MGM Resorts’ Jim Murren Hopes to Build a $10 Billion Japanese Casino
MGM Resorts International said it is prepared to invest $10 billion in a Japanese brick-and-mortar casino, if ever Japan approves casio gambling. The Japanese Diet (parliament) appears on the verge of approving a landmark casino bill, which has proved elusive for Prime Minister Shinzo Abe in recent years.
The political landscape shifted in recent months, giving the Japanese prime minister a rare opportunity to push through a gaming bill. For the past couple of years, Shinzo Abe relied on the Komeito Party to have the votes to pass legislation. Komeito is the Buddhist political party in Japan, and it opposes gambling on moral grounds.
Due to a small political shift in August 2016, Shinzo Abe’s coalition government no longer needs Komeito to hold together its majority in the Diet. With a window of opportunity, pro-casino legislators are seeking to push the casino bill.
MGM Resorts Wants to Build in Japan
That prompted MGM Resorts CEO Jim Murren to give a statement to Reuters about his casino company’s interest in the Japanese market. Murren said MGM would spend between 500 billion yen ($4.8 billion) and one trillion yen ($9.5 billion) to build an integrated resort. That is the industry name for a casino complex which includes hotels, retail outlets, conference space, attractions, and entertainment venues.
The idea of an integrated resort is to make the casino a hub of activity within one section of a city. While high rollers and mass market gamblers alike flock to the gaming area, their family members and loved ones can enjoy other parts of the entertainment complex. Even non-gaming tourists might plan a trip to the integrated resort.
Sharing Equity in Japanese Casinos
To fund the massive development, Jim Murren suggests that “multiple blue-chip companies” would be recruited to share equity in the complex, though MGM Resorts would lead the project. A certain number of those companies would be Japanese, something the local government officials would prefer.
Murren said of the proposed project, “We think there would be a tremendous amount of demand, and ultimately a public listing of these types of Japanese resorts would be very appealing.”
$40 Billion Gambling Economy
Such huge building costs might not seem wise at first glance, but experts believe Japanese brick-and-mortar casino gambling would be worth $40 billion a year. Modern Japan has never had legal casinos, but Japanese residents love the pachinko parlors which skirt gaming law just barely. To get around gambling laws, booths for cashing out pachinko balls are located near a parlor — but not on the premises.
Because of pachinko gaming, Japan generates more gaming machine revenue than any country in the world, including the United States. That leaves casino moguls like Jim Murren salivating at the opportunity to build in Japan. Analysts estimate Japan would be the third-largest casino economy in the world, behind only the United States and China.
Possible Locations of Issues
Jim Murren said his company would be interested in building near major metropolitan centers only. He mentioned three such locations: Tokyo, Osaka, and Yokohama.
Other sites have been mentioned by those proposing the casino bill. The Hokkaido islands in the north and Kyushu in the south have been discussed as possible casino locations.
Completion by 2020
Pro-casino legislators have wanted to complete casinos before the 2020 Summer Olympics in Tokyo. With the massive construction projects happening in the Tokyo area in preparation for the Olympics, building by 2020 in Tokyo would be troublesome. Osaka, on the other hand, has signaled it could handle any such construction projects.
MGM Resorts is not the only developer which has signaled interest. Sheldon Adelson of the Las Vegas Sands Corporation said in 2014 that he would invest $10 billion in a Japanese casino project. Melco Crown, a partnership between Lawrence Ho of China and James Packer of Australia, previously has shown interest in Japan. Melco Crown has had significant issues since 2014, though.
Casino Bill in 2016?
Several times during the legislative process from 2014 to 2016, one compromise suggested has been to limit gambling to non-Japanese visitors. All of the developers of any note have stated they would not want to build, if that were the case. Those gambling populations already are (likely) tapped in their home countries; it is the Japanese market that Jim Murren and Sheldon Adelson seek entry into.
With the new political equation for Shinzo Abe and the Liberal Democratic Party, unfettered Japanese casino gambling might be around the corner. Proponents hope to have a casino bill passed by the end of the year.
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