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Howard Stutz
Casinos seeking next Macau
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The race is on to find the next Macau or Singapore.
With the two Asian casino markets about to become the world's No. 1 (Macau with $33.5 billion) and No. 2 (Singapore with an estimated $6 billion) gaming revenue producers, new prospects are being targeted.
Nevada casino company executives are racking up air miles to and from Asia, traveling to Japan, Vietnam, Korea, the Philippines, Thailand and other potential casino destinations.
Many leaders in those countries watched what transpired in Macau and Singapore, and believe their locations can mirror those results.
Nomura Securities gaming analyst Harry Curtis told investors that smart money is riding on Japan, although it might be 2018 before the first casino opens.
Last month, Nomura held a conference call for investors with Takashi Kiso, president of Japan's International Casino Institute, an advocacy group involved in the current legislative debate over casinos there.
It's believed political consensus has been reached for a casino bill. Many Japanese lawmakers hope gaming will stimulate tourism in the wake of last year's earthquake and tsunami. However, a second bill covering details such as the number of casinos, taxation, the bidding process, and licensing could take two years to be approved.
"Longer than we expected," Curtis told investors.
The timing is not stopping Las Vegas Sands Corp., MGM Resorts International and Caesars Entertainment Corp., from expressing interest in Japan.
What Singapore has accomplished with just two casinos -- surpassing the entire Strip in total gaming revenues in less than two years -- provides a road map.
"Officials want to use integrated resorts in Singapore as the development model," Curtis said. "We expect competition will be fierce, given the potential profits involved."
A 2009 study by Osaka University estimated that Japanese casinos could attract $44 billion a year in gaming revenue. There's already gambling on some activities in Japan, such as motor sports and horse racing. Parlors containing pachinko machines, a cross between a slot machine and a pinball game, are popular throughout the country.
Kiso told Numara's clients that two or three casinos in Japan could evolve up to 10 nationwide, with an estimated gaming tax rate of 20 percent to 30 percent. Most believe the investment will be about $4 billion per location. (Las Vegas Sands spent $5.5 billion to open Singapore's Marina Bay Sands in April 2010.)
Gaming in Japan might be a mix between Macau and Singapore with junket operators licensed to provide high-end customers for VIP gaming rooms while locals pay to get on the casino floor.
"While little is priced into the stocks yet, passage of the initial bill could be a catalyst for integrated- resort operators," Curtis said.
Meanwhile, Nevada's large and small gaming companies aren't waiting for Japan to get its act together.
MGM Resorts International and Pinnacle Entertainment invested in the Ho Tram Strip development on the Vietnam coast about 80 miles southwest of Ho Chi Minh City. A 541-room version of the MGM Grand, which includes a casino, is expected to open next year. Pinnacle would follow with a hotel-casino in the second phase.
A timetable has not been set.
MGM Resorts and Caesars Entertainment have launched nongaming luxury hotel developments in efforts to expand their brands in Asia and other markets.
MGM Hospitality has 17 hotels in the pipeline, including locations in China, the Middle East and India. The MGM Grand Sanya on China's Hainan Island is expected to open this year.
Caesars, through Caesars Global Life, plans 25 hotels and resorts in China over the next five years, including the Caesars Palace Longmu Bay, also on Hainan Island.
Analysts aren't certain how to quantify the return on investment for the nongaming hotels.
"MGM has provided limited disclosures into the financials of the business," Credit Suisse gaming analyst Joel Simkins told investors last month. "Relative to the overall size of its core gaming business, we believe the contribution of MGM Hospitality remains fairly insignificant."
In the Philippines, Japan-based Universal Entertainment, which is controlled by Kazuo Okada, Wynn Resorts' unhappy largest investor, broke ground last month on a $2 billion casino resort in Manila.
The development has come up as an issue in Okada's legal fight with Wynn Resorts.
Okada reportedly wanted to Wynn to help build the project, but was rejected because the company thought it would compete with the company's Macau casinos.
