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Betting big on Japan

It’s been just over six months since the final passage of a bill establishing the framework for legal casinos in Japan and operators are steadily building their ground games in the race to win perhaps the most coveted license in the world.

A large and wealthy middle-class population, an expanding tourism industry in proximity to China and South Korea and a strong propensity to gamble have made Japan the key focal point for most of the largest casino operators. The market is expected to become the second-biggest in Asia in its first year of operation, though estimates for gross gambling revenue vary widely depending on the locations that are chosen for the initial round of resorts.

Perhaps not surprisingly, operators have pledged to invest billions to create unique and world-class IRs and have already spent heavily on establishing a presence on the ground.

The focus section for our first Asia Gaming Briefing magazine of 2019 is therefore Japan. We will look at the current state of play and what we can expect over the course of this year, both from a regulatory point of view and political. Although the IR Implementation Bill has been passed, there is still strong opposition to IRs from the Japanese public and the outcome of many local elections to be held across the country, including Hokkaido, could well play a key role in determining where resorts will ultimately be located.

We also publish a map to provide visual representation of the key prefectures hoping to a host an IR, the sites they are proposing and an idea of the local economy.

A major part of the focus will be on the operators themselves. In a mini-survey we ask which locations they are studying and why, and what they think it is about their company and proposal that will given them the edge in such a competitive race.

Lastly, once these IRs are up and running they will need to fill their casinos. We take a look at what the gaming floor of a Japanese IR might look like and consider some of the factors that may help shape decisions. Alongside the ubiquitous baccarat tables, there is optimism Japan may drive a new generation of high-tech electronic gaming.

2019: The Year of Clarity

2018 was the year that settled the question of whether or not casino gambling would be legalized in Japan. The answer was affirmative. 2019 will be the year when the rules of game will be clarified.

While not precisely connected to the IR industry, the fact that Osaka won its bid to host the 2025 World Expo will create a sense of urgency within the Japanese government to establish the specific national policies as quickly as possible. The clock is now ticking. It is universally understood that if the anticipated Osaka IR cannot open its doors in 2024, ahead of the World Expo, that an irreplaceable opportunity will have been lost.

Other than Osaka, it is still a wide open question as to where the other two IRs will be located. Will the gargantuan Kanto region—Tokyo or Yokohama— become host to a major urban IR? Or will the other two be in smaller markets across the country? 2019 will likely not hold the final answer to that question, but by the end of year all the serious local government candidates should have clearly emerged.

July 1 will be a key date because that is when the Casino Management Board (or whatever its English name will be), an independent agency under the auspices of the Cabinet Office, will be launched with almost a hundred staff members. It will have a budget of about JPY6 billion ($54 million). It remains to be seen whether the Casino Management Board intends to regulate Japan’s casinos in a direct, handson manner, or if other mediating organizations will be employed for that purpose.

It will likely be in advance of that event—perhaps in the spring—when the Cabinet Office provides local governments and IR operators a much clearer set of rules about the bidding process, taxation rates, and whole host of other specific regulations that will allow concrete estimates and proposals to be compiled.

It seems unlikely that the Cabinet Office officials will be able to answer all the remaining questions, and it would be true to form that some rules continue to be filled out in the months and years ahead, with occasional changes in their policies as problems are pointed out to the bureaucrats. They are, after all, trying to design an entirely new system for an industry with which they have no actual experience.

For the local municipalities, the Unified Local Elections in April will be a critical point on the political calendar for many of them. The elections will include highly IR bid-relevant gubernatorial elections in Hokkaido and Kanagawa prefectures. Also, the Aichi gubernatorial election is in February. Key prefectural assembly elections—these

assemblies must approve an IR bid under the terms of the IR Implementation Act—will be held in Hokkaido, Osaka, Kanagawa, Chiba, Aichi, Wakayama, and Nagasaki. Possibly impactful city council elections are scheduled for Osaka, Nagoya, Chiba, and Kawasaki.

It is unfortunately the case that the IR Implementation Act was passed last July without any genuine public consent. Newspaper opinion polls regularly showed 2-to-1 public opposition to legalizing casino gambling out of concerns such as the possible spread of gambling addiction, organized crime, and youth delinquency. The legislation was nevertheless pushed through because the government has a supermajority in both houses of the national legislature. This will have electoral consequences in 2019.

A peculiarity is that support for casino legalization in Japan in almost all cases corresponds precisely to the right-left ideological spectrum in the country. Those on the far right are the most enthusiastic advocates of the IR industry, while those on the far left are the most bitter opponents. Those in the middle are more in the middle. There’s remarkably little deviation from this ideological trend.

