Caesars to invest USD 5 billion in Japan casino

Caesars, Las Vegas Sands and MGM Resorts International are among the global gambling operators pledging to spend billions of dollars to build resorts in what’s projected to become Asia’s largest casino market after Macau. Such projects are financed based on the cash flow they generate, meaning operators including Caesars expect little difficulty in raising funds, Loveman said today in Tokyo.

Caesars debt stood at more than US$ 23 billion as of March 31st. The company, rated nine levels below investment grade by Standard & Poor’s, has sold assets, transferred properties between units, refinanced some debt and sold equity to stay solvent.

The financing market for casinos is strong, Loveman said in an interview. “I financed dozens and the markets for casino finance are very strong,” he said.

After a decade of discussions, Japanese lawmakers this month began debate on a bill to legalize casinos in the world’s third-largest economy. The proposal was submitted last December.

Tokyo Olympics

Japanese Prime Minister Shinzo Abe told Bloomberg News this week that his party will seek to pass a law ending a ban on casinos this autumn as part of a plan to boost tourism along with the Tokyo Olympics in 2020.

Completing casinos by 2020 “is getting tough,” Loveman said. It will take several years to solicit bids, award licenses and complete construction, after the government passes the bill to legalize casinos, Loveman said.

Caesars would also consider selling shares in Japan to the public via a listing, Loveman said. Rivals Wynn Resorts and MGM Resorts have also said they intend to sell shares for planned Japan resort ventures to help boost their profiles in the country.

Partner Search

Caesars has had talks with Japanese companies including Fuji Television Network Inc., Kajima Corp. and Mitsui Fudosan Co. on potential casino partnerships, Steven Tight, president for International Development at Caesars, said today in an interview.

“Capital markets generally believe that well-run large integrated resorts can be highly cash generative and financing specific to a Japanese project may be readily available for Caesars, as well as for others,” said Tim Craighead, Bloomberg Industries gaming analyst.

Caesars, Genting Singapore Plc and MGM Resorts are among operators that have discussed potential casino plans with the government of Osaka, Japan’s second-biggest metropolis.

Lotteries and pachinko, a cross between pinball and slot machines that awards prizes that can be exchanged for cash, are legal in Japan, as is betting on horse, boat and bicycle races.

Japan’s casino market could be worth as much as $40 billion a year as early as 2025, according to estimates from CLSA, a Hong Kong-based brokerage.