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Japan – Osaka presents a united front on casinos as Yokohama steps back

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The Osaka Prefecture, the city of Osaka, the local tourism board and three business organisations have joined together in a united bid to bring an Integrated Resort casino to the capital city of the Kansai region of Japan.

The associations want a casino operator to develop a resort on Yumeshima Island in Osaka Bay with plans including convention and exhibition halls, hotels, museums and retail.

The port city is famed for its modern architecture, nightlife and street food. It is third most populated area of Japan after Tokyo and Yokohama in the city’s Konohana Ward. Osaka Bay area is already home to Universal Studios Japan, which attracts 10m visitors each year.

Osaka Governor Ichiro Matsui has long lobbied the central government, especially Prime Minister Shinzo Abe, to ensure that Osaka is approved for one of the country’s first such resorts.

Governor Matsui said: “IR facilities are necessary to expand employment. I want to create a facility that the world will admire.”

The Kansai Association of Corporate Executives predicts a casino in Osaka would employ 98,000 people generating tax for the region of ¥760bn. Operators including Caesars, MGM Resorts and Genting have already met with Governor Matsui.

One of the other regions being widely tipped for casino development, Yokohama, is now taking a more cautious approach.

Facing a challenging re-election, Yokohama’s Mayor Fumiko Hayashi said: “A policy to deal with gambling addiction problems is extremely important. This is what the city needs to first discuss. Hosting an IR facility is just one way to promote local economic growth.”

The Yokohama Chamber of Commerce and Industry believes that an Integrated Resort casino would create local gaming tax of up to ¥671bn and provide jobs for over 70,000 people.

The jostling for position comes as Liberal Democratic Party members met to discuss how to move the legislation forward. A bill establishing the legislation for how IR facilities will be managed is expected to be submitted to the Diet before the end of 2017 but the group is expected to present recommendations by the end of March.

One of those members, LDP Policy Research Council chair Toshimitsu Motegi, stated: “The team was formed to discuss specific details on how IRs will be run as well as to come up with policies for dealing with concerns about an increase in gambling addicts.”

Analyst Union Gaming believes that local companies such as Japanese pachinko hall operator Dynam Japan Holdings are ‘ripe for strategic investment on the part of an international integrated resort operator as one of the largest and well-capitalised operators.’

Dynam specialises in operations outside of Tokyo has 444 pachinko halls.

Union Gaming analyst Grant Govertsen said: “Dynam has one of the largest data sets of gaming-related customers and customer behaviour based on its nearly 50 years of operations and market-leading position in terms of number of parlours operated. Given our belief that Japan integrated resort revenues will be driven primarily by locals it would make sense for a potential integrated resort developer to make a strategic investment in Dynam.”

Given its success in Macau and Singapore, Las Vegas Sands remains one of the favourites to enter Japan.
When asked about a potential strategic alliance in Japan, Sands’ owner Sheldon Adelson said: “We’ve had somebody in Japan this past week and the feeling about the partners is not very strong. They say that it’s not likely to be in the law. The law is being formulated by, I think, the interparty committee that was formed before the first law passed. They have one year to submit an implementation law that will determine the who, what, why, when, where, and how of how they’re going to establish the integrated resort with casino bill. I’m going over there in about three weeks to give a talk at an event there, in the third week of February and I’m optimistic.

“They’re basing this on our Singapore property,” he added. “Prime Minister Abe has visited the property. He was very impressed with it and so I think it’s going to be modeled after our property the Marina Bay Sands in Singapore. I’m optimistic and people tell us we’re in the pull position in terms of getting the concession. Some people say the new bill that has to be done within a year could be less than a year or it could be the whole year. We believe our pioneering track record of creating integrated resorts, our development experience, and our financial strength put us in the pole position to take advantage of an opportunity in Japan and other new development opportunities in the horizon.”

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