The upshot is that political support for IRs in every location depends upon conservative or rightwing governors, mayors, and assemblies being elected, and on liberals and the left being consistently defeats at the polls. In time, this political pattern may change, but it is highly likely to hold true at least through 2019.

As the year closes, concrete and reasonably accurate estimates about the economic size of the Japanese IR market will begin to become available. It will be only then that Japan’s gaming future can credibly be measured against the more mature IR markets such as that of Macau.

GROUPE BARRIERE

Jonathan Strock, president Barriere Japan

Where is your preferred location and why?

We are interested in the regional locations, that is to say not Osaka, Tokyo nor Yokohama.

What do you think is unique about your proposal?

Barriere has a very long standing Responsible Gambling program in place, with concrete measures to protect our customers and the population. In addition, we have over a century of history of working with municipalities and regions, which is exactly what is required in Japan.

Are you holding talks with potential Japanese partners and what will any consortium look like?

We are talking with a lot of potential partners, all of whom are Japanese. We believe that most of the economic benefits of the IR Implementation law should remain in Japan, our consortium will reflect this.

What is the biggest draw of the Japan market?

The incredible culture, the population, the food, such a fascinating place, and the size of the market.

What has surprised you/concerned you the most about the process so far?

The length of the concession is a concern. The entry fee is at a rate that might incite people to play a little more than they would have done otherwise, a monthly or yearly entrance fee would be welcomed. Taxes are at a good level. The efficiency of governmental administrations is reassuring. No surprises to be honest.

How are you working to win the hearts and minds of the Japanese?

By talking, and getting to understand the culture. By visiting as many places and people as possible. By reassuring over gambling addiction worries, people are afraid of the unknown, we try to explain the situation to them, so it is better understood, and thus less feared.

What do you expect from the coming year?

Secondary legislation that will give us the legal certainty to move forward, form our consortium, and reply to any interesting tender processes.

If you are not successful, would you be interested in expansion elsewhere in Asia?

Yes, very much so, we believe that the next century, at least, is Asian. We intend to be present in this market soon, irrespective of what happens in Japan, though obviously, we want to be in Japan.

GALAXY RESORTS & ENTERTAINMENT AND SOCIÉTÉ DES BAINS DE MER

Where is your preferred location and why?

We have spent the past few years travelling all over Japan, meeting with and building relationships with many people in the community and government as well as visiting and assessing potential sites for IR. We have learned that many candidate cities offer great potential for IR development and each has unique characteristics that will attract both domestic and international guests. We have actively participated in seven Request for Information (RFI) exercises to assist local governments to better understand what a sustainably operated IR can achieve in their communities. It is clear that the major urban locations within Kansai (Osaka) and Kanto (Yokohama or Tokyo) offer the greatest potential to make the biggest economic impacts. However, regional cities also offer great potential to highlight different aspects of Japan culture, open new tourism channels as well as contribute significant benefits to local economies.

What do you think is unique about your proposal?

GEG and SBM, along with and our Japanese partners, look forward to bringing our unique brand of World Class Japan Inspired IRs to the country. Together, we represent the Best of Asia and the Best of Europe and when combined with the Best of Japan we hope to create a compelling and unique IR experience that the citizens of Japan will be very proud of and tourists from all over the world will want to visit.

Are you holding talks with potential Japanese partners and what will any consortium look like?

GEG has built a very successful IR business through the strength of many long-standing partnerships and we will pursue the same strategy here in Japan. We are happy to partner with any local company that shares our values for quality and excellence, with a commitment to the communities we serve, to ensure a sustainable and profitable businesses with the mission to be the best. In fact, we already have a strong track record of partnership with Japanese companies, including a highly successful 10-year relationship with Okura Hotels and Resorts.

What is the biggest draw of the Japan market?

Japan is the last major developed GDP nation in the world to legalize IR style gaming. We also recognize that the very same tourists we welcome into our properties in the tens of millions each year from across East Asia and specifically Hong Kong, Taiwan, Mainland China and South Korea are the same tourists that contribute approximately 75 percent of all in-bound tourists to Japan. As such with our intimate knowledge of these markets and audiences – combined with the appeal of Japan as a unique and sophisticated travel destination, we feel we can make a significant and successful impact in Japan and create an IR that all citizens of Japan are very proud of.

What has surprised you/concerned you the most about the process so far?

IR implementation in any market is always a lengthy and complicated process – with many issues and questions needing to be addressed with stakeholders throughout society to ensure the smooth passage of legislation, regulation, license bidding, development and operation. This is normal in any new market which is introducing IR’s for the very first time and GEG were fully prepared for this process to take time when we set up our Japan office in late 2014.

