MGM Resorts ready to bet up to $10 billion on Japan
casino, possibly via REIT
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[October 31, 2016]
By Thomas Wilson and Emi Emoto
TOKYO
(Reuters) - Las Vegas-based MGM Resorts International could plow almost
$10 billion into a Japanese casino via a publicly traded real estate
investment trust, its chief executive said on Monday, as Tokyo inches
closer to legalizing the industry.
Casinos are currently banned in Japan, but the odds of their
legalization have improved sharply thanks to political shifts that could
open the world's next great frontier for high-roller gambling.
Chief Executive Officer James Murren said MGM would spend between 500
billion yen and one trillion yen ($4.8 billion-$9.5 billion) on an
"integrated resort" - a large-scale project combining casinos with
hotels, shopping and conference space - in Tokyo, Yokohama or Osaka.
Multiple blue-chip companies would look for an equity stake in an
MGM-led project, he said, suggesting high hopes for a Japanese gaming
market that brokerage CLSA says could be worth $40 billion annually.
"We think there would be a tremendous amount of demand, and ultimately a
public listing of these types of Japanese resorts would be very
appealing," Murren told Reuters in an interview.
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Rival operators keen to enter the market include Las Vegas Sands Corp,
which said in 2014 it would invest up to $10 billion in Japan.
If a law laying the framework for legalized casinos passes the Japanese
parliament, fresh legislation would set out details such as the location
of the casinos.
Any investment by casino operators in so-called regional resorts would
likely total 100 billion to 300 billion yen, Murren said. An MGM
spokesman said the company was only interested in investing in casinos
in large metropolitan areas.
Potential locations for regional casinos include sites in the islands of
Hokkaido in the north and Kyushu in the south.
The
company has previously flagged its desire to invest in a Japanese resort but it
has not disclosed details of how it would do so.
Murren
said he envisaged a REIT where an MGM-controlled operating company responsible
for expenses and investment would pay rent to a property company owned by
private investors and domestic and foreign companies.
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![](../images/103116pics/busine20.jpg)
MGM Resorts International CEO James Murren speaks during an
interview with Reuters in Tokyo, Japan October 31, 2016.
REUTERS/Toru Hanai
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"That
could be an interesting way to expand the level of involvement, as there are
many investors who are risk averse and looking for yield and others who are more
risk tolerant," he said.
A
resort in Tokyo, Osaka or Yokohama could be built by 2022-23, Murren said,
speaking to Reuters after a closed-door discussion with Japanese and
international businesses on casino resorts.
Beverage maker Suntory Holdings Ltd Chief Executive Takeshi Niinami, and ruling
Liberal Democratic Party lawmaker Takeshi Iwaya, both prominent casino backers,
also spoke at the discussion, people familiar with the matter said.
A Suntory spokeswoman confirmed Niinami's attendance at the event.
In April, MGM launched in the U.S. a publicly traded REIT consisting of 10 of
its U.S. properties, MGM Growth Properties LLC.
(Story corrects the third bullet point and eighth and ninth paragraphs to show
MGM is interested only in facilities in large metropolitan, not regional,
areas.)
(Reporting by Thomas Wilson; Editing by Stephen Coates)
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