Wednesday, June 29, 2022

Rush Street bets on regional opportunities


For Chicago-based operator Rush Street Gaming (RSG), building an IR in a smaller, regional location like Tomakomai or Nagasaki is not a consolation prize for missing out on one of the major Japanese urban markets, but is itself the main event.

In an exclusive interview with Asia Gaming Brief, RSG Chairman Neil Bluhm and CFO Tim Drehkoff—as well as Steve Rittvo, CEO of Innovation Project Development, who the company has retained to help them win their bid in Japan—laid out their priorities and strategies.

Bluhm explains that the basic factors attracting RSG to Japan are its stability and cleanliness, especially the sense that Japan is likely to maintain a gaming system that is well-regulated and ethical. He adds that RSG’s entire history is based upon entering small and medium-sized communities which have never before hosted a casino, so in that sense building a Japanese regional IR would involve familiar challenges for the company.

“We don’t build something that looks like another casino in Las Vegas or Macau,” Bluhm explains, “We build something typically that fits better into the fabric and architecture and feeling of the community.”

Drehkoff adds, “To be the 30th casino in Las Vegas; to be the 15th casino in Macau—it’s very different from being the first casino in Philadelphia or in Pittsburgh.”

“A lot of the people who have submitted in Tomakomai,” Rittvo summarizes, “are really interested in Osaka, Tokyo, or Yokohama. We are not. We’re serious. This is not our second choice. We are good at regional facilities and we know what our strengths are—and we’re not going to jump ship and apply somewhere else.”

Rush Street is behind properties such as the Fallsview Casino Resort, Canada's highest grossing IR and the Rivers Casino next to Chicago's O'Hare International Airport.

On the entertainment front, RSG is still elaborating its full strategy in expectation that its future Japanese partners will play a major role, but they do feel that Mr. Bluhm’s status as a world-class art collector and his close connection the Whitney Museum of American Art in New York and other institutions may provide an unique dimension to their potential offerings.

RSG is thinking hard about how to structure an IR consortium in Japan, broadly planning to have two levels of partners: First, larger, well-known Japanese companies based both in the specific region as well as nationally in order to bring heft and credibility to the enterprise; and, second, a larger number of small-stake partners to strengthen links with the local community.

At present, RSG has four people working as agents in Japan, but they haven’t yet developed a clear timeline about establishing a permanent in-country office. They have begun interviewing candidates to become their project manager or CEO for Japan, but are moving cautiously because of the supreme importance of finding the right person for that critical post.

RSG is throwing its hat into a highly crowded ring, which includes all the biggest names in gaming. Many already have teams in place in Japan and are jockeying for position by sponsoring events to raise name recognition and woo the local community.

Osaka’s Yumeshima is increasingly looking to be the big prize in the first round of anticipated IR licensing, with major operators stepping up their campaigns.

MGM Resorts announced it would sponsor for the Dotonbori River Festival, which was a two-day event bringing together food, music, dance, comedy shows, and other entertainment to this well-known district of Osaka. While Melco Resorts & Entertainment said it had become an official partner with Osaka in its bid for the 2025 World Expo, thus employing a similar strategy of engagement.

For its part, Las Vegas Sands showed its firepower by bringing David Beckham to Osaka, and in early September Sheldon Adelson himself paid a courtesy visit to the local authorities.

Osaka’s business community has also been proactive in pushing for IRs, but it hasn’t been alone. Norio Tomonaga, mayor of Sasebo city, Nagasaki Prefecture, visited Las Vegas in October as part of a weeklong official tour of the United States. Sasebo is the location of the Huis Ten Bosch theme park, the proposed location for Nagasaki’s IR.

Mayor Tomonaga was accompanied by a dozens-strong delegation of city councilmen and prominent citizens, and the Las Vegas stop was expected to include visits to at least two IR operators whose executives had previously visited Sasebo.

A total of thirteen IR operators have so far made visits to Sasebo to examine the potential site of the Nagasaki IR. Among these are the US-based companies Caesars Entertainment, Wynn Resorts, Boyd Gaming, Hard Rock International, Foxwoods Resort Casino, and Rush Street Gaming.

It is not yet clear how many resorts Japan will allow and in which locations. A white paper from Global Market Advisors suggested that the most likely scenario is for three cities in the first round, with a further three allowed in a second wave of license. The firm estimates, that with fully built out resorts in six regions, the Japanese market could generate $24.2 billion in annual gross gambling revenue.

GMA notes that income levels do not vary greatly from region to region with the exception of Okinawa, with average household income at about $53,000.

 

Asia Gaming Brief is a news and intelligence service providing up to date market information for worldwide executives on relevant gaming issues in Asia.

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