IR project off the table
The Las Vegas Sands Corporation has announced it is no longer pursuing its plans to open a resort casino in Japan. The global casino company is the latest major operator to pull the plug on its Japan integrated resort (IR) project, with Wynn Resorts and Caesars Entertainment having made similar moves.
framework around the development of an IR has made our goals there unreachable.”
The company’s founder and chairman, Sheldon Adelson, announced the cancellation of plans in a press release on Wednesday. He said: “The framework around the development of an IR has made our goals there unreachable.” He added that the company will now be focusing its attention on other opportunities.
As recently as January, Las Vegas Sands was going full steam ahead in an attempt to try to win one of three casino resort licenses in Japan. Its main focus appeared to be a Yokohama license.
Potentially off-putting rules and regulations
Most major global casino companies had been eagerly eyeing Japan’s casino market, with Sanford Bernstein analysts previously predicting it to be worth $8bn annually. Some analysts now maintain that the operators’ decision to cancel their plans for integrated resorts in Japan is more likely due to internal situations.
Some industry commentators believe that extensive rules and regulations are likely to accompany a casino resort license in Japan, making the idea a lot less attractive to casino operators. Such constraints would make it harder for companies to reach their required return on investment.
Las Vegas Sands will be looking elsewhere in Asia for investment opportunities
While Adelson believes that Japan will benefit from having these casino resorts, he said Las Vegas Sands will be looking elsewhere in Asia for investment opportunities. The company already has casinos in Asia at its Singapore and Macau properties.
Las Vegas Sands faces difficult times
Mio Kato of LightStream Research believes the ongoing coronavirus crisis has “made a complete mess” of casino companies’ balance sheets. With Las Vegas Sands estimating that its casino resort in Japan could cost $10bn, it can save a lot of money by pulling out of the IR project.
Las Vegas Sands casinos in Macau are up and running once again after a 15-day shutdown in February, but revenues are still very low. The company is also planning to reopen its Vegas casinos in June after it released details of its planned employee health screening process.
A blow to Japan
This latest announcement will be a further blow to the Japanese government, which is trying to re-energize its economy through higher levels of tourism.
Japan’s idea was to allow the development of three integrated resorts that included the likes of a casino, conference arenas, shopping malls, and hotels. The authorities were planning to start accepting bids from interested regions and cities in 2021. Some of the forerunners include the three largest cities of Osaka, Tokyo, and Yokohama.
However, gambling expansion in the country has been met with strong public opposition. This was only made worse after the emergence of a bribery scandal regarding Japan casino licenses and involving numerous government officials.