Tuesday, November 5, 2013

14 Japanese Casino Locations Now in Play!

Last weekend a number of Japanese magazines and TV shows were talking about the soon to be passed casino law in Japan. As many as 14 clear locations across Japan are now being short listed. And to my surprise a number of solid arguments; pro & con have been discussed. 

It is not an easy, "no brainer", allowing a Macau or Singapore casino boom to repeat within a short amount of time. Korea walked down the same path 10 years ago, failed, and nobody generally asks "why"? Japan is asking why and how to find the right balance with the obvious merits and demerits of casinos. 

Among the 14 casino locations being discussed, Okinawa and the four main islands will all get some of them, and two seem worth looking at in more detail; Tokyo will certainly get a casino, and it will most likely be in the new Olympic village site called Odaiba, within Tokyo bay. 

There are already large condo developments currently being built and gaining consumer attention, with some reports confirming 3 times more condo model home visits now than before the Olympics were announced, as well near Nagasaki, a Dutch village concept called "Huis Ten Bosch" has a large parking space with a casino design already for investment once the new law is passed. The US$25M dollar building is expected to bring in more than US$250M in revenue within its first year! Huis Ten Bosch launched in 1992 and went bankrupt in 2003. It was a financial disaster that was bought 3 years ago by a Japanese travel firm HIS in 2010. At the time HIS shareholders questioned if the move would really bring any return. Hindsight is always 20-20 but if a casino plan was being lobbied for in the background then this shows a very different and VERY lucrative investment profile. 

Some of the basic facts being used to persuade the Japanese market mainly compare Singapore with Korea. Before Singapore opened its Marina Bay Sands casino and later Sentosa's Integrated Resort, around 9.7 millions visitors spent US$1200 per visit. Just 4 years later 2013 is looking at a forecast of 11.2 million visitors with each spending around US$1800 per visit, some 50% more. This is the positive path Japan wants to follow and repeat. The trick is with visitors versus locals. Korea tried to expand its casino footprint as well, but had rules that encouraged local Koreans to gamble 10 years ago, not overseas visitors. Sadly, a pawn shop town of lives lost to gambling sprouted around the casinos. The tax revenue never really justified enough numbers for "the common good" within the country. 

This is the balance Japan is currently trying to determine. Which overseas visitor focus is enough to encourage solid tourist dollars from Asia? How much local gambling should there be with its possible demerits, deserve counseling or help for those "unlucky at the table" who live in Japan?

There is no easy answer and with 14 possible locations now in play, many rule variants and combinations can come out. The next few months will see more and more information released to the public, while the momentum is clear, casinos are on track for Japan's future by 2014.

For more Buy-Side and Sell-Side roles in Asia-Pacific, contact our TMJ Partners Japan & Asia Finance team.

Tokyo                                                              Tokyo
        Mark Pink                                                Shinichi Nagasawa

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