Lawrence Ho (何猷龍), the billionaire owner of Melco Resorts & Entertainment Ltd, said he favors building a casino in Osaka rather than Tokyo because there are more opportunities to develop the smaller Japanese city as an entertainment destination.
Ho is among the industry heavyweights seeking entry to Japan after Japanese lawmakers voted in December last year to open the country to casino gambling.
The government of Japanese Prime Minister Shinzo Abe, which made casino liberalization a priority, has not decided where those casinos will be built, nor which companies will operate them.
Photo: Bloomberg
The prize could be the world’s most lucrative casino market, which CLSA Ltd estimates could generate US$25 billion annually.
While Melco is considering the viability of Tokyo and nearby Yokohama, the company’s top choice is Osaka and the surrounding Kansai region, home to attractions such as Universal Studios Japan and the city of Kyoto, famed for its Buddhist temples.
“When you go to the Kansai region, it’s more fun, really, and we’re a company that focuses on fun and entertainment,” the 40-year-old Ho, who also serves as chief executive officer, said in an interview at Melco’s City of Dreams resort in Macau.
Melco is competing for Japanese licenses with rivals that include Las Vegas Sands Corp and MGM Resorts International, both of which are focusing on Tokyo and Yokohama in addition to Osaka.
To be selected, operators and municipalities will have to team up and submit a proposal to the government, according to guidelines published this month.
“MGM’s business model is to build large-scale destination resorts with lots of stuff that cost a lot of money,” MGM Resorts global development executive vice president Ed Bowers said this month. “So it needs to be in a high-density population area.”
The Tokyo metropolitan area is home to about a third of Japan’s people.
That popularity is what makes Tokyo less than optimal for hosting the type of integrated casino resort popular in Las Vegas and Macau, Ho said. Those facilities typically include hotels, entertainment options, shopping and convention centers.
“I’m not so sure Tokyo needs an integrated resort,” Ho said. “Tokyo by itself is amazing. It’s like when people ask me: ‘Do you think New York and London need an integrated resort?’ No, they don’t.”
About an eight-hour drive from Tokyo, Osaka is a prime shopping destination and a favorite for tourists from China. Although both cities are front-runners to be selected by the government as casino locations, Tokyo’s higher costs might be a deterrent.
“Tokyo’s inflated commercial land prices are higher than the rest of Japan,” Bloomberg Intelligence analysts Margaret Huang and Carmen Lee wrote in a report on Friday. “That may dissuade casino operators from developing an integrated resort there, even with the city’s population and infrastructure.”
CLSA’s US$25 billion revenue estimate is based on the country having two urban integrated resorts and 10 regional casinos. By comparison, gaming revenue in Macau last year was US$28 billion, while Las Vegas generated US$6.4 billion.
Gaming companies interested in Japan are still waiting for lawmakers to vote on proposals establishing rules on taxation and regulation, and addressing ways to combat gambling addiction.
Until then, Melco is busy courting potential partners, Ho said.
That can lead to some awkward encounters as the foreigners target some of the same Japanese companies.
“Right now, there is a lot of speed dating,” Ho said. “Sometimes, I go into a Japanese corporate’s office, and then I walk out and I see our competitors in the lobby.”
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