Greed in Japan; IGT embraces diversity

“Japan Junks it Up.” That was Global Gaming Business‘ teaser for an article on investment-killing measures that have a strong chance of making it into the Liberal Democratic Party‘s casino-implementation bill. Jim Murren might want to think twice about sinking $10 billion into the Land of the Rising Tax when you consider how the LDP would punish success: While a 30% flat rate on gross gaming revenues has been proposed, it has been countered with a sliding-scale scheme that would begin at 30% (on $1.4 billion in GGR), continue to 40% billion on $1.4 billion to $2.8 billion and max out at 50% on any revenues above $2.8 billion a year. A Morgan Stanley investor note predicted that such measures, in which one detects the heavy, anti-casino hand of the Komeito Party, “could discourage potential casino operators from investing too much on capital expenditure due to lower return on invested capital.”

It gets worse. The bill is expected to included a levy on Japanese or resident gaijin of $18.50 per casino visit, which would deter 51% of those punters willing to patronize a casino, according to one poll. “Other restrictive measures include a plan to limit casino visits by Japanese nationals and foreign residents to three times a week and 10 times in 28 consecutive days; and a plan that would limit the size of a casino to 3 percent of the gross floor area of the entire resort, for a maximum of 15,000 square meters (161,460 square feet*),” reports GGB. All that should MGM Resorts International, Las Vegas Sands and Melco Resorts & Entertainment think twice about betting the farm on Japan.

* — MGM Grand‘s casino square footage is 171,500.

Admittedly, casinos pay a higher minimum tax rate (39%) for the privilege of operating in Macao, but there are no admission fees and few caps on visitation, nor does the government restrict the size of casino floors, even if it is stingy when doling out table games. It still remains to be seen whether the Japanese government requires overseas investors to go in on Nipponese casinos as minority investors, an idea that would almost surely scare off Sheldon Adelson, if not others. (If things don’t go Sheldon’s way they are apt not to go at all.)

* Good news for Boyd Gaming: In its 4Q17 earnings report, Pinnacle Entertainment announced that two soon-to-be-Boyd properties, Ameristar Kansas City and Ameristar St. Charles, had seen improved cash flow. These are trophy assets (which is part of why Pinnacle kept the Ameristar brand on them) and Boyd trumped some of its regional competitors by landing them.

* International Game Technology has joined the All-In Diversity Project, founded to “benchmark diversity, equality, and inclusion across the global gaming and betting sectors.” In this, IGT follows in the footsteps of industry luminaries Paddy Power and Caesars Entertainment. The news comes as Wynn Resorts CEO Matt Maddox (we’re still getting used to saying that) is promising an improved diversity effort at his company. IGT went so far as to appoint a vice president of diversity and inclusion, Kim Barker Lee. “We need an open discussion on industry-specific barriers to inclusion and diversity, and offer opportunities to improve,” Lee told the press. Of this salubrious development All-In co-founder Kelly Kehn remarked, “We established All-in Diversity Project, but this initiative should be led by the industry. IGT’s commitment to diversity and inclusion will help serve as a shining example to the industry globally as to leadership on progress toward workplace equality.”

* When you’re having a wine tasting, it’s just not the same without some video poker, is it? Fox Valley Winery in Illinois is aiming to change that. It’s been approved for a slot route. Not coincidentally, business hours are being expanded. “We really have found that we are more about experience and education than just selling a bottle of wine over the counter to somebody taking it home. We need to extend our hours in order to do that. We are not looking for a different customer to come in. We are just offering an additional option and an opportunity for socialization,” said owner Richard Faltz, rationalizing the move.

Across the river from Illinois, Wild Rose Casino, in Clinton, Iowa, is shrugging off the impact of nearby slot routes in the Land of Lincoln. Wild Rose also has two intra-state competitors, in the form of Isle of Capri Bettendorf and Rhythm City. Wild Rose makes almost as much gross gaming revenue as Isle, with half as much gambling capacity. Having the highest payback percentage in the area (91%) can’t hurt.