Wednesday, August 22nd 2018

Last month, Japanese lawmakers approved allowing licensing for three casinos. Assuming all runs smoothly, the first casino is expected to open in 2025. Prime Minister Abe is scheduled to tour the country over the following months to promote how casinos will benefit Japan. There is excitement for tourism development by attracting more overseas visitors. Industry analysts also believe casinos will create jobs, and boost regional economies. Now that the law has passed, the large question of location and Casino operator remains.

Casino (Integrated Resort) operators are to make plans for local municipalities, who will in turn submit their choice plan to the central government. For their application, casino operators can apply solo, or as a consortium- which seems to be the more realistic approach. With everyone looking for their slice of pie, casino operators need to be wary when selecting partners. Japanese companies have shown a keen interest to enter consortiums, and now that the licensing has been approved, movements have been accelerated.

At the local municipal level, there are already relationships established with certain local players such as developers, hotels operators, constructors, designers etc. Consortiums with such key players can solidify operators chances of moving to the central government stage.

With too many players in the consortium, the operators control on the project is diluted. Furthermore, everyone is rushing to partner with many companies and players, ultimately   for their own interests.

If a casino operator is to make a consortium, or international investors to join a consortium, they must be careful to avoid uncontrollable risks. The players chosen should be absolutely necessary to the planning process, and parties that can be approached after the casino plans have made it to the central government should be put on hold. For partnering with players, transparency on both sides is crucial.

However, we are seeing not everyone in local municipalities and companies are sophisticated enough for large international business in a consortium which involves various entities and their interests – necessary compliances are concerns.

These will be landmines for sophisticated players such as international casino operators, also something their political and business competitors are very keen to watch. The impact of landmines are often evident in Japanese political scandals.

Furthermore, operators and other players need to be wary of scandals with potential partners. A recent example can be of Gaming Tycoon Kazuo Okada being thrown out of the boards of Universal Entertainment Group (UEC) and Tiger Resort Asia Limited (TRA) in 2017 amid accusations of fraud, and on August 6th 2018, being arrested in Hong Kong in relation to corruption-related offenses. UEC officials have established a new company, a move meant to prevent further problems with global casino regulating bodies that call for professional conduct from officials of a casino business.

Another way to say, a casino operator who avoids landmines makes the best chance in Japan, regardless its size and popularity.

We have been observed movement of this casino bill and all related players, and potential land mines.

Asterisk Realty can provide consulting services for players trying to enter into opportunities related to Japanese integrated resort development, by bridge conversations for Japanese players, casino operators, international investors, and hospitality operators, and introduce opportunities.

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