Is it possible that Japan is too rich for the casino industry’s blood? Las Vegas Sands President Rob Goldstein recently pegged the cost of a 
Japanese megaresort at $12 billion, while Fitch Ratings thinks it will be closer to $15 billion—more than double the cost of the world’s most expensive casino, Marina Bay Sands. The Motley Fool reports that Goldstein “believes it should serve as a gut check for the industry to really consider whether it can get the appropriate return for investors by spending that kind of money.” We’ve long been skeptical of the pie-in-the-sky returns projected for Japanese casinos and this only bolsters our caution. Sands recently pulled out of the race for Osaka (leaving Genting Group, Galaxy Entertainment and “Osaka First” MGM Resorts International), choosing to put its bet on Tokyo. Markets smaller than Tokyo, Yokohama and Osaka appear to be falling by the wayside.
Nor is Osaka a slam dunk. There are serious infrastructure problems related to the likely site, Yumeshina Island. Even MGM CEO Jim Murren acknowledged that opening in time for the 2025 World Expo would be a challenge, saying, “It requires almost surgical precision, not just by the developer, but by the government, from a permitting perspective, from an infrastructure perspective. It’s certainly not impossible.”
Sands may not be gung-ho on Japan anymore, not when the cost of one casino could equal its entire investment in Macao. According to The Motley Fool, Goldstein”said the company needs to more closely look at whether it would be able to generate appropriate returns for shareholders 
if it were to invest in a Japanese resort.” Estimates of how much Japanese will spend gambling are all over the place, ranging from $10 billion to $15 billion to $25 billion to $40 billion. Galaxy, for one, is hedging its bet by promising to bring in players from China. As Goldstein put it, “No matter how good you are at this business, that must give you pause and stop and think, Is that prudent? Can you really deploy, can you get the return? We’ve had those discussions, and we’ve had them with the Japanese government, and so our chairman and our board will make that decision ultimately.”
Or, as The Fool puts it, “The economics of building in Japan still mostly make sense, but now the resort operators realize they won’t be able to afford it at simply any price.”
Japanese and British citizens come from radically different cultures. However, a recent study of United Kingdom gamblers may offer a glimpse into the disconnect between Japanese punters and their aversion to casino gambling. Survey respondents drew a bright line between “soft” gambling (OK) and “hard” gambling (not OK). Arcade-machine games (pachinko anyone?) were hunky-dory with 42% of respondents. Ditto the lottery (33%), bingo (40%) and scratch cards (29%). No numbers on horseracing and similar forms of parimutuel betting are available but we believe they’d fall into the “soft” category.
Meanwhile, on the casino industry’s Macao front, stocks continue to fall thanks to increasingly violent popular unrest in Hong Kong. The Chinese government continues to stand by feckless Chief Executive Carrie Lam, although some believe she will be eased out in March. Too little, too late.
* As reported earlier, a federal judge has ordered the Seneca Nation to resume revenue sharing with the State of New York, continuing to do so through 2023. $255 million currently being held in escrow is to be released to the state’s hungry coffers, with the possibility of the total soaring to $355 million. The arrearage dates back to 2017, when the 
Seneca abruptly halted payments on the grounds that post-2016 plans for the use of the money didn’t exist. The real motivation for the Senecas’ action may have been Gov. Andrew Cuomo‘s authorization of four additional upstate casinos, which threatened tribal revenue. While the Senecas could prolong the agony with further court appeals, Cuomo aide Rich Azzopardi said, “It is our hope that they end this charade, stop using the courts to delay, and pay what they owe.” In addition to the federal stick, Cuomo has the carrot of sports betting when the Senecas come to renew their compact.
