Fierce race in Japan for three integrated resort permits

At least eight areas eyeing potential tourism windfall, despite fears of gambling addiction

On Sept 24, Japan's tourism minister Kazuyoshi Akaba revealed the eight interested parties seeking to win the right to host one of Japan's three integrated resorts. PHOTO: REUTERS

A fierce race to win the right to host one of Japan's three integrated resorts (IRs) is heating up, with at least eight areas eyeing the potential economic and tourism boom.

Tourism Minister Kazuyoshi Akaba last Tuesday said that, based on a Japan Tourism Agency survey, the eight interested parties are Hokkaido, Chiba city, Tokyo, Yokohama, Nagoya, an alliance of Osaka prefecture and Osaka city, Wakayama prefecture, and Nagasaki prefecture.

Just four of these eight areas - Yokohama, Osaka, Wakayama and Nagasaki - had previously announced their bids to host the IRs, slated to open around 2025.

The Japan Tourism Agency survey, conducted between Sept 9 and 19, covered all 47 prefectures and 20 ordinance-designated cities.

It is not binding, although agency officials have begun interviewing local governments to confirm the status of their preparations.

There may be more competitors for the IR licences: Kawasaki city just south of Tokyo, the coastal Hamamatsu city in Shizuoka prefecture, and Kitakyushu city in Fukuoka prefecture are among those that have reportedly not ruled out a bid.

IRs - mega-complexes with casinos, hotels, shopping malls, entertainment facilities and exhibition spaces - have been controversial in Japan over fears that they may fuel gambling addiction.

Analysts, however, say these fears are overblown, given the prevalence of pachinko slot machine parlours, and argue that IRs have the means to keep problem gambling in check.

Forecasts show that the Japan market will likely surpass Macau and Las Vegas to become the world's strongest casino market, and the national government wants to capitalise on IRs to sustain the tourism momentum beyond the 2020 Tokyo Olympics and 2025 Osaka World Expo.

Japan has set a goal of achieving 60 million visitors and overall tourism spending of 15 trillion yen (S$190 billion) by 2030.

The national government said in a basic IR policy issued this month that it will look at factors such as the IR operator's business soundness and financial stability.

The IR operators should also commit to making use of their casino business profits to improve the range of IR offerings and to give back to the local community, while ensuring that gambling risks can be reliably and effectively curtailed.

Meanwhile, the government will consider the host site's connectivity to other major cities in Japan and overseas, as well as look at how effective its measures are to improve traffic access and develop infrastructure.

Toyo University tourism management expert Kazuaki Sasaki noted that the local governments are at different stages of preparation, but added: "These stipulated standards are quite high, and it remains to be seen how far each administration can achieve them."

He told The Sunday Times that it will be key for local governments to work with IR operators to provide evidence-based explanations in an easy-to-understand manner in order to quell local opposition.

Mr Brendan Bussman, director of government affairs at Las Vegas gaming and hospitality consultancy Global Market Advisors, said: "The potential bidders that put forward the greatest understanding of the market and ability to grow those areas for Japan will have the best shot at securing a licence."

Osaka, which has long been deemed a front runner, had at one point drawn the interest of as many as seven IR operators.

But the official entry of Yokohama, a port city about 45 minutes by train from central Tokyo, into the race has reportedly whittled down the list to three: Las Vegas-based MGM Resorts International, Macau's Galaxy Entertainment and Genting Singapore, which developed Resorts World Sentosa.

Chief executive Sheldon Adelson of Las Vegas Sands, the developer of Marina Bay Sands, said it will drop out of the Osaka race and instead set its sights on Tokyo and Yokohama, where an investment "gives us the best opportunity" for returns on invested capital.

A survey by the Tokyo metropolitan government last year reportedly found that an IR in the capital could ring in annual revenue of 400 billion yen and economic ripple effects of another 700 billion yen to 900 billion yen.

The city of Chiba, also about 45 minutes by train from central Tokyo, wants to host an IR in its Makuhari district, which is near the Tokyo Disney Resort and home to the Makuhari Messe convention centre that hosts major events like the Tokyo Game Show.

Nagoya is due to host the Asian Games in 2026. A planned maglev train line slated to open by 2027 will cut travel time between Tokyo and Nagoya to 40 minutes, from the current 95 minutes.

"We still have roughly a year before the local race begins so there is lots of game to be played," Mr Bussman said.

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A version of this article appeared in the print edition of The Sunday Times on September 29, 2019, with the headline Fierce race in Japan for three integrated resort permits. Subscribe