Howard Stutz's Inside Gaming column appears Sundays. He can be reached at hstutz@reviewjournal.com or 702-477-3871. He blogs at lvrj.com/blogs/stutz. Follow @howardstutz on Twitter.
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US casinos will not have employment problem in Japan. Japanese corporations make divisions in USA, if invited. For instance, New Jersey got Sony, Ky got Toyota that create cars to ship to Korea. There are many reasons they value US workers than gender segregated culture of Japan when they have hard time in keeping male employees if they employ female for the same position. Japan has shortage in employable males, too. US casinos I see in Vegas do not have gender discrimination. Somehow nice weather Nevada neglected to invite Japanese corporations which are always looking to make factories and divisions in USA. One Matsuda factory will hire at least 30,000 here. No, Nevada government is too busy for casino industry. Unlike GM, Japanese come with their money. It is not cheating Japan. Japanese like to make auto here to sell to China, TV, computers, Nevada should think about job creations and additional tax revenue. This is my wish.
the more the empty suit "progresses" u.s. wealth and jobs overseas, any u.s. executive worth its wage must follow that money. no matter gaming, manufacturing, tech, energy. only problem with the empty suit's jihad to "change" this nation to one primarily composed of parasites is that at some point, there won't be enough hardworking taxpayers to support the parasites. like ms thatcher said..."the problem with socialism is that sooner or later you run out of other people's money".
This is a translation of one Japanese magazine. Names will are not spelled correctly. We sound s and th same, r and l same. Jonasan garlbiz (managing director & chief economist of research firm says that Wynn should press Okada to develop relationship with Sands or other Casinos if Okada want to do something in Japan. He believes many Japanese corporations will try to do casino business with Okada in Japan.
Now, what I think with my understanding of Japanese culture. No reputable companies will try to reach Okada. Japanese corporations are not going to associate with a corporations associate with Okada. It is not money they value. Sands. etc. are respected, but not Okada's type business. For instance, do you think Sony or Toshiba will do business with someone to take over their business? They call No-ttoriya. They also do not want to create chances to Sokai-ya. Nottoriya is the type of business Okada is doing now. Sikaiya? In my time, there are people who have minimum stocks and went to stockholder meeting, They read papers thotoughly beforeand questioned efficiently, Now, copycatters of these people, they yell "Agree, Agree" or "Oppse" "oppse" before meeting begins, to get paid donations from targetted corporations. Okada's presence will invite them. Originally, corporations had near-sighted official to stare sokaiyas (samurai stare) Now, corporations are very gentle. They don't need Okada's money. do you think Sony, Mitsubishi, Toyota, Canon will do business with Okada? right now, Okada is doing legitimate No-ttori_ya. Mitsubishi owns Rockfeller Center since before 1960. No, Okada is smart enough to take over Wynn.
Lucky to Mr. Sheldon, Japan has ID card system that can exclude people who shouldn't be gambling. Japanese politicians and wealthy people do not have to sneak in to yakuza operating gambling arenas in shrines or temples. They can openly lose money for tax reason. I believe it will not take so many years Nomura expect, for Nomura is too square to know illegal yakuza operations. I hope Japan rescue Fukushima etc victims first. Good luck for Sands, MGM, and Caesars. Toshiba created 'non-recycable nuclear waste compact system that Mongolia government, Japan, and USA wanted to create dump site in Mongolia's underground heavy granite zone. No more Hiroshima or Nagasaki disease in Japan? These three companies will have Chinese billionaires come to Japan to spend money. Japan do not have one-son-in one family law. These casinos will be helping Chinese people. Japan has shortage of workable age people now. They even employ females now.
So, if carpet bombing and agent orange weren't enough, now casinos in Vietnam should finish them off...
Caesars Global Life sounds like A insurance co. Hey Gary Boy see if you can take out a 5 year term for 25 billion face, your company cant make money with gaming hotels ,let alone non-gaming, And watch out for that Sam guy from Pinnacle this guy is sharp. Buy some of his stock Gary (PNK) This man knows how to run a casino company, See if your friends in NY will let you ring the bell on wall street when the IPO comes out.