How are you working to win the hearts and minds of the Japanese?

We envisage the development and operation of world-class IR’s that will have a positive, transformative impact on the Japanese economy as well as the communities and city in which the IR is located. Working with local Japanese partners, we will create a World Class Japan Inspired entertainment destination – appealing to both Japanese and International guests, promising an authentic experience that will be unlike anything ever seen in any other market worldwide. To achieve this, we will combine the Best of Europe, the Best of Asia and the Best of Japan, in one spectacular Integrated Resort experience, creating a truly unique destination that will leverage the brands, events, gastronomic and hospitality experiences, management teams, global marketing and financial strengths of all parties involved.

What do you expect from the coming year?

We look forward to continuing on the road of exploration across Japan – sharing our story for sustainable and responsible IR development with the communities and stakeholders we meet and learning more about the aspirations and expectations of the citizens of Japan, so we can fully address these in our future bidding proposals and IR concepts.

Las Vegas Sands

George Tanasijevich, Managing Director for Global Development for Las Vegas Sands, CEO and President of Marina Bay Sands.

Where is your preferred location and why?

Our anticipated investment amount and scale of the Integrated Resort that we will propose calls for the IR to be situated in a large, global city like Tokyo, Yokohama and Osaka. These locations are easily accessible to international tourists and have positive reputations among both business and leisure tourists. In addition, each of these cities would benefit substantially from the Entertainment and MICE-focused Integrated Resort that we hope to develop in Japan. They also serve as gateways to regional areas that will benefit from the spillover effects of the Integrated Resort.

What do you think is unique about your proposal?

Las Vegas Sands offers the strongest development track record among all IR operators in Asia, and also has the strongest balance sheet in the industry.

Are you holding talks with potential Japanese partners and what will any consortium look like?

We have been meeting potential Japanese partners for years and continue to do so.

What is the biggest draw of the Japan market?

We see substantial upside in the development of Japan’s tourism industry: Japan already has a positive reputation as an international tourism destination; its government recognizes the role and ability of tourism to drive economic growth, and Prime Minister Shinzo Abe is personally providing support and leadership on the introduction of IRs. An LVS Entertainment and MICE-focused Integrated Resort will help Japan overcome existing tourism infrastructure constraints and boost Japan’s tourism growth in substantial and sustainable ways.

What has surprised you/concerned you the most about the process so far?

Because we have carefully studied Japan for over a decade, not much has surprised us. As we expected, the Japanese government and business communities are very studious, meticulous and methodical in the way that they approach the IR opportunity. We are concerned that some in Japan still have misperceptions about IRs, casinos and problem gambling. Accordingly, we continue to help educate the public and address any concerns.

How are you working to win the hearts and minds of the Japanese?

The best way for the Japanese people to truly understand what an LVS IR can do for their country is for them to experience one of our properties. Many Japanese are familiar with and have a positive impression of Marina Bay Sands and our other properties. In fact, Japanese guests occupy a greater share of our rooms at Marina Bay Sands than foreign guests from any other country. But as we cannot possibly have all Japanese people experience an LVS property, we have been visiting Japan for more than a decade, concentrating our efforts in explaining the concept of Integrated Resorts to Japanese governments, business communities and the general public.

What do you expect from the coming year?

We expect to learn more details about the IR opportunity and process with the release of policy guidelines and the establishment of the casino regulator. We also expect to learn whether the three licenses will be issued in one or two tracks, and which cities are prepared to pursue a licence.

If you are not successful, would you be interested in expansion elsewhere in Asia?

We are always keen on expansion opportunities where we can help countries meet their tourism, economic and labor market goals, and generate sufficient returns for our shareholders.

Wynn Resorts

Where is your preferred location and why?

Wynn Resorts has looked at over twenty sites in Japan and is deeply impressed by the development opportunities. At this time we are focused on the major metropolitan areas such as Osaka, Yokohama, and Tokyo, as these seem the best fit for our approach to large integrated resorts.

What do you think is unique about your proposal?

Wynn Resorts is focused on high quality offerings, including a unique approach to entertainment, MICE, and hospitality - all driven by a constant focus on customer service. We see our type of resort as an excellent fit for Japan where high quality and customer service are valued.

Are you holding talks with potential Japanese partners and what will any consortium look like?

While we can’t provide details at this time, we are very pleased with the status of our discussions with Japanese companies.

What is the biggest draw of the Japan market?

