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Caesars Entertainment said it won’t pursue a license for a casino in Japan and will focus instead on its current business plan, including a merger with Eldorado Resorts scheduled to close next year.
Caesars management made the decision out of sensitivity to the Japanese government and business partners, who must make decisions this year to advance the casino process, chief executive officer Tony Rodio said in a statement.
Casino operators all over the world have been salivating at the prospect of opening resorts in Japan, which has the potential to become Asia’s second-largest gambling market after Macau. The Japanese government has given preliminary approval for what’s expected to be three major resorts. Cities are formalizing their bidding processes, with proposals for concepts in Osaka due next month.
A casino in Japan is expected to cost upward of $10 billion, with the government’s intended focus on generating tourism and convention revenue from adjacent hotels and meeting space. MGM Resorts International has already stated its intent to pursue a resort in Osaka, while Las Vegas Sands said earlier this month it wouldn’t submit a bid there, favoring instead a resort in the Tokyo area. Wynn Resorts has also signaled an interest in the Tokyo Bay, which could include Yokohama.
“As Caesars has pursued a license to operate in Japan over many years, we have been treated with respect and goodwill by Japanese government, business and community leaders, and with kindness by all the Japanese people we have encountered during this journey,” Caesars chairman Jim Hunt said.
Caesars is withdrawing just as the path toward casino resorts in Japan has become clearer. In recent years, the island nation has passed laws that legalized casino gambling and set forth conditions allowing resorts to be built. Operators and local municipalities are waiting for the national government to appoint a casino control commission and release guidelines on how sites and operators will be chosen, a process that has been beset by delays.
Yokohama, located about 30 minutes south of Tokyo, formally announced last week that it wants to take proposals for an integrated resort to be built on its Yamashita Pier. Right after the announcement, operators such as Las Vegas Sands, Wynn and Galaxy Entertainment Group came out with statements praising the move and underlining their interest in building in Yokohama.
Investment firm CLSA predicts Japan’s gross gaming revenue could reach $20 billion annually.
Caesars, the largest owner of casinos in the U.S., missed an opportunity to get a license in Macau, the biggest casino market in the world. The company has been struggling with a large debt load taken on after a 2008 leveraged buyout. Financier Carl Icahn took control of the Las Vegas-based company and engineered the $8.6 billion sale to Eldorado.
Caesars shares rose 0.8 percent to $11.43 in New York on Wednesday.
©2019 Bloomberg L.P.
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