Friday, August 23, 2019

Japan

Japan continues to position for IRs despite legislative delays

By David Rittvo*  As the Japan Diet begins its winter 2015 session, there is renewed anticipation for the passage of the Draft Integrated Resort legislation. Although the previous special session ended without the passage of the bill, there have been notable developments at both the federal and regional levels. The Innovation Group has been tracking the process in Japan for the past three years, including meeting with stakeholders in Tokyo, Osaka, Yokohama and other smaller regional markets. Last week, Yomiuri Shimbun, Japan’s largest newspaper announced that the federal government is currently considering draft legislation that includes the possibility of developing large-scale IR’s in Yokohama and Osaka only by 2020, in time for the Olympics. The draft legislation did not mention Tokyo as a possible other development. There was also no mention of a regional casino development in this announcement, but any IR is most likely to be placed in a smaller city away from the large city zones so that the developments do not cannibalize one another. The sizing of the Japan market remains a moving target due to the fluid nature of the legislation being considered. Analysts, including Jay Defibaugh from CLSA, have provided estimates that ranged between $4 billion and $10 billion depending on the location and operational dynamics. The smaller regional casinos have been pegged at between $350 million and $1 billion, depending on the development size and scope.   Seeing as the current legislation includes a lot of moving variables, including the potential to limit local access and/or require an entrance fee, as well as potentially limiting access to junkets and credit, exact estimates for the market are difficult to ascertain at this time. Regardless of the exact legislation, the potential IR developments in either the Tokyo Metropolitan Area or Osaka will be the single largest property, in terms of revenue generation, in the world. The regional level effort has seen the most progress since the last Diet Session. As most are aware from related press, Okinawa, considered by many to be a serious candidate for the first regional casino, has decided not proceed. As a result, The Hokkaido prefecture has emerged as the leading regional casino candidate. Similar to Osaka, Hokkaido has initiated its regulatory, development and information gathering process. In late 2014, the prefecture released a request for information to over 25 casino companies and developers. The request included background information regarding the operation of casinos, a view on potential development sites around Hokkaido and background on gaming potential for the regional market. The outcome of the RFI should begin to shape Hokkaido’s next steps for the development process and position it for continued momentum once the legislation is passed on the federal level. Meanwhile, activity in Osaka continues to move forward on both the governmental and private sector fronts. A group of Osaka based businesses, under the umbrella of Kansai Association of Corporate Executives, KACE, has released plans for a large-scale IR to be developed on Yumeshima Island. Both the Osaka City and Prefecture governments are continuing their pre-development, planning and information gathering phases. Our impression is that Osaka is positioning itself to be ready to start the lengthy development process once legislation is passed on the federal level, with the hope of being the first Integrated Resort in Japan. In the greater Tokyo and Yokohama area, it appears that Yokohama has increased its profile in communicating its ability to be the host city for a large scale IR development for the region. In 2014, Tokyo Governor Yoichi Masuzoe stated he would like to concentrate on the Olympic developments and continue his information gathering regarding the social and economic impacts of IR developments. In light of Tokyo slowing down its development process and the renewed interest on federal level support, Yokohama has continued to progress. Last week, The Yokohama City council submitted comprehensive plans for the waterfront development that would include an IR. The sites would allow the IR to take advantage of Tokyo Bay, Yokohama’s relative location to Haneda International Airport and strong transportation access. Finally, on the federal level, as previously mentioned, the initial IR legislation is “in the queue” to be considered and is awaiting presentation to the legislative body. Conflicting reports continue to surface, with some stating that due to the number of more pressing bills in front of the legislation, including on national defense, the bill might not be introduced or considered until a special session in July or November 2015. However, recent reports have also stated that the bill will be introduced this week. In addition to the legislative process, the members of the Diet and other stakeholders are fielding questions and concerns regarding the potential social impacts of the Integrated Resorts. One prominent example of this occurred in late 2014 when a study was released by the Ministry of Health, Labor and Welfare stating that close to 5 percent of the population has a pathological gaming problem. While some might dispute the methodology and overall results of the study, it raised concerns in Japan and led to further discussions amongst politicians. The outcome of these discussions has led to potential problem gaming mitigation factors being introduced with the bill. These could include a local entrance fee, strict self-exclusion policies and strong identification checking systems. In addition to these discussions, Congressman Takeshi Iwaya, Secretary of the IR Giren in Diet and a strong IR proponent, stated that the legislation will include a provision that allocates a certain amount of gaming revenue to tackling gambling addiction and creating care facilities for problem gamers. It is important to note that all of these measures are still under discussion as the Diet members continue to consider this bill. Federal bureaucrats are also continuing their information gathering trips and research to other IR markets. These markets include Singapore, Las Vegas, Atlantic City and Europe. The goal is to gather the best practices from established IR markets and implement those into the draft legislation and second gaming bill. Whether the legislation is passed is yet to be determined, but 2015 could be a make or break year for the stakeholders involved. Should the legislation pass, the scale and energy around the development opportunity and resulting product should be unlike anything seen in Asia. * David Rittvo, executive vice president of the international division for The Innovation Group, is leading a team to expand the company’s presence on an international level, with a focus on the Asian Region. He joined The Innovation Group as a Senior Analyst in 2009 to provide gaming feasibility analysis and to help formalize a specialty advisory discipline within the organization that provides F&B-specific consulting, marketing, development, financial, operational and management advisory services to the firm’s gaming, entertainment and hospitality clients. The international studies have included feasibility, market assessments, financial pro forma projections and master planning for multiple clients in Vietnam, The Philippines, Sri Lanka, Macau, Australia, Japan, Korea and Taiwan.  

