Las Vegas Executive Touts Caesars’ Yokohama Casino License
Jan Jones Blackhurst, Caesars Entertainment’s Executive Vice President of Government Relations, told a Nevada Newsmakers reporter recently that her company is well-positioned to win a Japanese casino license. Caesars unveiled a plan this month for an integrated resort in Yokohama, a port city of 3.7 million which lies roughly 25 miles by road south of Tokyo.
Yokohama is one of three Japanese cities expected to receive a casino license, along with Tokyo and Osaka. Chiba, a city 30 miles to the east of Tokyo, also seeks one of the three licenses. Caesars’ plan for Yokohama is to build a casino named “Great Wave” near Yamashita Pier.
Caesars Entertainment is one of many global casino giants vying for a Japanese casino license. Chinese gaming groups like Galaxy Entertainment and Melco Entertainment & Resorts wants a license, while top US operators like MGM Resorts, Las Vegas Sands, and Hard Rock International all plan to submit a license, too.
Jones Blackhurst, a former mayor of Las Vegas, told the Nevada television show, “There are no integrated resorts in Japan. The upside for revenue possibly is equivalent to or greater than Macau, even with just three licenses.”
Why Japan Is Important for Caesars
More than half of the license applicants will be disappointed, despite being the top casino companies in the world. While many expect a second wave of Japanese casino licenses to be offered in the early 2020s, nothing is assured in a country where 60% of those polled say they did not want land-based casinos.
Japan represents a rare opportunity for Caesars and its competitors. Japan is the third-largest economy in the world, which promises to make it the third-largest casino industry in the world.
Morningstar, a gaming industry research firm, estimates that the Japanese casino industry could generate as much as $21 billion per year by 2025. Macau, the top gaming destination in the world, generated $37.8 billion in 2017.
Most Important Market to Open in 2010’s
Jan Jones Blackhurt said, “Japan is hugely important, not only to Caesars but the entire gaming industry. This is probably the single most important market to open in the last decade for sure, maybe the last two decades.”
No other population spends more on gaming machines than the Japanese people — even Americans with their love of slot machines. While most forms of gambling are illegal in Japan, pachinko parlors have been a major draw for generations.
Many gaming executives believe Japanese mass market players will flock to slots row, due to their love of pachinko. That optimism continues despite laws designed to curb mass market gambling. To enter a Japanese casino, a resident will have to pay a $55 or so entry fee. Non-residents can enter for free.
Caesars Entertainment’s Japanese Chances
The full details of the licensing process are still being worked out. It is expected that applications will be accepted in the first half of 2019, with licensing decisions announced later in the same year. Caesars Entertainment’s is still expected to be a long shot, but Jan Jones Blackhurst says Caesars can overcome is supposed shortcomings.
When Macau’s licensing process took place from 2001 to 2004, Caesars Entertainment was still named Harrah’s Entertainment. It was the only one of Las Vegas’s big four casino giants — along with MGM Resorts, Las Vegas Sands, and Wynn Resorts — not to win a Macau casino license.
As Macau rose to become the single largest gaming city in the world from 2004 to 2014, the lack of a Macau connection was seen as a major disadvantage for Caesars Entertainment. The decline of Macau’s gaming revenues since 2014 and the increasingly arbitrary nature of its governance since then has somewhat dimmed Macau casino companies’ futures, but it is still the most lucrative market in the world.
Apollo Global Managment and TPG
Meanwhile, Caesars has undergone radical changes over the same time. Private equity firms Apollo Global Management and TPG Capital bought Harrah’s Entertainment in a leveraged buyout in January 2007. That was just before the Global Recession, so the company faced $30 billion in debt at the worst possible time.
By 2009, when the company changed it names from Harrah’s to Caesars (after Caesars Palace, its most famous property), gaming analysts and financial analysts were predicting the company was heading towards bankruptcy. Despite that, it bought down the debt to $23 billion over the next 5 years. In 2014, Caesars operations division (CEOC) filed for bankruptcy, hoping to dump $18 billion of its debt.
Caesars Entertainment’s Great Wave Project
That led to a lawsuit by the junior shareholders and long, bitter bankruptcy process. Caesars emerged from the CEOC bankruptcy two years ago. The company appears better situation to secure a Yokohama casino license now than it has been in the past, but Japanese regulators are thought to be seeking gaming operators who have experience in multiple countries — a criterion which would put Caesars at a disadvantage against most rivals.
The Japanese Diet called for its officials to work only with companies “with high morals, a sense of responsibility, and a clean nature.”
Of course, Caesars has been working to change perceptions. The company owns a casino in Ontario, while it also won a contract to build two non-gaming resorts in Dubai last year. Caesars also has a storied reputation in the United States, where it owns more casino properties than any other US gaming group.