LVS and MGM positioned to win IR bid: Morningstar

Las Vegas Sands and MGM Resorts are among the two operators most likely to receive the urban IR concessions in Osaka and Yokohama, notes Morningstar analysts.

“In our view, the companies best positioned to receive a gaming concession by year-end 2019 are those with strong track records of running world-renowned integrated resorts, especially in regions with stringent regulatory control like Singapore and the U.S," said the analysts in a Thursday note. 

Morningstar says it pegs Las Vegas Sands as most likely to win one of the two urban gaming licenses, due to its strong resort experience in Singapore, Las Vegas, and Macau, while MGM Resorts is positioned to win the other due to its strong resort experience in Las Vegas, as well as a healthy track record of dealing with partners.

Other operators are less likely to receive one of the urban licenses, due to either relatively weaker non-gaming resort experience, lack of presence in Singapore and/or the U.S., questionable practices, or portfolio restructuring, said the firm. 

In regards to the cities most likely to win the IR bid, Morningstar supports consensus that Osaka and Yokohama will take home the IR prize. 

Osaka is a favorite “due to strong government support, an already-identified location close to airports and businesses, and the need to improve its local economy and build convention space,” while Yokohama is also a favorite, “given its density and high per capita income, the advantage of having convention and exhibition facilities near Tokyo, and the fact that it already has a location identified for an integrated resort.”

As for regional candidates, Nagasaki and Hokkaido lead the pack, due to their distance from Osaka and Yokohama. Nagasaki has proximity to Korea, availability of land, while Hokkaido can leverage upon its popularity as a winter destination, said the analysts.

Finally, looking at the effect of Japan IRs on Macau, Morningstar says it forecasts Macau to lose only mid-single-digit visitation to Japan, as “it's largely immune due to China's middle-income class growth, proximity to southern China, improving infrastructure in Macau, and the advantage of a critical mass of casino resorts.”

More news from this jurisdiction

JapanWednesday, Jul 19, 2017

The city council of Iwanuma, in Japan’s northern Miyagi Prefecture, envisions a bid for an IR as a measure to help the local area recover from the March 2011 tsunami that devastated Japan.

JapanTuesday, Jul 18, 2017

Grant Govertsen, an analyst for Union Gaming, has produced a second report this month highlighting gloomy scenarios for the future of IRs in Japan.

JapanMonday, Jul 17, 2017

The official-two week campaign period ahead of the July 30 mayoral election for Yokohama was launched on Sunday, with two of the three candidates opposing the hosting of an IR in the city.

JapanTuesday, Jul 11, 2017

The high-profile public debate on gambling addiction, which until now has been mainly associated with the forthcoming establishment of IRs, is set to hit Japan’s lucrative pachinko industry.

JapanMonday, Jul 10, 2017

The city council of Tokoname appealed on Friday to Aichi Governor Hideaki Omura, calling for an accelerated feasibility study for siting an IR within their municipality.

JapanThursday, Jul 06, 2017

The Hokkaido prefectural government has reportedly decided that only one IR licensing bid from the local region will be submitted to the national government.

JapanWednesday, Jul 05, 2017

The outcome of Tokyo’s local elections on Sunday is likely negative for IRs, but could be a relief for Japan’s pachinko industry.