US operators hoping to capitalise on the partial legalisation of casino gambling in Japan have given further information on their ambitious plans to develop "integrated resorts" in large cities.
Las Vegas Sands (LVS) yesterday announced plans to build a casino resort complex in Yokohama that may have an investment value of up to $10bn "as a starting point".
The comments were made by LVS chief operating officer Rob Goldstein during the company’s third quarter earnings call on Thursday. He said $10bn was the minimum investment for the Yokohama integrated resort, and suggested that $12bn was a possibility.
He added that that level of investment was daunting, but the work could not be done for less. He commented: "No matter how good you are at this business, that must give you pause to stop and think, ‘Is that prudent? Can you really deploy, can you get the return?'"
He added: "We’re used to writing big checks, but all that money on one resort does make you stop and pinch yourself and ask whether you can get the returns that your shareholders deserve."
The race to build integrated resorts follows a decision by Japanese lawmakers last year to offer licences for three such developments, which will combine casinos with shopping malls, theatres, hotels and theme parks. This began a race among gambling companies to bid for the resorts.
In August, LVS withdrew from the race for Osaka and declared its intention to focus on Tokyo and Yokohama – two cities with larger populations and easier access for tourists. Its Yokohama bid is for a 47ha site Yamashita Pier, near the city centre.
Meanwhile, its US rival MGM Resorts International, reaffirmed its plans to build an integrated resort in Osaka in partnership with Japanese leasing company Orix.
Ed Bowers, chief executive of MGM Resorts Japan, said the MGM was pursuing an "Osaka only" strategy. Speaking during a joint news conference by MGM and Orix, Bowers said MGM and Orix were relying on the "cooperative relationships" they had developed with companies in the Kansai region surrounding Osaka.
The Japanese government will set up a regulatory body in January to oversee the casino development process. Local governments interested in hosting a resort are expected to select operators by early 2021. The central government will select the winners and award the first three licenses by 2022.
Image: Yokohama’s Minato Mirai district (A Kumach/CC BY-SA 2.0)