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Yokohama Quits Japan IR Race After New Mayor Election
By Jeff Osienya Aug 25, 2021 IndustryYokohama residents have elected a new anti-gambling mayor who has already shared his plan to withdraw Yokohama out of the Japan IR race. Osaka is the only large city remaining as an IR candidate.The Yokohama integrated resort dream has suddenly turned to dust after city residents voted in an anti-IR campaigner as their Mayor. 48-year-old Takeharu Yamanaka, a former professor at the Yokohama City University, won the mayoral election on Sunday, August 22nd. Having labeled casinos as a “poison apple” to the city, the newly elected Mayor vowed to extinguish Yokohama’s IR bid.
Poised to take office on Monday, August 30th, Mayor-elect Yamanaka had received official support from the Constitutional Democratic Party of Japan and was recommended by the Japan Communist Party. Following his win, he stated that Yokohama would, in the coming days, “issue a formal statement soon making it clear that Yokohama will not make a hosting bid.”
Several IR Candidates Had Already Shelved their Yokohama Plans
The first blow in a series of setbacks started when Las Vegas Sands, one of the biggest casino operators in the US with an eye for Yokohama investments, withdrew from Japan’s bidding process in May 2020. Then, less than a year later, Wynn Resorts pulled out of the Yokohama IR candidacy in February 2021, 6 months after closing its Yokohama office.
But that wasn’t the end of the operator-related setbacks that made Yokohama continuously less attractive for an IR candidature. Three months ago, Galaxy Entertainment also bailed out of the Yokohama IR competition after the first request-for-proposal (RFP) process for the city’s gaming license closed.
Like Las Vegas Sands and Wynn Resorts, Galaxy Ent also cited the pandemic as one of the reasons why it decided to quit its Japan ambitions. This left four contenders – Melco Resorts and Entertainment, Sega Sammy Holdings Inc, Shotoku Corp, and Genting, Singapore Ltd, battling out for the IR bid. Further, at the last minute, Sega Sammy Holdings also quit the race as a primary contender in favor of working with Genting Singapore as a minority partner.
On Monday, May 31st, the same month that Galaxy Ent backed out of Yokohama, the city announced that Shotoku Corp failed to pass its RFP qualification tests. So effectively, the IR bid for Japan’s second most populous city became a two-horse race with Melco Resorts and Entertainment and Genting Singapore.
Now that Yamanaka has been elected Mayor, the last nail has been hammered into the coffin. Two years of hard work and millions of dollars spent preparing Yokohama for booking an IR spot have officially gone down the drain.
Headwinds Continue Blowing Against Japan’s Dream to Become a Gambling Hub
When Japan, the second-largest economy in Asia, legalized brick-and-mortar casino gambling in 2018, there was a lot of interest from global casino operators. Industry analysts even saw the potential of Japan’s casino sector rival Macau and perhaps even outshine it and become the world’s largest gambling hub.
The plan was to construct three integrated resorts in three different municipalities, and interested cities were to battle it out and win a spot. At their municipal levels, interested cities started competitive bidding processes for operators who would become flagbearers to contend for the three IR licenses. Five cities, Tokyo, Nagasaki, Osaka, Wakayama, and Yokohama threw their hats in the ring have a piece of the pie in Japan’s casino market expected to be worth a whopping $25 billion upon maturity.
However, controversy has marred the process, including a bribery scandal and anti-gambling campaigns from locals who fear that problem gambling will become an issue. And the Coronavirus pandemic hasn’t helped the situation either, as it led to delays by the central government in announcing parameters for site selection. Moreover, since the novel virus shook the land-based gaming world to its core last year, gaming operators have been skittish about jumping into new land-based casino investments.
Further, based on the current political landscape, Tokyo will likely follow in Yokohama’s footsteps. Japan’s Liberal Democratic Party (LDP), the leading political party, has been losing ground, yet it is the biggest supporter of casino resorts in its plan to boost international tourism.
With Yokohama’s exit and Tokyo still shaky with its plans, Osaka, the third most populous Japanese city after Tokyo, and Yokohama, is the only municipality remaining that is still considered a strong candidate for one of the IR licenses. The fact that two of the largest cities in the country are out of the IR race doesn’t bode well for the perceived market potential.
The other teething problem to Japan’s potential as a gambling hub is that all the three remaining cities, Osaka, Wakayama, and Nagasaki, are in one area of Japan. Some analysts cast doubt on whether the central government will stack three IRs next to each other. While all hope isn’t lost, it will be interesting to see how Japan will move ahead with its IR plans.
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