Japan was once the next big international destination on the radar of major gambling in the United States. However, now that Las Vegas Sands Corp has dropped out from the bidding process, a number of key gambling analysts have said that the Japanese gambling market may be rapidly losing its appeal to U.S. based gambling firms.
It has been three years since Japan first announced three licenses for integrated resorts. Since then, however, little traction has been made on those licenses.
According to Steven Wieczynski, gaming analyst for Stifel Financial, the pulling out of Las Vegas Sands, the biggest casino operator in the world, does not bode well for the remaining bidders. The departure of Las Vegas Sands, whose leaders had expressed willingness to spend up to $12 billion on their Japan venture, may indicate that their management team could not find a way to ensure adequate returns.
Deutsche Bank gaming analyst Carlo Santarelli noted that the exit of Las Vegas Sands may raise doubts in the eyes of the remaining bidders as to the return potential of their investments in Japan.
Wynn and MGM Still in the Mix
The remaining bidders for a Japan license are led by two American firms. They are Wynn Resorts and MGM Resorts International while two Asian firms are also in the race. They are Hong Kong based Galaxy Entertainment and Malaysian firm Genting.
MGM Resorts is expected to continue focusing its efforts on the Osaka site. Bill Hornbuckle, acting CEO for MGM, is taking point for the Japan bid, but has admitted that the process could face delays. MGM is partnering with the local Japanese firm Orix, holding 40% of their venture. According to Global Market Advisors Partner Brendan Bussmann, MGM is expected to push through with their Japan plans.
Wynn Resorts’ leaders have not made any public statements regarding Japan, and did not discuss the issue in their latest quarterly conference call. Michael Weaver, the spokesman for Wynn, disclosed that the company is still keeping a close eye on the Japanese market.
Rumors of Gambling Restrictions May Have Led to Sands’ Exit
Wieczynski stated that one potential reason for Las Vegas Sands’ exit was the emergence of rumors alleging that the Japanese government may impose further restrictions on gambling in the country, which would certainly affect the potential returns bidders can expect from their massive investments.
According to Wieczynski, many analysts in the gambling industry fear that some firms are in too deep into the process of winning a Japanese gaming license that they may lose sight on the returns they can gain.