The demand in Japan for a high quality resort providing a wide range of entertainment, hospitality, meeting and exhibition space, and dining options makes Japan an ideal location for a Wynn integrated resort. We feel our company approach to providing a unique resort experience and our strong interest in being part of the local tourism economy are a good fit for Japan.

What has surprised you/concerned you the most about the process so far?

We have been very pleased with the careful approach taken by the government in regard to establishing an integrated resort industry. This thoughtful preparation will provide a solid foundation for proper selection and operation of the three resorts.

How are you working to win the hearts and minds of the Japanese?

We are very excited to be learning about the unique Japanese culture and to think about how to blend it with our unique approach to resort development. Every day we have the opportunity to both learn more about

the expectations of Japan and to discuss our other resorts elsewhere in the world and how those concepts might be customized for Japan.

What do you expect from the coming year?

We will be opening our office in Japan, continuing to increase the breadth of our team, advancing our design, and building strong partnerships. We expect to engage with the government by providing input on the regulation drafting and with the cities on their planning efforts.

Foxwoods Resort & Casino

Where is your preferred location and why?

At Foxwoods, we are interested in developing an Integrated Resort in an area of smaller population such as Tomakomai in Hokkaido Prefecture which is similar to the location we have in Connecticut. We have great experience in developing, operating, and attracting guests to an integrated resort in a rural location.

What do you think is unique about your proposal?

Our Foxwoods Resort Casino was recently voted the Best Casino Outside of Las Vegas by the readers of USA Today. We will create a unique and memorable destination resort. For our conceptual design for Hokkaido, we presented an Integrated Resort that truly respects the environment and its beautiful surroundings. First, at the entrance to the $2 billion resort is an authentic Japanese garden opposite a large equestrian center. Second, as you continue driving into the resort, you will experience unique retail stores, an indoor/outdoor water park, an events arena with amphitheater, and movie theaters. Next, in the center of the resort, is a 1,200 room hotel with indoor/outdoor pool and spa, a world class casino, state of the art convention space, and a winter pavilion with ice skating. Finally, we also propose a research center for Alzheimer’s/Dementia to assist the prefecture with providing treatment solutions for its senior population.

Also unique about our proposal, we are one of the few submissions from a Native American tribe.

Are you holding talks with potential Japanese partners and what will any consortium look like?

We think it is very import to have a Japanese development and investment partner that is familiar with local codes and customs. During our trips to Japan, we have been actively speaking with potential Japanese partners who feel that Foxwoods Resort Casino is the type of brand they would be interested in working with.

How are you working to win the hearts and minds of the Japanese?

Foxwoods has been doing a number of things to get both government and people in Japan familiar with us. We have been making a number of trips to Japan to meet with local developers and landowners to share the story of the Mashantucket Pequot Tribal Nation and Foxwoods Resort Casino. In addition, we have been attending the Japan Gaming Congress every year and having our CEO actively participate in panel discussions to discuss our IR concept. We have done a number of presentations about our IR concept to government agencies and the Chamber of Commerce in Tomakomai and Hokkaido this past year.

What do you expect from the coming year?

We expect the Japanese Government to provide more details and guidance regarding the regulatory framework for implementing the IR Act. We also plan to remain active and engaged in seeking Japanese partners interested in working with us.

Hard Rock International

Hard Rock International showcased its plans for an IR at January’s Hokkaido IR showcase. Chairman Jim Allen presented a building model of their proposed property, making sure to namedrop Japanese electronics heavyweight NEC for their facial recognition technology and luxury hospitality brand Four Seasons for their high-end hotels.

According to Allen’s presentation, the property will offer over 1500 rooms and 200,000 square feet of retail, a cultural exhibit for the Ainu people, a Broadway Show experience hall, a Hard Rock Live concert arena seating 10,000 in attendance, a music Hall of Fame honoring international and Japanese artists, a Yankees Baseball area, cherry-blossom parks, winter wonderland entertainment areas, an international wellness center, and a direct train route to the resort.

The Seminole-owned resort, casino and restaurant operator has been aggressive in their pursuit of an IR license in Hokkaido. Last November, they became a top partner of the J1 Football League team Hokkaido Consadole Sapporo. This was soon followed by an official sponsorship for an ice sculpture exhibit at the popular Sapporo Snow Festival slated for early February.

MGM Resorts International

Where is your preferred location and why?

Japan is seeking to develop the world’s best IRs that will include very large MICE space, spectacular new entertainment and the opportunity to showcase the best of Japan. MGM has years of experience in the development of large-scale integrated resorts in multiple jurisdictions across the world and are exploring opportunities in the large cities, where we could create something compelling.

