GGRAsia – MGM shuns marginal stake in a Japan casino resort: mgmt

MGM shuns marginal stake in a Japan casino resort: mgmt

May 11, 2018 Newsdesk Japan, Latest News, Top of the deck

Jim Murren, chairman and chief executive of U.S. casino operator MGM Resorts International, says the firm would not be interested in having a marginal stake in any consortium it might join to build a gaming resort in Japan.

“In terms of our minimum level of consortium investment [for Japan], we are not going to be interested in being a consortium partner with 20 or 30 percent of something,” the executive said on Thursday during the firm’s analyst and investor day hosted in Las Vegas, United States.

He added: “I’m not sure if we’ll have a majority [stake] or not – I don’t think anyone really knows that for sure – but we are going to have a very significant equity investment [in Japan] and we are going to be in a consortium that values MGM’s development and management and compliance expertise in the gaming sector.”

MGM Resorts had previously indicated that any consortium it might work with was likely to be “Japanese-led”.

Investment analysts say Japan’s nascent casino industry could move nearer to realisation with the possible passage this year of the Integrated Resorts (IR) Implementation Bill.

The IR Implementation Bill – as submitted to Japan’s parliament late last month – proposes an initial cap of three casino resorts nationwide, and a fixed tax rate of 30 percent on any casino gross gaming revenue (GGR) generated by that country’s proposed gaming resorts. It sets a JPY6,000 (US$55) casino entry fee for locals for 24-hour access, and limits casino visits by Japanese to three times a week and 10 times per month in aggregate.

Commenting on the proposed tax rate for Japan’s casino industry, Mr Murren said MGM Resorts was “very satisfied” with the existing proposal relative to what it could have been and based on how much the company was “thinking about investing” in that country.

“It’s all a balance between tax rate and every other element that goes into what you would do in terms of scaling the project,” said MGM Resorts’ CEO.

Mr Murren added that the firm was aware that Japan’s goal “is not to maximise gaming revenue, but to drive international tourism”.

“There’s really no way for the country to drive a level of international tourism … without that kind of infrastructure investment by the private sector,” he stated.

In a separate occasion, Ed Bowers, senior vice president of global development at MGM Resorts, said the firm’s management hoped the IR Implementation Bill would “receive Diet approval within the next few weeks”. The executive was speaking on Friday, during the second day of the Japan Gaming Congress in Tokyo.

Mr Bowers, who is also chief executive of MGM Resorts Japan LLC, said additionally that the gaming industry “stands ready to provide input on any proposed [new] regulations” by the Japanese government.

“The opportunity to provide comments will help ensure the regulations are the best possible regulations and do not result in any unintended consequences,” he said during a presentation at the conference.