A consortium containing United States-based casino operator MGM Resorts International and Japan’s Orix Corp is likely now to be a front-runner for selection as private-sector partner to Osaka (pictured) in that Japanese metropolis’ effort to be allowed a casino resort.
That is according to an analyst from Fitch Ratings Inc in commentary to GGRAsia. It was in response to our enquiry regarding the impact of, and reasons for, respective decisions by U.S.-based Las Vegas Sands Corp, and then by Asia-based Melco Resorts and Entertainment Ltd, not to pursue any further their interest in partnering with the Osaka authorities on such a casino pitch to Japan’s national government.
“The exit of Las Vegas Sands and Melco [Resorts] from Osaka certainly increases the probability that the MGM/Orix consortium, which was already a strong contender, wins the RFP [request-for-proposal] there,” Fitch analyst Alex Bumazhny told us in emailed remarks.
“However, a handful of other operators that have not pulled out [of Osaka] yet, such as Genting [Group] and Wynn [Resorts Ltd], also have a decent chance,” the Fitch analyst noted.
“Our sense is that whatever ends up being built [in Osaka] will be world class and will be the maximum investment the winning operator could make before jeopardising their return on investment thresholds. None of the major public operators that are left in the race are known for underinvesting when looking at their recent portfolios, and all have solid financial profiles as well as development and operating experience,” Mr Bumazhny added.
Casino operator and developer Melco Resorts announced last week that it would adopt a “Yokohama First” policy in its pursuit of a Japan casino licence.
In late August Las Vegas Sands – that has Macau casinos under its Sands China Ltd unit and also runs an operation in Singapore’s casino duopoly – had said it would focus on Tokyo and Yokohama in its effort to be allowed to build a casino resort in Japan, and would no longer pursue such an opportunity in Osaka.
Fitch’s Mr Bumazhny noted in his comments to us: “The integrated resort developments in Japan will be massive and expensive undertakings. Yokohama with a larger greater-Tokyo population to pull from and, in our opinion, a more favourable site, makes the risk-reward of such an undertaking more manageable.”
Fitch Ratings had noted in a recent update on the Japan casino liberalisation process, that Yokohama was close to Haneda, one of Tokyo’s international airports.
The Fitch reported had also said Osaka’s proposed location, an artificial island called Yumeshima – while “extremely large” at 47 hectares (116 acres) – was without very close supporting amenities. By contrast, the proposed Yokohama site at Yamashita Wharf had them already, said the ratings house.
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Adjusted EBITDA reported by Asian casino operator Melco Resorts and Entertainment for the fourth quarter of 2020