At the moment, the stars have aligned in Osaka/Kansai. The local government is keen to develop an integrated resort on Yumeshima located in the Osaka bay area. Local businesses and groups, namely Kansai Keizai Doyukai and Osaka Chamber of Commerce & Industry, are also extremely positive and quite active in exploring the idea of integrated resorts in Osaka. This level of buy-in from both the public and private sectors are conducive to creating an IR that the people of Kansai can be proud of. Given the current environment in Osaka, we recently announced our Osaka First policy. This policy is focused on dedicating significant resources and activities to the development of an IR in Osaka over other candidate sites.

There are other large cities that are also attractive. Yokohama recently issued a request for information (“RFI”) to measure interest in the development of an IR there. As it has been reported, MGM has responded to their RFI.

What do you think is unique about your proposal?

Japan is one of the most unique markets in the world. Business success here requires long-term investment of time and resources.

MGM’s Japan development team has actively been on the ground for years creating relationships, learning Japanese business and culture, and preparing to create a compelling proposal for the candidate cities. We believe the significant amount of time and resources invested, and the greater amount we intend to invest from now, will result in a uniquely Japanese integrated resort that the people of Japan will appreciate.

Are you holding talks with potential Japanese partners and what will any consortium look like?

MGM is a company that listens. We believe an IR in Japan will not succeed without significant input from Japanese partners, not limited to those who participate in the resort but also the surrounding businesses of an IR that we operate in. MGM will continue to work closely with its partners as the process and our plans evolve. We look for companies that share our values, high integrity, financial wherewithal, and passion in creating a uniquely Japanese resort with us.

What is the biggest draw of the Japan market?

MGM believes Japan has the potential of hosting an IR that would be a global hub of entertainment and MICE, on top of being an engine of growth for the Japanese economy because Japan has a wealth of unique historical and cultural tourism assets, one of the world’s most adored cuisines, one of the best infrastructures in the world, and last but not the least, Japan is one of the safest countries in the world.

What has surprised you/concerned you the most about the process so far?

We have been very impressed by the level of detail that the central and local Japanese governments are paying attention to when doing their studies of the IR business overseas. There is no doubt that the industry will be well regulated, given the amount of work all stakeholders are putting into this endeavor.

How are you working to win the hearts and minds of the Japanese?

By upholding our strong belief in partnerships, especially with the local communities. We have been involved in community-hosted festivals and events, building relationships and nurturing trust. We plan to offer as many opportunities as possible to the people, communities, and SMEs in Osaka where they get to listen to our case, learn about MGM, as well as voicing their views on an IR in Osaka.

What do you expect from the coming year?

This year we plan to be more active in Osaka and engage with local communities to inform people about integrated resorts and MGM. Specifically, we intend to engage with the citizens of Osaka through Town Hall type events that give the general public the opportunity to engage with us and address questions they may have about the business.

Melco Resorts & Entertainment

Lawrence Ho, chairman and CEO of Melco Resorts & Entertainment, held a press conference in Tokyo in December 2017 in which he unveiled his “City of the Future” concept. Ho emphasized his life-long interest in Japan and Japanese culture: “There are so many elements that I love about Japanese architecture, Japanese landscaping, the culture, tea ceremony… If we were able to build an IR here, it would truly be a dream come true,” he stated.

According to Ho, the main characteristic which sets Melco apart from other IR operators is its genuine commitment to elite quality as opposed to scale: “You want the right, affluent tourism—people who can actually contribute. More affluent tourists are more sophisticated. They can appreciate and understand the culture a lot more than just the masses.”

Melco has focused its efforts on the two major urban markets of the Kanto and the Kansai, and in fact has established offices in both Tokyo and Osaka.

Ho made a series of statements suggesting that he was prepared to spend “whatever it takes” to win his Japan bid, and that he would move his company headquarters to Japan if successful in gaining an IR license.

In 2018, it was also revealed that an eSports stadium would “very likely” be a “key component” of any major market IR that Melco Resorts & Entertainment would build in Japan.

Melco also spent a considerable amount of effort promoting its “MelGuard” system, which promises to provide secure entry to Melco casinos utilizing biometric technology. It was intended to demonstrate the seriousness with which Melco approaches the issue of problem gambling.

Mohegan Gaming & Entertainment

Mohegan Gaming & Entertainment, the Connecticutbased gaming operator owned by the Mohegan tribe, is counting on its experience within locations similar to Hokkaido, their strong commitments to local communities and their database advantage of opening an IR in Incheon, Korea in 2022 as the main factors that differentiate them from their competitors.

