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By Dave Hueston, KYODO NEWS - Aug 28, 2019 - 15:29 | Feature, All

Encore at Wynn Las Vegas has been closed from noon on Monday through early Thursday afternoon since Oct. 19, a shutdown that includes the hotel, casino and restaurants. Parent Las Vegas Sands said. Moved Permanently. The document has moved here.

Since the enactment of a law in July 2018 allowing legalized casinos to open in Japan, large-scale resort operators from the United States have been boosting their promotional activities to enter the fray of Japan's budding casino market.

With the government's integrated resorts promotion law set to allow up to three coveted gaming licenses for the development of casino resorts around the country, a potential market worth by some predictions 2 trillion yen a year ($18 billion), U.S. casino giants are staking their chips for what they hope will be a big payout.

Although expectations are high in Japan for substantial economic gains, including job creation, the potential involvement of such high-end casino operators as Wynn Resorts Ltd. and MGM Resorts International has added to widespread public concern about a rise in gambling addiction and negative social impacts.

At a press conference held for Japanese media in a suburb of the U.S. city of Boston on July 24, Wynn Resorts Development Japan President Chris Gordon spoke at length of the company's desire to build the 'world's largest' integrated resort in a city such as Tokyo, Osaka or Yokohama.

(Chris Gordon)

The term integrated resort, or IR, refers to a comprehensive entertainment complex that, alongside casinos, incorporates facilities such as shopping malls, theaters, hotels and theme parks. The locations for the three IRs are expected to be chosen by next year at the earliest.

One of the biggest components of an IR envisioned by Wynn Resorts would be throwing its door open to organizers of so-called MICE -- meetings, incentives, conferences and exhibitions -- events, explained Gordon.

Also facing concerns about deteriorating public safety linked with gambling when it opened its latest resort in the United States, the $2.6 billion Encore Boston Harbor located in Everett, Massachusetts, which opened on June 23, Wynn Resorts footed the bill for the hiring of 20 additional local police officers, Gordon said.

It also spent some $65 million (6.8 billion yen) on road improvements to the 33-acre property, which opened public access to the waterfront for the first time in over a century.

Gordon was also keen to note that the Encore Boston Harbor casino project got the nod from a major academic district just 6.5 kilometers away, which includes Harvard University.

In June, the IR promotion bureau in Osaka Prefecture and the city of Osaka announced that seven casino operators were vying against each other after sending in early request-for-concept documents for a gaming license in Osaka. Under the new legislation, the casino resorts are due to begin operating in the mid-2020s.

Among those making pitches in Osaka were Wynn Resorts, Las Vegas Sands Corp. and MGM Resorts International, which has teamed up with Japanese financial group Orix Corp.

Of the non-U.S. companies, Hong-Kong based Melco Resorts and Entertainment Ltd. and Genting Singapore Ltd. are also said to be in the running, while two other companies have not made their bids or concepts public yet.

Las Vegas Sands recently dropped out of the Osaka race, saying it will instead focus on developing a resort in the Tokyo and Yokohama areas. MGM Resorts' chief executive Jim Murren has said his company 'remains deeply committed' to developing a resort in Osaka.

(Encore Boston Harbor)

Wynn Resorts' Gordon said that if the company gets the green light, it would put all its energies into its Japanese resort -- whether in Osaka or elsewhere.

'The whole company, president, vice president, all the staff, will be focused on how to do that right. I think one of our real differentiators is how we really focus on the quality of every part,' Gordon told reporters after the seminar at Encore Boston Harbor.

Although the Japanese government has not announced a basic policy to decide the three locations for building IRs, Osaka has been the most gung-ho, already proposing a plan to open a venue on Yumeshima Island, an artificial island in Osaka Bay, ahead of the 2025 World Expo in the city.

Osaka has estimated 1.96 trillion yen in total economic benefits for the IR's overall development and business operations, effective tax revenues of 250 billion yen and employment opportunities of 97,000 people per year, according to a 2017 prefectural report.

Gordon stressed that Japan's plans to boost tourism ahead of the 2020 Olympics and Paralympics and beyond is what makes it an attractive market for a casino resort. The government has targeted 40 million tourists by next year and a long-term goal of 60 million by 2030, establishing tourism as a key growth sector.

'As you know, the government has set goals for the next 20 years to raise tourism to a very high level. We like that. It's also a society that has had an interest in gaming -- they certainly have gaming now with pachinko, horses and motorboats.'

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Japan's MICE market, in particular, for group tourism dedicated to planning, booking and facilitating large conferences is 'very strong,' Gordon said, adding that 'Japan is a country with a famous history of quality, famous history of customer service. That's a good fit for our brand.'

Although Gordon said 'Osaka is the most active' city in pursuit of a resort, he has not ruled out the other big cities, such as Yokohama and Tokyo. The capital, he said, 'is being a little bit quiet (now) as they work on the Olympics.'

