Nevada NewsMakers

News - December 6, 2018 - by Ray Hagar

Caesars Entertainment is positioned to become one of the few U.S. gaming companies to gain access to the lucrative Japanese gaming market, said Jan Jones Blackhurst, executive VP government relations and corporate responsibility for Caesars Entertainment.

In July, Japan's parliament passed laws to allow a limited number of Las Vegas-style casino resorts

"Japan is hugely important, not only to Caesars but the entire gaming industry," Jones Blackhurst told host Sam Shad on Nevada Newsmakers Wednesday. "This is probably the single most important market to open in the last decade for sure, maybe the last two decades."

Japan is seen as the next Mother Lode for Las Vegas gaming companies because of its citizens' intense interest in gambling and the island nation's close proximity to other enthusiastic Asian gaming markets, Jones Blackhurst said.

"Because the Japanese have been very thoughtful how they have put together their legislation, the gambling potential is enormous," Jones Blackhurst said. "The Japanese love to gamble. They are also looking to grow their tourism and their entire direct tourism market who are also significant gamblers -- the Koreans, the Chinese and the Malayans."

Las Vegas gaming executives expect the first casino license to be issued in 2020, with the first resort to be opened by 2025, according to the Las Vegas Review-Journal. Osaka, Wakayama and Yokohama are among the cities interested in having a casino.

Japan could become a $21 billion gaming market by the middle of the decade, according to a report last year by Morningstar Research. It compares well with Macau, the world's top gaming market, which is a $33 billion gaming market.

MGM and Wynn, two other Las Vegas companies seeking Japanese licenses, said they would invest as much as $10 billion for each location under the recently passed legislation, according to the Wall Street Journal. The gaming expansion with U.S. companies is seen as a pillar of Prime Minister Shinzo Abe's plan to boost tourism and stimulate economic growth.

"There are no integrated resorts in Japan, so they think the upside for revenue possibly is equivalent to or greater than Macau, even with just three licenses," said Jones Blackhurst, the former mayor of Las Vegas and the Nevada Democratic Party's gubernatorial nominee in 1998.

The term 'integrated resort,' or IR, refers to an entertainment complex that includes shopping malls, theaters, hotels and theme parks -- as well as gambling casinos.

The Japanese government, however, is worried the proposed integrated resorts will increase the nation's robust gambling addiction.

The nation has an estimated 3.2 million gambling addicts, according to a 2017 Japanese health ministry survey. The biggest culprit in feeding the addiction is pachinko, an arcade game similar to slot machine. Japanese law technically categorize pachinko as a form of entertainment rather than gambling.

To combat this addiction, the Japanese government hope the Las Vegas-style resorts will cater more to tourists and less to Japanese citizens.

Under the laws passed by parliament, Japanese players would be limited to three visits to the integrated resorts a week and just 10 for a month. The Japanese customers will also be required to pay a substantial fee to enter the resorts.

"Right now, there are more than 44 million pachinko machines and then, of course, they (Japanese officials) are very worried about responsible gaming and addictive behavior," Jones Blackhurst said. "These three integrated resorts will probably not add more than 12,000 new machines. And they are really a solution because your big gaming brands have become very seasoned with responsible gaming programs, outreach and education. So they really solve some of the problems."

The Japanese citizen will still have other potential gambling outlets even if they have trouble gaining access to the integrated resorts, Jones Blackhurst said.

"They also have horse racing. They have boat racing and they have probably the biggest lottery in the world," she said. "They are avid gamblers. So it is interesting to see all the restrictions they are putting on the integrated resorts as if that is going to drive a problem, which it definitely won't."

Before parliament's vote, Japanese officials and lawmakers visited Las Vegas to see how that city handles social problems that go along with gambling, Jones Blackhurst said. Japanese officials were also keenly interested in the work of the Nevada Gaming Commission and Gaming Control Board because they want to have a gold standard when it comes to regulation, Jones Blackhurst added.

"The Japanese have been very thoughtful about crafting legislation that not only mirrors the highest standards of regulatory integrity but they have put into place what they think are appropriate confines to combat addictive behavior and to make sure the majority of their revenues are coming from the tourist population rather than the local population," Jones Blackhurst said. "That is just their comfort level."

Caesars is also looking at expansion into other nations and are interested in Brazil and India, Jones Blackhurst said.

Yet gaming resorts in those nations are years -- maybe decades -- away from fruition, she said.

"I think it is an opportunity," she said of Brazil. "I don't think it will be an opportunity in the immediate future."

A recent presidential decree legalized sports betting in Brazil, Jones Blackhurst noted. Yet casino gambling has strong opponents, she said. Las Vegas gaming companies need patience when thinking about expanding to Brazil, she said

"There is still resistance in Brazil from the Catholic Church, so it is going to be awhile," she said. "I think it is an opportunity. I don't think it will be an opportunity in the immediate future."

Speaking of India as a gaming market, Jones Blackhurst said, "India would be a great market but I don't see it coming on line in the next decade."