Las Vegas Sands is highly unlikely to reenter the race for a Japanese IR license unless there is a dramatic shift in the regulatory and locality landscape, according to brokerage Sanford C Bernstein.
The global casino giant, which until this week had been considered the favorite to develop an integrated resort in Yokohama, announced its shock withdrawal from Japan on Tuesday, citing the “framework around the development of an IR” as making its Japan goals unreachable.
LVS has previously hinted at the capital city of Tokyo with a population base of 36 million people as its ideal IR location, but Bernstein stated in a note shortly after the company’s withdrawal that a return to Japan is unlikely anytime soon.
“Could LVS come back into the mix in Japan in the future? Perhaps, but by no means very likely,” said analysts Vitaly Umansky, Eunice Lee and Kelsey Zhu.
“Sands had always been most excited by Tokyo (and only shifted to looking at Osaka and Yokohama after Tokyo did not officially enter the casino race).
“Tokyo is now faced with an Olympics that is delayed to 2021. The Japan process is also likely to see delays due to the coronavirus epidemic. The plan to award winning RFPs at the prefecture level during 2020 and early 2021, followed by the federal government awarding up to three licenses in 2H21 is most certainly going to be pushed back.
“The situation could change materially between now and then … Tokyo may re-enter the mix, however the likelihood of Sands coming back (unless there was a clear winning Tokyo opportunity) is remote due to the same reasons it pulled out in the first place.”
While the impact of COVID-19 on LVS’ global gaming operations in Las Vegas, Macau and Singapore has been an untimely setback, Bernstein said this was almost certainly not the key driver behind the company’s withdrawal from Japan.
Instead, the analysts point to the government’s insistence on issuing only 10-year licenses and subsequent reluctance from banks to fund the debt, as well as increasing investment expectations and restrictive policies on locals play as the deciding factors.
“A US$10 billion-plus development with more and more limitations on locals becomes a higher risk proposition,” Bernstein said.
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