SVP Corporate Finance Christopher Jones further described what makes Mohegan unique. “We are in the Northeast, so we understand what it’s like to operate in a 4-season environment” explained Jones. The climate around their Connecticut property, Mohegun Sun, is much like Hokkaido where heavy snow falls in the winter.

Location-wise the property is 3 hours from New York City and 2 hours from Boston, which is very similar to the situation that would present itself in a IR in Tomakomai city. “We’re used to working in an isolated environment,” says Jones. “At the very least you’re going to have to draw that customer from Sapporo which is 45 minutes away. You really need to draw that customer from Tokyo, Osaka and other parts from Japan, and even more so you need to draw that customer from international markets like Korea and China.”

Jones believes that Mohegan’s IR project in Incheon, Korea named Inspire, set to open in the early part of 2022, will give them an advantage by the time the first IR opens in Japan. “We are going to be able to build a database of Korean and Chinese customers. This massive database will allow for timely marketing to international customers within short traveling distance from here (in Japan). “

Jones also emphasizes community commitments such as local hiring, contributions to local education and charity, and alliances with local businesses. He also stressed the importance of life support systems an IR will bring to an isolated location. “The police and fire safety forces within the property can cover up to a 50-80 miles away. We are able help save 15-20 people’s lives per year, because we have one of the most advanced life-support systems in all of the state of Connecticut” he added.

Rush Street Gaming

Where is your preferred location and why?

We have chosen Japan for our first gaming-related expansion into Asia due to the strong alignment between our expertise in the regional IR model and Japan’s goal of building a worldclass regional IR. We are only interested in a regional IR and are not considering Osaka, Tokyo or Yokahama. We are currently focused on Tomakomai as our preferred location in this project. We believe that Tomakomai is ripe for economic revival and driven to become a technologically-advanced city, and already currently serves as the gateway to Hokkaido with easy access to the airport and existing tourism destinations within the prefecture. Our experience in opening new markets and culture of compliance will play a defining role in bringing a regional IR to Japan and in shaping the future of Tomakomai.

What do you think is unique about your proposal?

We are a real estate developer with experience in developing high-quality projects, built from the ground up on time and on budget. Our unique approach ensures that each and every development is created following an ongoing dialogue with the local community so that the facility serves as a strong economic engine and proud community partner. Our experience in gaming is almost exclusively opening in markets where gaming did not previously exist. This experience is unique and will be valuable in Japan.

Are you holding talks with potential Japanese partners and what will any consortium look like?

We have conducted thorough research in the Japan market, and we have been and still remain actively engaged with local stakeholders, including potential partners in Japan. We believe this will result in the formation of a healthy consortium aligning our interest, Japanese interests and those interests of the local community.

What is the biggest draw of the Japan market?

Japan is a market of high potential, with a great culture of respect and compliance. As a real estate developer, we specialize in creating customized IRs that integrate seamlessly and function as a part of the local community in which we operate while drawing substantial visitation. The opportunity to build a worldclass IR in Japan, and thereby gaining access to the entire Asian market while maintaining a strict culture of compliance is our biggest draw.

What has surprised you/concerned you the most about the process so far?

One concern is that the regulations for the regional IR will be identical to the major city IRs. We think that a regional IR would be more successful with slightly modified regulations better reflecting the market opportunity.

We are surprised at the amount of promotion and effort different operators (including ourselves) have put into Japan given that clear guidelines and timelines associated with the IR bidding process have not yet been published.

How are you working to win the hearts and minds of the Japanese?

We are unconstrained by a “one-size-fitsall” approach and are committed to creating an IR that serves the needs of all stakeholders. As the proud creator of the world’s first ever gaming facility to be recognised for its green design, we are dedicated to building an environmentally-sensitive IR that draws on the beauty of Hokkaido. In line with our commitment to engage with the local community at every stage throughout the process, we have recently opened our first Japan office in Hokkaido, and also launched an online platform “My Tomakomai” which aims to capture the voices of the local community on how they envision their IR to be.

What do you expect from the coming year?

We are expecting and hoping that the Hokkaido government fully supports an IR in the coming months. We anticipate the adoption of final regulations and implementation programs by appropriate agencies in Japan, both national and local that will allow us to move our project to fruition. A number of significant decisions for us await these finalizations. We also expect for clarity around the procurement process and regulations to come from the national government in 2019. We also expect to advance our own consortium plan and for ongoing discussion between regulators and experts to shape the future of the emerging IR industry in Japan.

Caesars Entertainment

Where is your preferred location and why?

