Casino legalization fell on its sword in Japan when Prime Minister Shinzo Abe abruptly dissolved the Diet, in order to call for elections. According to Reuters, “That means lawmakers cannot pass regulatory legislation next year, making it highly unlikely any casinos will be ready in time to profit from tourists arriving for Japan’s 2020 summer Olympics.” And since budgetary and defense issues will take priority, passage of any casino legislation in 2015 is looking unlikely, too. Or, as one lobbyist said, “It’s challenging but not impossible.”
What’s a casino company to do? Turn one’s gaze to South Korea, of course. It may be a $2.4 billion market, a fraction of Las Vegas‘ annual tally, but its Chinese tourism is growing, with mainlanders up 53%, seeking everything from retail to plastic surgery. It’s also no stranger to casino gambling. “At least they are familiar and don’t have to go through the initial stages like Japan,” says a management consultant. Not only are $2.2 billion in new projects in train, including one co-financed by Caesars Entertainment, the number of declarations of interest coming from a certain Sheldon Adelson has increased exponentially. However, Adelson knows that he can’t make ends meet on South Korea’s current “tourists only” policy, so it will be good spectator sport to see if his will bends before Seoul‘s does.
* Macao‘s government has thrown a lifeline to beleaguered casinos, extending border-crossing hours, including keeping the Hengqin Island portal open around the clock. Even so, revenue is expected to remain basically static through all of next year — unless this artificial stimulus can goose casino play a bit. It could also have the salubrious effect of easing Macao’s dire housing shortage (new hotel rooms are far outpacing new residential product) by making it easier for casino workers to live in China proper.
In the meantime, increased reliance on bread-and-butter gamblers is proving a mixed blessing. Obviously, they don’t bet as large as the whales do, but mass-market play means more money for the casinos, as the junket operators are out of the picture. Adds analyst Jonathan Galaviz, “they do spend on hotels and other ancillary nongaming type of activity and that’s been a growth sector.” MGM Grand Paradise, in particular, capitalized on mom-and-pop play, growing it 30% in 3Q14. Against this have to be set increased promotional expenses for all the operators. Still, “I don’t think you can underestimate the number of outward bound Chinese tourists. You’re seeing new wealth. You’re seeing new people coming,” says Hill & Associates Director of Operations John Bruce.
* Mohegan Tribal Gaming Authority CEO Mitchell Etess is calling it quits. But don’t read anything into it: Etess won’t leave Mohegan Sun until June of next year, maybe later. He’ll spend his retirement — wait for it — playing golf.
