2020 Vision for Japan

With Tokyo landing the 2020 Summer Olympics, the door might be cracked open for legalized gaming in Japan.

The gaming industry has long regarded Japan as a potentially lucrative market, and at least one gaming analyst has said it would quickly surpass Manila and Singapore.

Casino gaming operators are reportedly already sniffing around for sites, and Union Gaming Group (UGG) recently held a 3-day development conference in Tokyo that included keynote addresses from major casino representatives.

It’s still a long way off, but the potential is enormous. There is considerable incentive for Japan to explore casino gaming as a way to pay for the estimated $1.53 billion cost of Olympic venues.

Two large-scale casinos—in Tokyo and Osaka—could be worth $10 billion in annual gaming revenues, according UGG Principal Grant Govertsen. Those figures would dwarf revenues on the Las Vegas Strip, which produced $6.2 billion in 2012.

Casino operators could be taxed as much as 10 percent nationally on gross gaming revenues and also pay local fees and licensing costs.

Among the gaming companies reportedly scouting possible sites are Las Vegas Sands Corp., MGM Resorts International, Caesars Entertainment Corp. and Macau casino operators SJM and Melco Crown Entertainment.

In the past, Japan has considered gaming legalization, only to reject it. This time could be different, according to UGG, as the current government appears more gaming-friendly. In July, UGG reported that its informal poll of its diverse Japan contacts showed that “gaming expansion is a 50/50 or better proposition this fall.”

Don’t expect to see casinos opening anytime soon, however. Analysts say the earliest resort opening could be 2019. “In the case of Tokyo, we think there would be significant government support to complete an integrated resort in time for the opening of the 2020 Olympics,” according to Govertsen, who told Bloomberg that a legalized gaming market in Japan would become the number two market “practically overnight” and “quickly surpass Singapore and surpass Manila quicker still.”

The Culinary Union is at it again. Earlier this year, the union launched vegastravelalert.org, a website warning Las Vegas visitors and convention organizers about the contract negotiations and “a labor dispute [that] could affect your event.” Now the union has sounded yet another alarm, alerting Wall Street investors that a citywide strike could take place if contracts aren’t hammered out soon with MGM Resorts International and Caesars Entertainment.

The union’s posturing apparently has raised eyebrows for MGM and Caesars officials, who told the Las Vegas Review-Journal that strike talks are premature, and they expect to reach agreements with the union. The two companies, which signed extensions for contracts that expired June 1, operate about 20 major Las Vegas Strip-area hotel-casinos.

While this sort of back-and-forth is common during negotiations, the union took a step closer to a strike on Sept. 15. Around 8,000 workers voted overwhelmingly to give the union the authority to strike at 14 Las Vegas downtown and off-Strip casinos and two industrial laundries. No strike date has been set.

The last citywide strike occurred in 1984 when more than 17,000 workers protested 32 Las Vegas Strip hotel-casinos.

Culinary Local 226 and its bargaining partner, Bartenders Local 165, represent nearly 50,000 workers in hotel resort noncasino areas, including housekeeping, hotel operations, and food and beverage.

“Since June, the unions have held several rounds of talks with the two major multiproperty operators, MGM and Caesars,” Culinary Local 226 Research Director Kin Liu wrote in the report. “Simmering tensions in negotiations now appear likely to boil over as the weather cools and the city enters its busy fall season.”

Let’s hope cooler, more reasonable heads prevail, and it doesn’t come to that. Las Vegas is no longer reeling from the Great Recession, but its economic state remains shaky, and a strike could upset its precarious balance.

Peter Mead
Casino Enterprise Management