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Integrated Resorts in Japan: When, Where, and How Much?

The Japan Gaming Congress packed the conference room at the Conrad Tokyo this week with more than 500 attendees, many of which showed enthusiasm that the Diet will pass the Integrated Resort gaming bill in June. If this happens (maybe a 60% chance?  The clock is ticking….) it will pave the way for the formation of a gaming commission, and ultimately greater clarity as to the final set of gaming regulations, and the criteria that will be used to select winning bids for three lucrative gaming licenses. Estimates of the timing of the whole process (commission formation to the opening of the first integrated resort) were all over the board, from as early as 2023 to as late as 2030 (the latter of which was put forth by one individual – most felt it would be in the 2024-2026 range), assuming legislation passage next month.

Well-interspersed into the conference were presentations by representatives of seven of the world’s largest operators of integrated resorts, as well as by representatives of several jurisdictions trying to position themselves for an IR license in a smaller, regional setting (as compared to an urban location – there were no representatives promoting Osaka or the Tokyo/Yokohama area). It is unclear whether there will be a difference in IR component requirements between an urban location IR and a regional IR development, and more notably, a major question coming out of the conference is whether the criteria for license selection will work in favor of urban IRs or in favor of regional IRs. Logic would suggest that with three licenses there would be a 2/1 split; but there can certainly be an argument as to which type gets the “2”.

What was clear from the conference is that cost of development of integrated resorts at any of these locations could be as low as perhaps $2.5 billion, to potentially four times that (or more). What was also clear is that while the licenses would be lucrative, they also come with ample risk, particularly with respect to a license term that could expire (potentially not to be renewed) before an IR reaches a level of stabilized operation. While the likelihood of this license revocation may be remote, it could mean that IR proposals would be less impressive than if there was certainty the projects (if successful) would have sufficient time to recoup development costs and reward investors.

We’ll all know by June 20 whether the next chapter begins, or the story ends for the year.

Scott Fisher, Ph.D.

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