Las Vegas Sands not concerned over Japan's casino legalization yet

In comments made to the media at a public event, the president and COO of Sands China reportedly said the two markets will be different in the customers they attract. Those who frequent Macau -- the only place in China where it is legal to gamble -- tend to come from the south and central mainland, while those that would go to Japan would be from northern Chinese regions.

Macau is only just recovering from a two-year slide in gaming revenues brought on by a government crackdown on excessive luxury, official gift-giving, and corruption that snared several junket operators: the middlemen who fly in VIP gamblers to casinos, ply them with gifts and enticements, and even loan them the money they use to bet at the tables. The casinos then pay the junket operators a percentage of the money the high rollers bet.

After the crackdown began, however, many VIPs chose to keep a lower profile, preferring not to draw undue attention to their wealth. China was also concerned about the outflow of money from the country that occurred through the casinos in Macau. As a result, wealthy gamblers began looking to move their activities to casinos in places like Singapore, Malaysia, and Australia. It was only with the opening of Wynn Resorts new Wynn Palace Macau in August, followed by the new Sands Parisian Macao in September that the hemorrhaging of gaming revenues in the territory was staunched.

The new venues on Macau's Cotai Strip were designed to appeal more to the mass-market, middle-income tourist, allowing the casino operators (and the territory as a whole) to be less reliant on the VIPs going forward, but that shift underscores why the emergence of new nearby casino hub could be worrisome. Wynn realizes about 60% of its revenues from Macau, and Melco Crown Entertainment generates almost 90% there. New casinos in Japan might well siphon off hordes of gamblers.

But the ribbon-cutting of the first Japanese casino is still years away at best, as more legislation needs to be introduced and approved by Japan's legislature before any construction could begin, let alone before a casino opens its doors. And of course, the casino operators themselves are already scoping out where they might take advantage of this new opportunity. So for now, Japan remains a distant threat on Macau's horizon.

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