ust before Christmas, James Packer's Asian casino venture, Melco Crown, pledged to spend $10 million on ''cultural projects'' in Japan in partnership with Tokyo's University of the Arts. ''Melco really wants to do something to help contribute to cultural development in Japan,'' a spokeswoman for the company said.
Macau generated more than $US 45 billion in revenue from its casinos last year. Singapore is maturing but gambling revenue from its two casinos is expected to reach $US7 billion this year. This could put it ahead of the Las Vegas strip which is expected to generate gambling revenues totalling $US 6.5 billion this year, according to Citi.
In December, a group of Japanese lawmakers submitted a bill to legalise casinos and it is expected to progress through Japan's parliament, the Diet. ''The Abe administration, which has popularity, stability and a track record of pushing forward into areas that were once thought to be anathema to public support, should be able to legalise casinos in Japan,'' said CSLA gaming analysts in a report this month.
''We expect that this bill will be approved in the second quarter 2014,'' said Citi analysts.
''We expect a request for proposal [RFP] process could start as early as late 2014.''
While the case for casinos in Tokyo and Osaka is considered a forgone conclusion, CSLA said that ''over time, there could be as many as 10 casinos constructed in Japan's other regional locations like Okinawa''.
Melco Crown has been aggressively lobbying in Japan ahead of the proposed changes and Mr Ho has said the company would spend up to $US5 billion in Japan if its bid is successful. But the competition will be tough. Las Vegas Sandsexecutives have openly talked of investing $US6 billion in Tokyo alone.
Wynn Resorts has also said an investment in a Japanese casino "is going to be way bigger" than the $US4 billion it is spending on its project in Macau's Cotai area.
Melco Crown is not dependent on success in Japan to continue its strong growth trajectory.
China's growing wealth is expected to see its gambling enclave, Macau, double its gaming revenue to $US91 billion by 2018, according to CSLA, which picked Melco Crown as one of the stocks best placed to take advantage of this growth.
Melco Crown, 34 per cent owned by Mr Packer's Crown, has $US2.6 billion worth of projects under way in Macau including the Studio City development. CSLA also picked Melco Crown's Philippines operation as being well-placed to take advantage of the casino boom in Manila. This market is expected to generate $US5 billion in revenue by 2017, boosted by an influx of foreign gamblers.
It is all upside for Crown investors whose shares have more than doubled over the past year thanks to its high growth Melco Crown stake.
Morgan Stanley said Melco Crown could pay a dividend as early as this year, which could have significant implications for Crown's cash profile. A modest 50 per cent pay out ratio by Melco could translate to a $US188 million cash dividend to Crown this year.
''We estimate Crown could receive more than $US1 billion of cash dividends cumulatively over the next five years,'' Morgan Stanley said.