Caesars Entertainment CEO Gary Loveman says opening Japan’s casinos in time for the 2020 Tokyo Olympics will be “tough,” but the largest casino operator in the US is prepared to invest $5 billion or more and is in talks with several Japanese companies about a possible tie-up on a resort in the capital city.
He said Caesars’ US$23 billion debt load will not deter it from competing for a license in a market some analysts say could hit $40 billion in annual gaming revenue a decade after launch.
“You can typically finance a very substantial portion of that value through the debt market,” Mr Loveman told Bloomberg. Caesars “will have no trouble raising the finance for a world-class facility in Tokyo,” he said. “I financed dozens, and the markets for casino finance are very strong.”
Caesars has been in talks with a number of prospective partners, Fuji Television Network, Kajima Corp. and Mitsui Fudosan Co. among them, said Steven Tight, Caesars’ president for International Development.
The company would also consider selling shares in Japan to the public via a listing, Mr Loveman said.
Other license contenders, including Wynn Resorts and MGM Resorts International, have suggested similar plans.
Caesars joins an A-list of global operators that want in on gaming in Asia’s second-largest economy and its wealthiest on a per capita basis. In addition to Wynn and MGM, Las Vegas Sands, Melco Crown Entertainment and Genting Singapore have said they will spend billions to be part of it.
A bill to legalize casinos, the first step prior to developing a licensing, regulatory and tax structure, was introduced in the National Diet in December by the governing Liberal Democratic Party. The bill was discussed briefly in committee but never was brought to a vote during the regular session, which ended on Sunday. However, Prime Minister Shinzo Abe is a supporter of the economic potential of an industry centered on Tokyo and Osaka and says he will push to get the bill passed in a special session of the Diet expected to be convened in the fall.
Supporters, Mr Abe among them, see the resorts as a complement to the 2020 Olympics, but Mr Loveman told Bloomberg that meeting that time frame “is getting tough” as it will take several years to solicit bids, award licenses and complete construction.
Caesars, which is rated nine levels below investment grade by Standard & Poor’s, has struggled to stay solvent since the 2008-09 recession battered revenues in its domestic markets. The company has sold assets, transferred properties between units, refinanced debt and sold equity to stay solvent. Despite all this, it is not alone in believing it can find the money to compete in Japan.
“Capital markets generally believe that well-run large integrated resorts can be highly cash generative and financing specific to a Japanese project may be readily available for Caesars, as well as for others,” said Bloomberg Industries gaming analyst Tim Craighead.
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