International edition
September 28, 2021

Tokyo and Osaka

US casino billionaires place bets in Japan's tale of two cities

(Japan).- As the casino business in Japan moves closer to a reality, both foreign and local operators are lining up to build the next Macau. Two U.S. billionaires are betting on rival cities, Tokyo and Osaka, to be the first in Japan to open casino resorts - once the government gives the go-ahead to legalize gambling.


apan is one of the world's last untapped gaming markets and could become the third largest gambling destination after Macau and the United States, with estimated annual revenue of over USD 40 billion, according to broker CLSA.

Lawmakers who support legalizing casino gambling hope to see initial draft legislation this year, with the first resort opening by 2020, when Tokyo hosts the Olympic Games.

In a race for first-mover advantage, 76-year-old Chicago real estate mogul Neil Bluhm has set his sights on the southern commercial hub of Osaka, while Las Vegas gaming tycoon Sheldon Adelson, four years his senior, is putting his weight behind a Tokyo flagship resort.

Bluhm, who owns casinos in Pennsylvania, Chicago and Niagara Falls, has a net worth of US$ 2.6 billion, according to Forbes. The former lawyer and now head of Rush Gaming believes Osaka, one of Chicago's 'sister cities', has the kind of flexible local government that will help drive this project, and, crucially, has "shovel ready" casino sites. He says the whole process - from approval to construction - in Tokyo will be more complex, more time-consuming, and more expensive.

While Adelson hasn't ruled out pitching for Osaka, too, he sees Tokyo as the main prize, given its highly affluent 13.2 million population. The CEO of Las Vegas Sands, who Forbes says is worth close to US$ 39 billion, has pledged to spend US$ 10 billion as Japan opens up to legal gambling - an offer he says his rivals can't match.

In a recent report, Morgan Stanley predicted that a Japanese casino resort costing more than US$ 5 billion would offer a return on investment of below 20 percent due to rising costs and a struggle to attract enough high-rolling Chinese VIP customers.

Sands, which has casinos in Macau, Singapore and Las Vegas, remains bullish on its Japan plans given the country's wealthy population and proximity to China. "We are very confident in our ability to generate a return that would be satisfactory to our shareholders," George Tanasijevich, managing director for global development, said in a phone interview. He did not elaborate.

Bluhm shrugs off rivals' talk of big money spending. "Sometimes people like to throw big numbers around in order to get picked ... We have been more for Osaka in the US$ 4-US$ 5 billion range," he told Reuters.

Bluhm also reckons he may have an edge over the big operators in Macau - who he thinks likely prefer Tokyo - by working alongside local partners. "In reality, they are going to want to totally run the project. They are probably not used to having partnership relationships like we are," he said.

Osaka's government is keen for foreign operators to use Japanese firms in a consortium or joint venture, said Masayuki Inoue, director general of the city's economic strategy bureau, stressing Osaka wants a large casino resort with convention and entertainment facilities. "Osaka city is flexible. We're ready to discuss anything."

The Kansai Keizai Doyukai, a leading local business lobby, reckons land costs in Osaka will be a tenth of those in the capital, some 250 kms (155 miles) to the northeast. And, it says, the city can offer a development area three times bigger than that occupied by Singapore's two casino resorts - Marina Bay Sands and Resorts World Sentosa .

Fifty-six percent of Osaka residents polled in April said they were positive about the city of 2.8 million people having a casino resort. The city, located on Honshu island at the mouth of the Yodo River has a reputation for being more extrovert than Tokyo, and local authorities have designated a 170-acre plot of reclaimed land, known as Yumeshima, as the preferred resort site.

Osaka's Governor Ichiro Matsui told Reuters last month that casino operators would invest around US $5 billion for an integrated resort, and bear some of the infrastructure costs such as a potential rail link. In comparison, officials in Tokyo, already setting about preparing for the 2020 Olympics, appear more tortoise than hare.

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