Japan is a few days away from deciding on the recipients of a license to operate the country’s first legal casino. A decision that the Las Vegas Sands has been anticipating patiently but as it might seem they might be getting cold feet.
The Las Vegas Sands announced their will to spend up to $10 billion to develop an integrated casino resort in Japan. But as the decision nears and the reality of how much it is really going to cost sinks in, it looks like the gaming giant will turn the other way.
During Sands’ recent earnings conference call, COO Rob Goldstein said, “the company needs to more closely look at whether it would be able to generate appropriate returns for shareholders if it were to invest in a Japanese resort.”
Japan’s real gambling market value
In comments made by Las Vegas Sands chief operating officer, Rob Goldstein, during the company’s third-quarter earnings, he said, “$10 billion was the minimum investment for the Yokohama integrated resort,” Goldstein suggested that $12 billion was a possibility.
He also added, “We’re used to writing big checks, but all that money on one resort does make you stop and pinch yourself and ask whether you can get the returns that your shareholders deserve.”
Japan’s actual gambling market value is shocking new not just to the Las Vegas Sands but to other potential investors. Early estimated places the Japanese casino market to approximately $40 billion annually. Subsequent valuations though have put the Japanese market closer to $15 billion.
Japan’s gambling regulations
Gambling in Japan is known to be tightly regulated as it’s only legal now to buy lottery tickets and to bet on horse races and a few motorsports.
Japan is planning to issue three licenses for developing and operating casinos in Osaka, Tokyo, and Yokohama. It is worth mentioning that the first licence will be issued for Osaka.
The Las Vegas Sands bid for the gambling license after Japan passed the integrated resort promotion bill, which was approved and set in motion by Japanese legislatures will now allow such licensing.
Before approving the legislation, MGM Resorts International commented, “We think there would be a tremendous amount of demand, and ultimately a public listing of these types of Japanese resorts would be very appealing.”
The Las Vegas Sands decided to invest in Yokohama after the government of Japan released licences for three casino resort developments that combine casinos, shopping malls, theatres, hotels and theme parks.