GGRAsia – Yokohama mulls if IR estimates valid in Covid-19 world

Yokohama mulls if IR estimates valid in Covid-19 world

Aug 06, 2020 Newsdesk Japan, Latest News, Top of the deck

A senior official in Yokohama (pictured), a Japanese city that has been courting private-sector investors in an effort to get a casino resort, says it plans to go back to those expressing interest in such a scheme, to see whether their previous financial modelling on such a project remains viable in the light of the Covid-19 pandemic.

Toshihide Hirahara, a deputy mayor of Yokohama, made the comments on Wednesday while meeting with anti-casino community groups, according to information collated by GGRAsia’s Japan correspondent.

The official has particular responsibility for the city’s initiative on an integrated resort or “IR”, as large-scale casino complexes with facilities with hotels, conference space, shopping and other entertainment, are known in Japan.

The fresh communication will be with those commercial organisations that have already submitted suggestions under Yokohama’s request-for-concept (RFC) phase, which ran until late December.

They will be asked in particular about their opinion on their pre-Covid-19 estimates for earnings and capital investment from such a scheme, according to GGRAsia’s correspondent.

In May it was reported that a business group in the Kansai region had indicated that a post- Covid-19 world might require a reduction in the capital investment for a casino resort scheme. The city and prefecture of Osaka, in the Kansai region, is a leading contender to host one of up to three casino resorts to be permitted in Japan in a first phase of liberalisation.

Pre-crisis, a figure of as much as US$10 billion had been mentioned for a big-city casino resort.

Most of the international casino operators that have been publicly linked with pursuit of a Japan project are already coping with either a large downturn in casino gross gaming revenue (GGR) from existing operations, or ongoing temporary closure of facilities.

Another factor of concern mentioned by international operators in relation to Japan, is the fact that the national government has not yet published its so-called basic policy on IRs, even though interested Japanese cities are due to choose a private-sector partner in time for a national application process currently scheduled to start in January 2021.

Yokohama RFP delay likely

Mr Hirahara’s boss, Yokohama mayor Fumiko Hayashi, had already said in late July that if the national government did not determine its IR basic policy by “early August,” the city could not “finalise and announce” its own IR implementation policy in August.

Yokohama had flagged August as the month it had hoped to announce that local policy, and the city’s request-for-proposal (RFP) application requirements. That was already a delay from the original time frame set for June.

Casino operator Wynn Resorts Ltd – which had previously announced a “Yokohama focus”, confirmed on Tuesday it was – in the words of chief executive Matt Maddox – “pretty much ceasing” its efforts in Japan, at least until there were meaningful developments regarding that market.

Las Vegas Sands Corp, another firm linked with Yokohama, had already said in May it was pulling out of the race for a Japan casino licence, with the group’s chairman and chief executive, Sheldon Adelson, saying the “framework” for development in Japan had made the firm’s goals there “unreachable”.

Other firms said to have been involved in Yokohama’s RFC phase included: Macau licensees Galaxy Entertainment Group Ltd, and Melco Resorts and Entertainment Ltd; Singapore casino duopoly participant Genting Singapore Ltd; and Japanese entertainment conglomerate Sega Sammy Holdings Inc, which in January mentioned identifying partners for such a venture.

As recently as late February, Genting Singapore had mentioned a “Yokohama focus” for its Japan play. Since then, the firm has announced job cuts at its Resorts World Sentosa casino complex in Singapore, but reaffirmed its commitment to the Singapore government to spend SGD4.5 billion (US$3.3 billion) expanding its Singapore facility.

Galaxy Entertainment and Melco Resorts respectively have large capital commitments to expanding their Macau facilities, and face a public retender for Macau gaming rights, associated with the June 2022 expiry of their current respective Macau licences.