(A casino at Encore Boston Harbor)

Yokohama recently threw its hat into the race and has said that with the cooperation of 12 casino operators, including Wynn Resorts, it estimates it could generate annual economic effects of up to 1.6 trillion yen. It is considering building a resort at the 47-hectare Yamashita Wharf, adjacent to Yamashita Park, a major tourist site.

But the big U.S. casino operators are not only looking to sink their teeth into the biggest cities in a market with the potential to become Asia's second largest after Macau. They are also considering regional hubs.

Native American tribal casino operator Mohegan Gaming and Entertainment and Florida-based Hard Rock International, which operates 11 hotel casinos worldwide, have both unveiled plans to build a resort in Hokkaido's Tomakomai.

Mohegan's plan, for example, features three deluxe hotel towers including 2,500 luxurious guestrooms of various styles, themes and size. The IR would cost between $3.5 billion and $4.5 billion to develop and employ up to 7,000 people, a public relations official for Mohegan said.

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'During the winter, the region offers some of the best skiing on the planet. We believe there is an opportunity to further develop this industry. During the summer, the region is an ideal location to escape the heat in Tokyo, Seoul or Shanghai,' the official told Kyodo News.

Although Wynn Resorts' Gordon said he could not give out specifics, in terms of the number of business partners the company is talking with in the respective cities or an estimate of its potential investment in Japan, he did say it would be the largest IR the firm has ever been involved with. Wynn Palace in the Cotai Strip area of Macau cost $4.2 billion.

'In Osaka, it would be in between 2 and 3 million square feet (186,000-280,000 sq. meters) for a MICE facility. That's probably eight times the size of (Encore Boston Harbor).' He said he expected the resort would create as many as 16,000 jobs.

'This would be much larger than the investment in Cotai. But the reason we didn't put an exact number on it is it's very early, we still have a lot of design to do, a lot to learn,' he said after reportedly making estimates earlier this year of an initial investment in the $8 billion to $9 billion range with operating expenses of between $940 million and $1.4 billion.

Another reason industry insiders give for the push to enter the Japanese market is a saturation of casinos in the U.S. gambling hub of Las Vegas, making expansion there difficult.

(Las Vegas Strip)

As the main customers in Las Vegas have been Chinese, according to dealers, U.S. casino operators have expanded their businesses into Macau and Singapore in recent years to more easily target a wealthy Chinese and South Asian clientele. Now, with Japan set to become more of a world tourist destination, the floodgates have been opened.

The central government will make public a draft of its basic policy, which is expected to incorporate evaluations on economic impacts and gambling addiction, as well as location selection criteria and the deadline for applying for licenses, as early as next month.

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Although the prefectures of Wakayama and Nagasaki have also entered the race and Tokyo, Hokkaido and the city of Chiba are considering joining the competition, 40 local governments have said they will not apply, citing concerns over public safety and an increase of people being saddled with gambling debts.

As part of efforts to tackle addiction, residents of Japan will be charged a 6,000 yen entrance fee for casinos and be limited to 10 visits per month and thrice per week.

A 2017 interim government report estimated that 3.6 percent of Japanese adults have been addicted to gambling at some point in their life, higher than the 1 to 2 percent average in other developed countries, and that gamblers have a predilection for easily accessible pachinko parlors.

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Nearly two-thirds of respondents to a Kyodo News poll conducted last year opposed opening casino resorts, citing concerns over gambling addiction and a possible increase in crime.

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Dr. Bo Barnhard, an authority on gambling addiction on the faculty of the University of Nevada Las Vegas who spoke at Wynn Resorts' seminar, explained how Singapore, after opening its first casino in 2010, dealt with gambling addiction by implementing various countermeasures and treatments.

As a result, gambling-related problems in the workplace or in personal relationships dropped off significantly 'to a level below what existed prior to the legalization of gambling.' He added, 'Japan can harness this kind of foreign know-how.'

But as the new integrated resorts begin operations from the first half of the 2020s, it still remains to be seen how Japan's national and local governments will successfully establish an effective safety net to ameliorate concerns about problem gambling as well as criminal activities, such as money laundering, linked to casinos.

Brendan Bussmann of Las Vegas gaming and hospitality consultancy Global Market Advisors said Japan will likely need to implement safeguards across all forms of gambling, just as Singapore did through the creation of its National Council of Problem Gambling.

'Japan will likely have to create a similar organization that will need to use evidence-based research to establish the best practices for exclusion, awareness, research and resources across all forms of gaming, including pachinko,' Bussmann told Kyodo News.

'Technology can play a significant role through the training of staff, exclusionary programs, analytics, and research,' he added.

As for dealing with the underworld of organized crime often linked with gambling, Wynn Resorts' Gordon said, 'Without getting into specifics into what we'd do every day, we'd obviously work very closely with local law enforcement. The Japanese government are the experts as to what elements might be active in Japan. As we are in all our facilities, we would be extremely cooperative and aggressive.'

Aug 28, 2019 | KYODO NEWS

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