22 January 2019

Japan poised to be another Macau?

Suddenly, the world’s casino giants are falling over each in the rush to enter Japan’s gaming market. MGM Resorts International, the largest casino operator on the Las Vegas Strip, said it plans to invest US$5-10 billion in Asia’s second largest economy. Las Vegas Sands Corp. chairman Sheldon Adelson said his firm has earmarked at least US$10 billion for its Japan foray. The group is also considering collaboration with local operators.

Japan has yet to pass legislation to open up its gaming market. The country so far allows gambling in horse racing, cycling and rowing, but casinos are still illegal. It is said that the green light for casino operations could come before Tokyo hosts the 2020 Olympics.

If that happens, the country’s gaming market could reach US$10 billion a year, making it second only to Macau, according to Union Gaming Group’s estimates.

Last year Macau reported gaming revenues of US$45.2 billion, seven times the amount raked in by Las Vegas. Few have ever thought that the former Portuguese enclave could see such amazing growth.

Will Japan’s incipient industry be able to approximate the size of Macau’s thriving casino business? This is the question Hong Kong Economic Journal’s EJ tactics column tries to answer.

Both Macau and Las Vegas have their unique advantages, which Japan may use as a reference.

Las Vegas, the largest city in the US state of Nevada, features an airport with extensive international connections and one that can accommodate dozens of private jets used by big spenders.

It has built its grand casino palaces around other industries such as tourism, retail, vacation, entertainment as well as food and beverage. Its exhibition and conference businesses are also doing well.

Macau, although much smaller than Las Vegas with only 31 square kilometers of available land, prides itself as the meeting point of the East and West. Its Portuguese heritage imbues its buildings and other cultural facets with a quaint charm. Its posh hotels and gaming complexes offer a dazzling array of leisure facilities alongside gaming tables and machines.

Like Las Vegas, Japan will have more space than Macau to build its gaming facilities. But unlike Las Vegas, it shares with Macau the geographical edge of being near mainland China, where almost all of Macau’s high rollers are coming from.

What’s more, Japan has stunning natural sceneries, tourist destinations, entertainment venues and better air quality.

However, the country is still struggling to drive away tourist fears about nuclear contamination which resulted from the 2011 Fukushima disaster.

If Japan decides to go ahead with its gaming business plans, the government is likely to plough in huge sums of money to support the new industry. And this explains why this early, the global gaming giants are eager to place heavy bets on the potentially rich market.  

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Freelance journalist

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