Waning Interest
Companies, however, have grown more disenchanted. Caesars Entertainment Corp. halted its effort to win a license in Japan last August, choosing to focus on its U.S. operations and merger with Eldorado Resorts Inc. MGM Resorts International became the de facto winner of a license in Osaka after Malaysian tourism giant Genting Bhd and Galaxy Entertainment Group Ltd. dropped out.
Genting and Galaxy have said they are still interested in a location elsewhere in Japan, as are Wynn Resorts Ltd. and Hong Kong’s Melco Resorts & Entertainment Ltd.
Casinos have also remained unpopular with the Japanese public, with a majority of residents opposed to them.
The industry’s reputation was further dented by the December arrest and indictment of a ruling-party lawmaker on suspicion of receiving bribes from a Chinese company seeking to invest in the casino industry. The Liberal Democratic Party politician, Tsukasa Akimoto, has denied wrongdoing. The arrest was the first of a sitting lawmaker in about a decade.
In the past year, Sands honed its focus on the area around the capital of Tokyo, especially the southern city of Yokohama -- which had raised its hand to host a casino despite vocal opposition from local residents. Keikyu Corp., which operates railway networks in the area, had expressed an interest in working on a casino resort there.
$10 Billion
Adelson, one of the richest men in the world, said he would be willing to spend $10 billion on a resort that would include gambling, hotels and meeting space, similar to those he’s built in Las Vegas, Macau and Singapore.
Considering the resort could take five years to build, a 10-year concession wasn’t enough to earn a good return on that size investment, said the people, who asked not to be identified discussing private deliberations.
Land prices and labor expenses in Japan are high, and banks were unwilling to lend more than half of the construction cost, the people said. The proposed taxes in Japan would be steep with a 30% levy on gambling revenue and a 31% corporate tax rate.
The country was also planning to put limits on the number of times Japanese citizens could visit and impose an entry fee of about $55 a day, the people said. Winnings by foreign gamblers may also be taxed.
Sands, which will close its office in Japan, focused some of its efforts in recent years on getting these terms changed at the both the local and national level, but ultimately concluded that wouldn’t happen. Adelson has abandoned expansion efforts in the past when the anticipated returns didn’t seem like they were worth the risk, most notably a proposed resort in Spain in 2013. Recently, he said he may pursue casino acquisitions for the first time.