Will Adelson’s Las Vegas Sands Corp be the first to build casinos in Japan?

  • The successful casino hotel company are thought to be in the running for one of Japan’s casino licenses
  • Japan continues its integrated resorts mission by allowing firms to bid on the few available licenses

With Japan set to introduce its new casino legislature in the third quarter of 2018, several questions remain as to the country’s methods of welcoming the casino industry into its midst.

las vegas sands cor build in japan
Tokyo bound: Will Sheldon Adelson’s Las Vegas Sands Corp get the first bite at Japan’s casino industry?

Answers are beginning to emerge, however. Morningstar, an investment management company based in Chicago, IL, reportedly believes that Nevada-based casino hotel resort giant, Las Vegas Sands Corp could well have the “upper hand” over its competitors when it comes to Japan’s pending casino licenses.

Coincidentally, this prediction comes just days after Sheldon Adelson, founder and chief executive officer of Las Vegas Sands Corp, is reported to have become $1.7 billion wealthier in only four days. Thanks to his investment in many casinos across Macau, Adelson is now thought to be worth a staggering $34.9 billion. Could this have been seen as a ‘positive’ by some in Japan?

Track record of managing global resorts

“In our view,” says Morningstar equity analyst Chelsey Tam, “narrow-moat Las Vegas Sands Corp is best positioned to win a gaming concession in the middle of 2019, due to its track record of managing global resorts with a strong balance sheet.”

And she may be right. Las Vegas Sands Corp produces more income each year than any other gaming organization worldwide, with estimates suggesting a net revenue of over $11 billion in 2016.

The casino hotel company already has a foothold in Asia, boasting casinos in both Singapore and Macau. But will all this be enough to guarantee Las Vegas Sands Corp a win in Japan?

What are the odds?

Right now, Japan’s National Diet is drafting its second casino-related bill, which will lay out the finer details of the integrated resorts (IR) movement – including how many casinos will be legally allowed to operate in the country.

Las Vegas Sands Corp is predicted to be a frontrunner for one of Japan’s casino licenses because of its strong track record, revenue-generating prowess, and proven management ability. But will the casino hotel company ensure Japan’s smooth transition into the world of legal commercial gambling?

Other firms, including Wynn Resorts, Melco Resorts, Genting Group, and MGM Resorts, are also hot on the trail. It’s not all bad news for these companies should Las Vegas Sands Corp win the bid, though; Japan could be releasing more IR licenses than previously assumed, with Morningstar hedging the bets on four licenses instead of the original two.

A projected timeline of events plots the bidding period to last until 2019, with the first resorts opening in 2014 at the earliest.

Money matters

According to Morningstar, Las Vegas Sands Corp is predicting a gaming revenue of around $19 billion and a further $6 billion non-gaming revenue per year if they build in Japan.

But income means tax. Japan’s second, more inclusive IR bill aims to address future operators’ tax rates which, in turn, will have a great impact on foreign investment.

Singapore’s casino industry development model has been the inspiration for Japan’s own blueprint. The former’s has gambling floors that contribute a 15 percent tax rate on ‘mass market play’ and an added five percent on ‘VIP tables’. These rates are both far below those of Macau, where a 39 percent tax rate is payable on casino’s gross gaming income. That being said, Singapore’s levy sits far below that of the many states in America that allow gambling.

These reasons, among others, are why the Japanese casino market has the potentially to be hugely sought after – it’s no wonder Las Vegas Sands Corp is hot on the heels of the country’s new casino legislature.

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