GGRAsia – Dynam may target smaller Japan casino project: analyst

Dynam may target smaller Japan casino project: analyst

Aug 11, 2014 Newsdesk Japan, Latest News, Macau, Top of the deck

Japanese pachinko hall management company Dynam Japan Holdings Ltd is anxious to enter the casino business but is likely to avoid competition in Japan’s larger cities, says Fisco Ltd analyst Hiroyuki Asakawa.

“This is a realistic approach, given the size of the company and the risks inherent in the casino business,” added the analyst.

Tokyo-based Fisco provides financial investment support services for retail customers.

Hong Kong-based brokerage CLSA said in a report in February that the Japanese government was likely to approve in the first phase of casino liberalisation two large resorts in major cities, and a smaller regional venue.

A bill to legalise the industry is pending in the Diet, the country’s parliament. The Cabinet Committee of Japan’s lower chamber started discussions in June on the enabling bill, but parliament is currently in recess until the autumn.

“Full debate on this bill is likely at the extraordinary session of the Diet this autumn, but it appears that the bill will ultimately become law,” said Mr Asakawa.

The Japanese government last month confirmed plans to set up a new body that would coordinate the work of the different government agencies working on the legalisation of casino resorts. It is hoped the move could speed up the administrative process and enable the first such venues to open in time for the Tokyo Olympics in 2020.

Several local governments in Japan have expressed interest in hosting an integrated resort, including those of Hokkaido, Chiba, Kanagawa, Osaka, Nagasaki, Miyazaki, and Okinawa.

“No Japanese company has the know-how to operate a casino, and several companies are trying to acquire such know-how, but this will take quite a bit of time,” said Fisco’s analyst.

Japanese lawmakers have given a clear indication that they are interested in having foreign casino operators involved in integrated resorts in the country, according to a note obtained by GGRAsia.

All the big Las Vegas operators as well as Macau operators Galaxy Entertainment Group Ltd, Melco Crown Entertainment Ltd and SJM Holdings Ltd have expressed an interest in the Japan market.

Dynam Japan has invested a total of about US$85 million in Macau-based casino services firm Macau Legend Development Ltd and it might be “gaining valuable know-how from the company,” said Fisco’s analyst.

Macau Legend, controlled by businessman David Chow Kam Fai, operates the Babylon Casino and the Pharaoh’s Palace Casino at Landmark Macau hotel under a SJM Holdings Ltd licence.

According to Mr Asakawa, the initial investment in an integrated resort could be huge, probably over JPY1 trillion (US$9.8 billion) in the Greater Tokyo area.

As such, competition for sites in Japan’s larger cities “is likely to be intense,” he added.

The pachinko operator however “plans to avoid such a large initial investment and to base its decision on entering the casino business on the optimal use of its land, capital, and work force,” said Mr Asakawa.

The analyst however warns against the many variable elements in flux at present, saying it is not possible to forecast whether casinos in Japan “would attract serious global gamblers, as do Las Vegas and Macau”.

“If the casino business were overly regulated, it may not be competitive internationally,” said Mr Asakawa. “It would be prudent to await the details of the anticipated law and its application before committing significant resources to the business,” he added.

Dynam Japan said a fortnight ago that revenue for the quarter ended June 30 dropped 4.8 percent to US$375 million.