We have been meeting with stakeholders throughout Japan, in both large cities and smaller regional areas, who share our vision for a Japanese IR partnership that truly reflects the best of Japan. We view Yokohama, Tomakomai, Osaka and Tokyo as very attractive development locations.

What do you think is unique about your proposal?

Caesars is the only operator with a track record of realizing successful resorts in both major urban and regional markets. We are committed to developing a one-of-a-kind Japanese Entertainment Resort destination that will boost tourism, enhance Japanese communities, generate high-quality jobs and bring other long-term benefits to the economy. Our resort would showcase Japanese culture and history, appealing to domestic and international tourists by providing the best entertainment and experiences

In Osaka, we informally shared our vision for an IR anchored on the three pillars of Wellness, MICE and Entertainment. Based on what we have heard, we believe we are the only major operator to propose an IR centered on Total Wellness (ikigai), which is in line with Kansai region’s long history of leadership in the medical and healthcare industry and also reinforces the themes proposed by Osaka for the 2025 World Expo.

In Tomakomai, we responded to the formal Request for Information by the city government and the Request for Concept by the Hokkaido government. As with any new market, we spent significant time researching the market to create an initial proposal that we hope is sensitive to the local context and responsive to the specific objectives and concerns of the local government.

Are you holding talks with potential Japanese partners and what will any consortium look like?

We have been meeting with the public and private sector, academia and other interest groups throughout Japan to best understand who aligns with our vision and values. Our first priority is to join up with Japanese companies who share our values and vision for a longterm partnership. It’s too early to talk about preferred partners, but as a general comment we have been impressed by the knowledge and perspective of our counterparts in Japan and are appreciative of their hospitality.

What is the biggest draw of the Japan market?

Considering Japan’s affluence as the thirdlargest economy in the world, the population density in Japan markets, and Japan’s success in growing tourism at an astounding rate, it’s fair to say that Japan could rank among the largest markets in the world.

We believe that a Japanese Entertainment Resort would have great synergy with Japan’s existing tourism resources, including its amazing tourist destinations, food and cultural experiences.

What has surprised you/concerned you the most about the process so far?

It’s clear to us that Japan is committed to getting this right for the long term, which completely aligns with our approach. Through our 80 years of experience in the development and operation of IRs across multiple jurisdictions, we have always adapted to local laws, customs and processes. We respect the way things are done here in Japan and will continue to work closely with local partners and communities.

How are you working to win the hearts and minds of the Japanese?

Caesars’ priority is to promote our company’s strengths as a trusted, transparent, and transformative partner for Japan. We aim to be a valuable member of the community and to build mutual trust and respect, starting with a deep understanding of Japan.

As the industry pioneer in responsible gaming, we are continuing initiatives aimed at building awareness and understanding in the community and showcasing our ongoing advancements in Responsible Gaming technology, including those specific to the Japanese market.

Our ‘100-Year Partner for Japan’ campaign, which we announced last September, represents the alignment of all elements of our pursuit of Japan cooperation, both over the past 15 years and far into the future, and symbolizes our aspiration to develop long-term partnerships with Japan and nurture the IR sector together with the local community.

What do you expect from the coming year?

Municipalities will begin the process of selecting operator partners with which to pursue an operator licence. Our focus will be on continuing to demonstrate that Caesars Entertainment is the best partner for Japan, and we look forward to lending our support to local government and community leaders as they move forward in this process.

If you are not successful, would you be interested in expansion elsewhere in Asia?

Caesars’ international growth strategy places a high priority on Asia, where we have international development offices in Hong Kong, Korea, and Japan. The company’s future looks bright in the region, particularly in North Asia; our first Asia flagship in Greater Seoul is currently under construction and due to open in 2021.

Bloomberry Resorts

Where is your preferred location and why?

We prefer a resort type IR, which fits to the concept of Solaire.

What do you think is unique about your proposal?

Solaire is specialized for the resort-type IR, with the highest standard of quality as well as hospitality.

Are you holding talks with potential Japanese partners and what will any consortium look like?

Yes, we are in discussion with potential partners as part of a long process.

What is the biggest draw of the Japan market?

Authentic tourism attractions, a substantial number of mass players and high technologies

What has surprised you/concerned you the most about the process so far?

The slow decision making of IR Bill. The balance between operation and regulation.

How are you working to win the hearts and minds of the Japanese?

Enhancing the tourism industry. Contribution to the local economy. Disaster proof designing and construction.

What do you expect from the coming year?

RFC.

If you are not successful, would you be interested in expansion elsewhere in Asia?

Under study.

