Las Vegas Sands Corp. revealed on Thursday that it would not pursue building an integrated resort in Osaka, Japan, with Chairman and CEO Sheldon Adelson saying in a statement that the company would instead turn its attention toward Tokyo and Yokohama.
The gaming giant had been focused on Osaka for several years, seemingly competing for a single license with MGM Resorts International and other Asia-based gaming operators.
The news appears to put MGM Resorts in the lead to develop an integrated resort in Osaka. In February, MGM Resorts Chairman and CEO Jim Murren said Thursday the company “remains deeply committed” to pursuing an integrated resort in Osaka.
Stifel gaming analyst Steven Wieczynski told CDC Gaming Reports the decision by Las Vegas Sands “probably means MGM has a strangle hold on Osaka.”
Jefferies gaming analyst David Katz said in an interview that Las Vegas Sands likely concluded that the opportunity in Osaka wasn’t what the company thought it would be.
“The days when Las Vegas Sands can look at a field of mud like Cotai and place a big bet are probably behind them. They are not that kind of company anymore.”
In a statement provided by MGM, Murren didn’t mention Las Vegas Sands.
“We announced our ‘Osaka First’ strategy and have not wavered from that plan,” Murren said. “We have always had confidence in our position, as what we will bring to Osaka is something only MGM Resorts can deliver.”
Japan has long been viewed as a potentially lucrative country for casino gaming, with predictions of up to $20 to $25 billion in annual gaming revenue, second only to Macau.
In 2017, Japan lawmakers approved legislation for three integrated resort complexes, which would include casinos, hotels, restaurants and non-gaming attractions, such as retail, conference facilities and entertainment. Japanese leadership has still not formulated the request for proposal process nor officially settled on locations.
Adelson said an investment in Tokyo or Yokohama gives Las Vegas Sands “the best opportunity” to gain a better return on its investment. Adelson has said in the past that the company would spend $10 billion to build an integrated resort complex in Japan.
Along with Las Vegas Sands and MGM Resorts, most of the major Las Vegas-based gaming companies have expressed interest in Japan, including Wynn Resorts and Caesars Entertainment.
Much of the attention has been focused on Osaka, where government leaders have wanted to see an integrated resort built in time for an international Expo in 2025.
“For the past several years, we have engaged in a conversation with the Osaka government regarding the possibility of building a world-class integrated resort there,” Adelson said. “We thank the people and government there for their professionalism and wish them much success with Expo 2025 and the other initiatives they have planned.”
In January, MGM named former Nevada Governor Brian Sandoval president of global gaming development and said he would lead the company’s international expansion efforts, primarily in Japan.
“We will bring world class entertainment, exciting cultural events, convention expertise, and premium dining and retail experiences that will have broad appeal both nationally and internationally,” Murren said. “We have extensive experience in developing and operating large scale integrated resorts across multiple regions. MGM Resorts will develop a truly unique destination that will generate significant economic activity for the region and increase employment opportunities while delivering an attractive return for all stakeholders.”
He mentioned MGM’s partnership with Orix, a Japanese company with a strong presence in Osaka.
“Together, we are working to submit our response to the ‘request for concept,’ and look forward to the next steps in the process,” Murren said.
Las Vegas Sands in Asia
Katz said Las Vegas Sands may have looked at the cost of competing for an Osaka license and decided it would rather wait and focus on the other cities while it pursues development in its current markets.
Las Vegas Sands is spending more than $5.5 billion on renovations and expansions to its existing resorts in Macau and Singapore, which, combined, provided the company approximately 85 percent of its total quarterly revenue stream.
In Macau, the company is spending more than $2 billion over the next two years, primarily on the renovation, expansion and rebranding of its Sands Cotai Central complex into The Londoner Macau, a $1.35 billion London-themed resort first announced in 2017. Sands will also spend $400 million for the 370-suite St. Regis Tower Suites and $450 million for the 290-suite Four Seasons Tower Suites, both of which are expected to be completed by the first quarter of 2020.
The Londoner project is being constructed in phases to create minimal disruption. Construction is expected to continue throughout 2020 and 2021.
In April, Las Vegas Sands said it would spend $3.3 billion on the Marina Bay Sands resort in Singapore, which will include a 15,000-seat arena, a 1,000-room hotel, and additional convention space. Expansion to the resort’s casino – one of two in the island nation – is not part of the project.
“Over the past several quarters, we have commented on our capacity constraints at Marina Bay Sands and our willingness to invest additional capital for expansion,” Sands President Rob Goldstein said in April. “We want to grow. Singapore’s evidence of that.”
Other companies
Wynn Resorts, Caesars, Resorts World’s Malaysia-based parent Genting and Hong Kong’s Galaxy Entertainment, have all been linked to the potential Japan casino market.
However, Caesars – which is being acquired in a $17.3 billion merger with Eldorado Resorts – could see its Japan efforts curtailed after more than a decade. In June, Eldorado CEO Thomas Reeg, who will head up the merged company, said the Japan process may be slowed because Eldorado is primarily a domestic-based company.
“We have not made firm decisions on international (operations) yet,” Reeg said. “The opportunity internationally will have to be stupendous for us to run in that direction.”
Shares of Las Vegas Sands closed at $54.41 Thursday on the New York Stock Exchange, down 72 cents or 1.31%. MGM shares were up less than 1 percent. MGM Resorts was unchanged on the New York Stock Exchange, closing at $28.51.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
