Ownership structure may influence Japan bid outcome

Tuesday 15th of May 2018

The level of foreign ownership allowed by the Japanese government in the country’s IRs may play a significant role in determining who gets the coveted licenses, experts told a panel session at G2E Asia.

With the IR Implementation Bill now before the Diet, many of the questions surrounding the major points of Japan’s casino legislation have now been revealed, including tax rates, the number of licenses and casino floor size.

The government is expected to require that international bidders for one of the licenses team with a Japanese partner, though few details are available.

“I think the most unresolved question is the percentage of foreign ownership, that is the biggest mystery,” said Alidad Tash, SVP of gaming and strategy at 2NT8. “The percentage ownership is a big deal and that may play a part. If that ownership is less than 50 percent, or less than 30 percent , it may upset what we are traditionally viewing as the likely winners of these three sites.”

“Some integrated resort operators around the region are known not to play well with other partners, let alone with multiple partners,” he told the panel.”

William Shen, managing director of Caesars Entertainment in Japan and Korea, said his company would be prepared to take a minority stake in a project in Japan to enter the market.

However, he also pointed out that so far potential domestic partners have been slow to come forward.

Union Gaming analyst Grant Govertsen said he expects the issue to take a while to resolve.

“We will see this dance continue for quite some time before we get any clarity, or any marriages if you will between international and Japanese partners.,” he said.

Tash noted that a foreign operator taking a 60/40 minority stake with one partner is not likely to be a problem.

“The difficulty will be if they say you get 40 percent and these 15 people over here get 60 percent. That consortia will have to deal with a multitude of parties who don’t necessarily have any experience in gaming and that is going to be very challenging.”