Genting Singapore

"As the frontier in integrated resort development, Genting Singapore owns one of the world’s most successful integrated resort destinations, Resorts World Sentosa, in Singapore. Japan is one of the most attractive countries around the world with promising inbound tourism growth. We have always been interested in large city locations to expand our business footprint. The specific cities have shown interest in having an Integrated Resort and we have responded to their requests for information, views and comments. Concurrently, we have also engaged in discussions with stakeholders and potential Japanese partners to understand the environment and the localities where such cities are involved. We continue to work steadily towards the expected bidding process in the second half of 2019 following the establishment of the basic policy for developing integrated resorts.”

ETGs key for Japanese casinos, pachinko problematic

While competition is hotting up amongst the operators bidding for a coveted Japan license, suppliers are also eyeing the market for opportunities and trying to answer the key question as to what the Japanese casino floor might look like.

Japan is a very mature market when it comes to gambling options, with six types of government-run racing operations and national lotteries. Then there is the pachinko and pachislot market, which has seen better days, but still managed to gross $180 billion in 2017. There are several factors that need to be considered when discussing games for Japan.

One of the main goals of the Japanese government is to stimulate tourism numbers, meaning the casino offering should also cater to the “foreign player” as well as the local player. It is also a certainty that the floor space of the casino will be limited to three percent of the total resort area. Then there is the local player aspect, in that the average Japanese adult is not well-versed in playing table games and many are not confident in the rules.

Considering that this will be the first casino in Japan, we will for sure see some of the classic gaming options such as video slots and classic table games like blackjack and roulette, as well as games like baccarat and sic bo catering to Chinese players who will be a significant customer segment.

The discussion gets more interesting when we look into the details. Gaming machines include electronic table games (ETGs), which have advantages over table games that could become key in Japan. Standard ETGs do not require actual dealers. This could be part of the solution for initial workforce issues considering the lack of fully trained dealers and the 24-hour operation they must handle.

Dealer-operated ETGs, where one table can cater to over 100 player machine terminals, is another attractive option. The other factor is the ETG’s role in bridging machine and table play.

Players not familiar with table games have a chance to privately learn how to play with lower stakes than the actual tables. There is also less human interaction with ETGs, something to consider as a potential advantage when targeting local Japanese players, given the Japanese cultural trait of saving face in front of others.

The customer segment that ETGs do not reach leads us to the next interesting detail of the Japanese casino - premium-mass and VIP players.

This customer segment is one that any Japanese casino cannot ignore, especially for an integrated resort-scale project. Unfortunately, the topic of VIP rooms is still completely up in the air. Closed rooms are synonymous with junkets and while they do not always go hand-in-hand, there is a realistic chance that Japanese casinos will implement an open-air VIP area. Some high roller potential could be lost depending on the privacy levels of the VIP facilities. However the limited gaming floor space will for sure require some form of VIP player facility, closed-walled or not.

Perhaps the most interesting discussions are technological advancements and new gaming trends. The first casino in Japan will not be in operation for at least another five years and if we look back five years ago there have already been a few big market shifts.

How big will e-sports and sports betting become by then? Where will games of skill go from here? Will new table technology allow for smoother operation of table games? One product at G2E Las Vegas this year that caught operator attention was Aruze Gaming’s Roll to Win Craps, an ETG and table game hybrid where players still roll the dice as in the table game, all the while placing bets and being able to check game rules and result patterns on an electronic video terminal.

Who is to say that Japan cannot be a pioneer for a more interactive and entertaining gaming floor?

The operator requires only one dealer to service the table and the video aspect allows for flexibility to make flashier game experiences and use formerly unused wall space for advertisements or perhaps stream an ongoing sports event. Innovations of this kind could just be the beginning of a next generation of gaming technology that will make its way to Japanese casinos.

In terms of gaming trends, who is to say that Japan cannot be a pioneer for a more interactive and entertaining gaming floor? The country boasts one of the best arcade and amusement game industries in the world. Common Japanese amusement games like coin pushers, virtual horse racing, and card collection battle games feature interactive player ID and digital assets to keep players interested. Although differentiation between what is a “game” and what is a “gaming machine” could be a regulatory hurdle, Japan certainly has the potential to bring quality entertainment games that are not seen in the everyday casino.

However, bringing Japanese gaming to the floor, such as pachinko, seems less likely due to social stigmas. Pachislot on the other hand, is much closer to its physical-reel slot cousin seen today on casino floors, and the player skill element has been decreasing over the years in the local market. We could very well see a derivative of pachislots in the form of casino gaming machines by the time the first casino door opens.