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Brave New World

Casino operators are circling Tokyo. Using the Japan Gaming Congress to network and position their brands. And all this prior to the market opening. According to local observations, one thing’s for sure: the Japanese are unlikely to replicate the Macau model.

Image courtesy of Japan Gaming Congress

The Japan Gaming Congress (JgC) started yesterday in Tokyo and will last until May 11. It is one of the key events taking place since the Integrated Resort Promotion Bill was approved by the Diet, the upper House of Japan’s Parliament, on December 14, 2016.
Business Daily asked local and American-based casino operators, as well as analysts, about the contenders’ strategies and expectations of the Congress that may shape one of the strongest lobbying moments to bid for the Japan market.
Speaking to Business Daily from the site of the Congress yesterday, Chris Weiners, Managing Partner at Hogo Digital, a marketing company, provided his firsthand insights into the attendance strategy of local casino operators.
“The Macau companies are [in Tokyo] to showcase their existing profiles and their ability to localise concepts based upon the location. They are here to present their unique plans and how those integrate with the overall community; for example, how they may tackle issues like problem gaming and how they plan to work with local firms in the procurement process to involve the local business community.”
In particular, Galaxy Entertainment Group (GEG), which established an office in Tokyo more than two years ago, according to previous reports by Macau Business, is visiting the Congress with a small but select delegation, which includes GEG’s President Michael Mecca and Vice-President Jeremy Walker, in addition to two members of their Japan office.
Speaking to Business Daily, Jeremy Walker explained that GEG is playing the card of a “strategic” partnership with Monte Carlo-based Société des Bains de Mer (SBM).  
“Our unique offering of the Best of Asia combined with the Best of Europe is a compelling offering,” he enthused.
MGM Resorts International, which seems to have taken the lead by establishing an office in Japan more than three years ago – MGM Japan, Ltd. – is commanding the show from its office in the U.S.
Alan M. Feldman, Executive Vice President of Global Industry Affairs of MGM Resorts International, told Business Daily that Ed Bowers, head of the company’s Global Gaming Development efforts, who is also serving as CEO and Representative Officer for MGM Japan, Ltd., is attending the Congress with six colleagues, amongst staff of MGM Japan and consultants.
“I doubt that anyone from [MGM] Macau will be in attendance,” he clarified in reply to Business Daily’s questions.
Neither Feldman nor PR representatives for MGM Macau replied to our further questions as to why nobody from Macau is attending the Congress.
Melco Resorts and Entertainment has also confirmed that the company has entertained a long-term “keen interest” in Japan. “We have been carefully considering this market for more than a decade,” said Chimmy Leung, Director of Corporate Communications.
In its reply to Business Daily’s enquiries by day’s end yesterday, Leung had not confirmed, however, if Lawrence Ho, the company’s CEO, was attending the Congress but did say that Geoffrey Stuart Davis, Executive Vice President and Chief Financial Officer, and Ross Dunwoody, Head of Development, both attended the event yesterday.
Wynn Macau was unable to reply to Business Daily’s questions by the time this story went to print.

Local commitment and partnerships
One of the strategies pointed out earlier by Chris Weiners – that casino operators would be eager to show their local commitment and social responsibility toward the ‘community’ – have been raised in comments by GEG, MGM and Melco alike.
In the aftermath of its announcement that it is pursuing the Japanese gaming market alone, with the termination of its partnership with Crown effective May 15, Melco claims that their “commitment to Japan is for the long term.”
“The ideal setup for us is to form a consortium with domestic corporations and parties while holding a majority stake in the project. We hope to work closely with local partners and engage local communities to support the government’s aspirations, enhance the tourism landscape and deliver long-term benefits for Japan,” the company stated.
As for MGM Resorts, Feldman believes that “enormous benefits can be derived from a well regulated and entertainment-focused integrated resort.”
Meanwhile, GEG VP Jeremy Walker claimed that in order for IRs to be successful in Japan they “believe they must be developed and operated responsibly in conjunction with local partners and the local community,” with the VP further highlighting the group’s work with the GEG Foundation and local Small and Medium Enterprises (SME) at Broadway Macau.
In terms of overall business strategies, Walker commented that the GEG delegation in Tokyo will be joined by a number of local partners with whom they have been collaborating. Since the establishment of the GEG office in Japan, he said, “we have been quietly but systematically building relationships with many of the key decision makers and interested business and community groups all over the country.”
Walker did not, however, identify the agents of these relationships, despite our additional questions.
Likewise, Alan M. Feldman of MGM explained that the company sees the Congress as another opportunity to “interact with leaders in both the public and private sectors.” In addition, he claimed they have been meeting with several potential partners throughout their time in Japan. “These companies span a wide range of industry sectors including real estate development, hospitality, finance, technology, transportation, media and construction,” he said.

Gambling meets politics
Chris Weiners, who is giving a talk today about marketing strategy and current opportunities for PR and government relations, said that most of the government officials present at the event today are from the Liberal Democratic Party (LDP), including the House of Representatives and the House of Councillors.
“Most of [the regional government officials] will be arriving tomorrow for their individual sessions,” Weiners clarified.
Toru Mihara, a long-term advisor to Japan’s government on the liberalisation of gambling, told Business Daily that while local government officials are present not many state officials would attend. Moreover, he explained, “local government [officials] are being invited free of charge; some are confirmed to be present but maybe not all of them will come.”
Mihara had not replied to our questions about who is covering the costs for inviting local government officials by the time this story went to print.

Please advise
On the question of regulatory standards, analysts still believe that Macau’s model is not the way to go for Japan’s Integrated Resorts.
Reaffirming his early position from previous reports, Mihara said that “legally speaking, Macau has past legacy and we don’t believe this will be of any use to Japan. Macau is a totally Chinese market, difficult to compare with other cultures.”
In a similar vein, Wang Changbin, Professor of Gaming Teaching and Research Centre at Macau Polytechnic Institute, gave strong reasons why the Macau gambling system and law could never be a model upon which the Japanese Government would draw upon to design its own bill.
“First, no other jurisdiction restrains the number of licensees while allowing the licensee to develop an unlimited number of casinos. Second, a VIP room which is run by a third-party other than the licensee is rarely allowed in other jurisdictions as it can generate serious regulatory problems.”
The academic concluded his remarks by pointing out other weaknesses emanating from the local system that would barely appeal to Japanese officials, who have been under intense public pressure since the preliminary IR bill was approved by the Diet.
“The so-called satellite casinos in Macau can hardly be found in other jurisdictions, especially in a well-regulated jurisdiction. In addition, an effective regulatory system should be pursued in a new gaming jurisdiction while in this respect Macau itself is learning from others.”