Sega Sammy to cut hundreds of jobs

Sega Sammy Holdings announced a corporate restructuring that will lead to the loss of 300 jobs in Japan. “With the number of regular employees planned...

Innovation to advise team on casino resort legalization in Japan

The Innovation Group has been selected as the industry advisor to the the team chosen by the Cabinet Secretariat of Japan tasked with studying...

Netanyahu urges Japanese official to facilitate Adelson franchise

Israeli Prime Minister Benjamin Netanyahu pressed a senior Japanese official last year to allow for gaming tycoon Sheldon Adelson to open a casino in...

Konami reports flat net revenues for 2014

Konami Corp. reported flat year-on-year net revenues for the last nine months of 2014, with the company’s digital entertainment arm bringing in the bulk...

A final glance at Asian gambling in 2014

There were some significant changes in the Asian gaming market in 2014. A couple of new casinos were built in the Philippines last year,...

UBS predicts no H1 passage of Japan casino bill

Japan, under newly re-elected Prime Minister Shinzo Abe, may entertain discussions on legalizing casinos, but won’t pass the bill in the Jan-June session of...

Okinawa abandons plan to attract casinos

The prefectural government in Okinawa, Japan won’t seek to attract integrated resorts if the country passes a law legalizing casinos, due to opposition from...

Abe wins general election raising hopes for casino bill

Japanese Prime Minister Shinzo Abe has won a big win in general elections and pledged to drive through his economic reform plan, raising hopes...

Four pachinko parlors eye Hong Kong listing

Four of Japan’s pachinko hall operators are considering seeking a listing on the Hong Kong Stock Exchange to expand outside of Japan, where revenue...

TRENDING ARTICLES

Melco's Morpheus Hotel Macau

Morpheus boosts Melco’s Q2 results

Melco Resorts & Entertainment said its Q2 revenue rose 17 percent, helped by the opening of its Morpheus hotel in June last year and higher hold rates, though performance at its City of Dreams Manila property weakened on increased competition.

Casinos may be permitted at Goa’s Mopa Airport

Goa Chief Minister Pramod Sawant revealed to the legislative assembly that a concession agreement with a local infrastructure company could also allow the construction...

World Poker Tour heads to NagaWorld

The World Poker Tour today announced a collaboration with NagaWorld to host WPT Cambodia from November 16-25, 2019.  This monumental event is the first World...

Gambling research in focus at IAGR2019

Research into gambling behavior will feature as part of the keynote sessions at the International Association of Gaming Regulators (IAGR)’s annual conference held in...
Korea, Paradise City

Paradise Q2 loss widens

Paradise Co., which operates foreigner-only casinos in South Korea, posted a wider Q2 loss although revenue gained.