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Galaxy Entertainment Withdraws From Yokohama Casino IR Race
By Jeff Osienya May 19, 2021 IndustryHong-Kong-based Galaxy Ent. Group bails out on its bid to pursue a license for erecting an integrated casino resort in Yokohama. The Coronavirus pandemic has wreaked enough havoc in the gaming world to scare casino operators from pursuing new ventures.Galaxy Entertainment Group Ltd, one of the most prominent Macau casino operators, has pulled out of the Japanese Integrated Resort (IR) casino race. The renowned casino operator had its eye on setting up an IR in southern Tokyo in the city of Yokohama but is now shelving the idea. While Galaxy Entertainment did not give a definite explanation for its about-face on an IR in Yokohama, it still has plans to apply for another IR project in a different city in Japan.
The vice-chairperson of Galaxy Entertainment, Francis Lui Yiu Tung, talked about the company’s decision in a press briefing, saying that:
Quote“Galaxy Entertainment Group, along with our partners from Monte-Carlo Société des Bains de Mer (SBM) from the Principality of Monaco, have been actively pursuing discussion for several years with the Japan Government and local communities including Yokohama. The world and business climate continues to evolve which has been exacerbated by the Covid-19 pandemic. We greatly appreciate the opportunity to play an active role in Yokohama’s IR selection process but have decided to not participate at this time. We will continue our dialogue to support Japan in achieving its goal to develop a sustainable and world-class IR industry.”
Currently, the Hong Kong-based Galaxy Group operates some of the biggest casino resorts in the gaming mecca of the East, including Broadway Macau, StarWorld Macau, and Galaxy Macau. The gaming company had set its sights on building a massive Sin City-style integrated casino resort on a waterfront parcel of land spanning over 116 acres. Galaxy had also been pursuing a similar opportunity in Osaka but later abandoned the idea in February 2020.
RFP Process Expired But Three Contenders Are Still on the Race
The news from Galaxy Group comes after the first request-for-proposal (RFP) process for the gaming license in Yokohama ended on Monday, May 17th. However, three more gaming companies that had earlier expressed their interest are presumed to be seeking the IR spot by the time the draft RFP window closed.
The three casino operators in question are Melco Resorts and Entertainment, Sega Sammy Holdings Inc, and Genting Singapore Ltd. Melco is also based in Hong Kong and runs successful operations in Europe and Asia, whereas Japan-based Sega has a presence in Macau. Genting Singapore is a subsidiary of the larger global Genting Berhad gaming brand, and its operations are focused on the Asian market.
Yokohama, the second-largest city in Japan with a population of over 3.725 million, is likely going to be one of the cities that the Japanese government will pick to host one of three IRs in the country. Each of these IR casinos is expected to cost over $10 billion to construct.
However, before launching any IR casino construction, the city is supposed to choose a foreign casino operating company that will help bring the IR project to life. After that, the IR project proposal shall be presented before a panel of federal officials who will consider whether Yokohama’s pitch is good enough.
Now that the draft RFP period has come to an end, Yokohama will have a special panel go through drafts for the next two weeks. From there, starting June 1st to June 11th, the three casino operators will be asked to submit their final RFPs to the city. After the final RFP submission, the same panel will give the applications another look and then select a candidate that is best suited for the development of an IR casino in the city. Yokohama is expected to name its shortlisted operator by the end of summer 2021.
Several Casino Operators Have Bowed Out of Japan’s IRs
Last year, reports emerged that the Galaxy Entertainment Grouped was crushed by the COVID-19 pandemic, as was the case for many gaming brands. The company experienced a 75% net revenue decline year-over-year to about $13 billion and ended up with a $3.2 billion deficit on its balance sheet in 2020. This loss could have been one of the reasons why Galaxy decided to pull back even though the company still expressly maintains interest in the soon to be launched casino market in Japan.
Galaxy Entertainment is, however, not the only operator to back out of the Yokohama IR bid. Las Vegas Sands had initially planned to spend a whopping $12 billion on a Yokohama IR but quit the race in May 2020. Wynn Resorts was also keen on Yokohama’s IR position so much that it even opened an office in the city to bolster its pursuit. But then, come February 2020, win also gave up on the Yokohama IR.
While the basis of Yokohama’s desirability isn’t entirely hinged on which casino operators have expressed their interest in the city, the departure of three of the world’s largest casino operators may end up making Yokohama less to host one of Japan’s three IR casinos.
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