese city of Macau. The former Portuguese colony, the only place in China were casinos are legal, had $45.2 billion casino gaming revenue in 2013, seven times that of the Las Vegas Strip.
Adelson reiterated the company is still interested in building resorts in both Tokyo and Osaka and wouldn’t consider smaller locations such as Okinawa because they wouldn’t draw as much convention business as the big cities.
“Adelson’s usual development model is to build a large-scale resort that includes convention centers and shopping malls,” D.S. Kim, a regional gaming analyst at BNP Paribas based in Hong Kong, said by phone. “He’d only consider metropolitan cities with wealthy population and infrastructure which can support heavy visitor traffic.”
Adelson has a net worth of $38.1 billion, the ninth richest globally, according to the Bloomberg Billionaires Index. The company invested in Macau casinos more than 10 years ago and has since become the largest foreign operator in the city, which is about an hour by ferry from Hong Kong.
Macau accounted for 61 percent of Las Vegas Sands’s adjusted earnings before interest, taxes, depreciation and amortization last year, with almost 30 percent from its one casino in Singapore and the remaining from the U.S., according to data compiled by Bloomberg.
Sands plans to focus on Asia after abandoning in December a plan to build a $30 billion mega-resort in Spain. Adelson had said he’s looking at a different model of doing Asia-like integrated resorts in major European cities.
MGM Resorts would invest “several” billion dollars once the Japan market opens up, President Bill Hornbuckle said last year. Wynn’s investment in a Japan casino “is going to be way bigger” than the $4 billion it is spending on its current project in Macau’s Cotai strip, Wynn Resorts Development Chief Operating Officer Gamal Aziz said last year. Both companies said they plan to find local partners to develop casino projects.
Adelson said today he wants to partner with risk takers and would consider working with Masayoshi Son, founder and president of SoftBank Corp. (9984) He said he didn’t know if the Japanese executive is interested in gaming. Hiroe Kotera, a spokeswoman for the wireless carrier, declined to comment on Adelson’s remarks.
Among the potential partners for casino operators are trading companies such as Mitsui & Co. (8031), Mitsubishi Corp. and Itochu Corp. and gaming machine makers Sega Sammy Holdings Inc. (6460) and Konami Corp. (9766) The trading companies have project-finance experience and real estate development connections, while the game makers have helped develop casino projects and technology outside of Japan.
Japanese lawmakers from the ruling Liberal Democratic Party, the Japan Restoration Party and other groups submitted a bill to legalize casinos to parliament in December. They are expected to begin discussions during the parliamentary session in spring.
Lawmakers said they intend to pass a bill asking the government to create a legal framework for casinos in the current parliamentary session. A subsequent bill detailing the rules of casino operations would also need to be approved.
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