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NEWS 31 October 2016

MGM Resorts ready to pledge up to $10bn on Japan casino

By Caroline Watson
Whilst casinos are currently illegal in Japan, the odds of their legalisation have improved dramatically due to political shifts that have the potential to open the world’s next great frontier for high-roller gambling.

As Tokyo leans further towards legalising the industry, Chief Executive of MGM Resorts International stated the Las Vegas-based company could invest up to $10bn into a Japanese casino via publicly traded real estate investment trust.

MGM’s Chief Executive Officer, Jim Murren, says the company will spend between ¥500bn and one trillion yen ($4.8bn - $9.5bn) on an “integrated resort” – a large-scale project combining casinos with hotels, shopping and conference space – in Tokyo, Yokohama or Osaka.

With rival operators, such as Las Vegas Sands Corp, keen to enter the market, there are high hopes for the Japanese gaming market. Brokerage CLSA has claimed the market could be worth $40bn per-annum.

The MGM-led project could be built by 2022-23, with multiple blue-chip companies potentially looking for an equity stake in the plan.

In an interview with Reuters, Murren stated: “We think there would be a tremendous amount of demand, and ultimately a public listing of these types of Japanese resorts would be very appealing.”

Murren further told Reuters that he envisages a REIT where an MGM-controlled operating company responsible for expenses and investment would pay rent to a property company owned by private investors and domestic foreign companies.

He believes this approach “could be an interesting way to expand the level of involvement, as there are many investors who are risk adverse and looking for yield and others who are more risk tolerant.”
RELATED TAGS: Land-Based | Casino | Legal & Regulatory
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