Japan: Casino revolution threatens to fail
Have corporations only once on the Focused on opening up a new market, this decision is actually not reversed so quickly. Especially not in the gambling industry. After all, the licenses are usually very limited - and accordingly it means: Strike instead of waiting. The view of Japan is all the more astonishing. The basis for a flourishing business should actually be laid here with a revised gambling law. But that is becoming more and more shaky. Because more and more corporations are withdrawing from the race for the "Japan license".
End of licensing efforts in Japan: Las Vegas Sands joins in
For the Japanese gambling plans, the outlook is getting bleak. Like the US news serviceBloomberg the US gambling groupLas Vegas Sands would like to withdraw from its plans for an expansion into Japan. This is an enormously momentous decision. After all, the group has planned a project worth around ten billion dollars and has been working on it for several years. Las Vegas Sands has been trying to gain a foothold in Japan for around 15 years. The Japanese people are considered to be wealthy, so expectations of the country's gambling markets are correspondingly high. Apparently, however, other things are more important for companies - and more daunting.
Las Vegas Sands are primarily supposed to deter the strict and not very lucrative licensing conditions of the Japanese authorities.The country only wants to issue licenses for a maximum term of ten years. However, that does not fit with the plans of the group, which alone estimates a construction period of around five years. Around half of the license term would therefore already be used for construction. At the same time, the company reports that local conditions and government officials could cause profits to be further reduced in the five years of operation. So, looking at the licenses in Macau or Singapore running for 20 or even 30 years, Las Vegas Sands decided:Japan is not attractive enough.
Time to focus on other ways to lay
Much more flatteringly put it byfounder of Las Vegas Sands billionaire Sheldon Adelson. He explains:
“We are grateful for the numerous friendships we have made and the strong relationships we have with Japan. But it is now time for our company to focus its energies on other opportunities.”
Las Vegas Sands' decision is quite a blow to Japan. After all, the group is not the only gaming provider that has meanwhile said goodbye to plans for Japan expansion. For Japan, this not only means a dent in their reputation, but also in theirplans to liberalize gambling. The course for this was only set in 2019 by legal reform, with tourism in particular being driven by the casino resorts. But now the plan seems more shaky than ever. It is unclear to what extent suppliers will also be impressed by the casinos' withdrawals. There are also possible consequences of the corona pandemic. Not only Las Vegas Sands, but almost all gambling companies in Macau and Las Vegas. It is therefore quite possible that further withdrawals from Japan can be reported in the future.
Caesars Entertainment made the start
International experts are not too surprised at the withdrawal. Jefferies analyst David Katz explained that while the withdrawal came as a bit of a surprise to him, it was understandable at the same time. One would have the impression that theConditions in Japan are no longer as attractive as was initially assumed. In addition, Las Vegas Sands has not yet been able to assess what the long-term consequences of the pandemic would look like. The analysis group CLSA sees it similarly. It is said here that the timing of the withdrawal was certainly no coincidence. After all, Las Vegas Sands is struggling with enormous losses due to the corona pandemic.
Investors, on the other hand, probably found the decision somewhat more difficult. Shortly after the decision was announced, Las Vegas Sands stock fell significantly. In the meantime, however, the papers have recovered. In August last year, the US giantCaesars Entertainment decided to end its efforts to obtain a license in Japan. The Galaxy Entertainment Group and Genting companies soon followed.
MGM Resorts still dare
The fact that the latter two companies have dropped out makes at least one US company happy: MGM Resorts. The company was able to secure the contract in Osaka. The next few years will have to show whether this investment will pay off. For example, although the Japanese love to gamble on pachinko, arcades and casinos are less popular.In the run-up to the licensing, there was resistance in many regions because the residents did not want casinos in their neighborhood. However, the organizers are still sticking to their plans. And despite the withdrawals of some companies, these seem to be becoming more and more concrete.
By the way, the Japanese government was not really impressed by the withdrawal of Las Vegas Sands. In a press conference, the head of cabinet, Yoshihide Suga, did not comment on the US company's decision. Instead, it was only announced that the plans for the opening of the casino resorts should still be adhered to. If this succeeds, the liberalization of the industry could possibly develop into a real success. The government estimates thatthree resorts in the country could bring more than $20 million to households annually. This would make Japan the gambling metropolis in Asia after Macau. So far, however, the market is heading towards a problematic situation. It is also unclear how the casinos will be accepted by the critical population after they open. Even with the green light from the government, there is still no guarantee that investments in the land of the rising sun will actually pay off.