GGRAsia – Yokohama casino could cost up to US$12bln: RFI findings

Yokohama casino could cost up to US$12bln: RFI findings

May 27, 2019 Newsdesk Japan, Latest News, Top of the deck

A Yokohama casino resort could cost as much as US$12 billion to build, and six of the largest casino operators in the world – including four with Macau operations – have some interest in a scheme in the city.

Those are some of the findings from the request for information (RFI) process conducted by Yokohama city (pictured). It was completed by September last year, but the information that was gleaned from it was only released publicly on Monday, and without revealing which entity gave what answer.

Following feedback from 12 entities under the RFI phase, the local government identified that the capital investment could be as much as JPY1.3 trillion (US$11.9 billion). The lowest figure mentioned was JPY620 billion.

Banking group Morgan Stanley recently expressed concern that the intense competition for Japan casino rights could have the effect of inflating the capital cost of entry, and thereby lengthen the amount of time it would take such a scheme to reach operational break-even.

A maximum of three casino resorts are to be allowed in the first stage of liberalisation of Japan’s gaming industry.

The estimated annual revenue to be generated by a Yokohama facility ranged from JPY350 billion to JPY880 billion, according to the city’s RFI exercise. The estimate for annual earnings before interest, taxation, depreciation and amortisation was put at JPY80 billion to JPY210 billion.

Estimates for gross floor area for such a resort ranged from 1.5 million square metres (16.1 million sq feet) down to 670,000 sq metres, said Yokohama’s integrated resort research report for financial year 2018. The term integrated resort or “IR” is used in Japan to denote large-scale casino complexes with other tourism facilities.

Nine of the 12 respondents in Yokohama’s RFI stage were willing to be identified. They included: United States-based casino firm Caesars Entertainment Corp, which currently has plans for a South Korea resort; Capital and Innovation Inc, a Japanese business consultancy; Macau operator Galaxy Entertainment Group Ltd, which has already confirmed interest in Osaka via the latter’s request for concept (RFC) phase, which closed on Friday; and Genting Singapore Ltd, operator of the Resorts World Sentosa casino resort in Singapore and also reportedly a participant in the Osaka RFC stage.

Also among the Yokohama RFI respondents were: Asian casino investor Melco Resorts and Entertainment Ltd; MGM Resorts International, majority shareholder in Macau operator MGM China Holdings Ltd and also a suitor for Osaka; Sega Sammy, a Japanese entertainment brand that already has an interest in the Paradise City casino resort in South Korea; Shotoku, a Japanese technology firm; and Wynn Resorts Ltd, parent of Macau operator Wynn Macau Ltd.

Yokohama’s annual IR reports have been made every year since 2014. According to information coordinated by GGRAsia’s Japan correspondent, they are to be taken into consideration when the incumbent mayor, Fumiko Hayashi, recommends whether or not the city – Japan’s second largest by population – should seek to attract investors for a casino resort and make a bid to the national government to host such a scheme.