(Repeats article published on Sunday. No changes to text.)
By Farah Master and Nathan Layne
OSAKA/TOKYO May 11 Two U.S. billionaires are
betting on rival cities, Tokyo and Osaka, to be the first in
Japan to open casino resorts - once the government gives the
go-ahead to legalise gambling.
Japan is one of the world's last untapped gaming markets and
could become the third largest gambling destination after Macau
and the United States, with annual revenue of over $40 billion,
according to broker CLSA.
Lawmakers who support legalising casino gambling hope to see
initial draft legislation this year, with the first resort
opening by 2020, when Tokyo hosts the Olympic Games.
In a race for first-mover advantage, 76-year-old Chicago
real estate mogul Neil Bluhm has set his sights on the southern
commercial hub of Osaka, while Las Vegas gaming tycoon Sheldon
Adelson, four years his senior, is putting his weight behind a
Tokyo flagship resort.
Bluhm, who owns casinos in Pennsylvania, Chicago and Niagara
Falls, has a net worth of $2.6 billion, according to Forbes. The
former lawyer and now head of Rush Gaming believes Osaka, one of
Chicago's 'sister cities', has the kind of flexible local
government that will help drive this project, and, crucially,
has "shovel ready" casino sites.
He says the whole process - from approval to construction -
in Tokyo will be more complex, more time-consuming, and more
While Adelson hasn't ruled out pitching for Osaka, too, he
sees Tokyo as the main prize, given its highly affluent 13.2
million population. The CEO of Las Vegas Sands Corp, who
Forbes says is worth close to $39 billion, has pledged to spend
$10 billion as Japan opens up to legal gambling - an offer he
says his rivals can't match.
THROWING BIG NUMBERS
In a recent report, Morgan Stanley predicted that a Japanese
casino resort costing more than $5 billion would offer a return
on investment of below 20 percent due to rising costs and a
struggle to attract enough high-rolling Chinese VIP customers.
Sands, which has casinos in Macau, Singapore and Las Vegas,
remains bullish on its Japan plans given the country's wealthy
population and proximity to China. "We are very confident in our
ability to generate a return that would be satisfactory to our
shareholders," George Tanasijevich, managing director for global
development, said in a phone interview. He did not elaborate.
Bluhm shrugs off rivals' talk of big money spending.
"Sometimes people like to throw big numbers around in order
to get picked ... We have been more for Osaka in the $4-$5
billion range," he told Reuters.
Bluhm also reckons he may have an edge over the big
operators in Macau - who he thinks likely prefer Tokyo - by
working alongside local partners. "In reality, they are going to
want to totally run the project. They are probably not used to
having partnership relationships like we are," he said.
Osaka's government is keen for foreign operators to use
Japanese firms in a consortium or joint venture, said Masayuki
Inoue, director general of the city's economic strategy bureau,
stressing Osaka wants a large casino resort with convention and
entertainment facilities. "Osaka city is flexible. We're ready
to discuss anything."
The Kansai Keizai Doyukai, a leading local business lobby,
reckons land costs in Osaka will be a tenth of those in the
capital, some 250 kms (155 miles) to the northeast. And, it
says, the city can offer a development area three times bigger
than that occupied by Singapore's two casino resorts - Marina
Bay Sands and Resorts World Sentosa.
Fifty-six percent of Osaka residents polled in April said
they were positive about the city of 2.8 million people having a
casino resort. The city, located on Honshu island at the mouth
of the Yodo River has a reputation for being more extrovert than
Tokyo, and local authorities have designated a 170-acre plot of
reclaimed land, known as Yumeshima, as the preferred resort
Osaka's Governor Ichiro Matsui told Reuters last month that
casino operators would invest around $5 billion for an
integrated resort, and bear some of the infrastructure costs
such as a potential rail link.
In comparison, officials in Tokyo, already setting about
preparing for the 2020 Olympics, appear more tortoise than hare.
Industry executives worry privately that Tokyo is so focused
on getting the Olympics right that there's little momentum
driving the casino issue. Tokyo Governor Yoichi Masuzoe, a
former health minister, has yet to say whether he will seek a
casino license for the capital or not.
"We're not like Osaka and Yokohama. We haven't stepped on
the accelerator and said let's go," Yukimasa Saito, an official
at the governor's office, told Reuters.
A waterfront area called Odaiba in Tokyo Bay has been touted
by executives and officials as a preferred location for any
casino resort in the capital, but securing enough land could
prove a challenge.
At present, around 14 hectares (34.6 acres) are available
for sale by the city behind the headquarters of TV broadcaster
Fuji Media Holdings. Doubling that would require
re-zoning parks and buying land currently owned by a real estate
developer and Toyota Motor Corp, said an official in
Tokyo's waterfront development division.
The department sparked concern among some casino watchers
about Tokyo's intentions last month when it said it would
auction a 2.7-hectare plot in the Odaiba area for a 10-year
lease - effectively taking the lot out of the equation for
casino resort developers.
In Osaka, officials say a casino would help spur Japan's
tourism beyond heavily populated Tokyo. Osaka is just half an
hour from the former imperial capital Kyoto and trade hub Kobe.
Other regional hubs, such as Sasebo in the south and the
ageing port city of Otaru, have also said they would welcome
casino plans to boost tourism. None are as far advanced in the
process as Osaka - where a common local greeting is "mokari
makka?" - are you making money?
While rival operators - including Melco Crown Entertainment
, MGM Resorts International and Genting
Singapore - are eyeing both Tokyo and Osaka, Bluhm says he's
already in talks with Osaka-based Japanese companies across a
range of industries.
For residents like Yusuke Sawada, a 30-year-old architect, a
casino resort could be a boost for local Osaka businesses.
"If casinos come, it can bring more tourists to spend big
money. Osaka has much less money (than Tokyo). We need it more."
(Additional reporting by Emi Emoto and Yoshiyuki Osada; Editing
by Ian Geoghegan)