Sega Sammy Mulling Online Gaming Markets Following Japan IR Exit

Posted on: November 16, 2021, 10:38h. 

Last updated on: November 16, 2021, 01:58h.

Sega Sammy Group, best known in the US for its iconic arcade and video games, tells investors that it’s exploring potential entries into regulated online betting markets.

Sega Sammy Japan online betting Sonic
Sega Sammy President Haruki Satomi is seen here with the company’s most beloved character, Sonic the Hedgehog, at the franchise’s 2020 movie premiere. Satomi says the company is exploring new business segments, with one being online betting. (Image: Getty)

In a recent investor update, Sega Sammy revealed that it’s considering new investment spaces. The revelation comes a little more than two months after Yokohama — the prefecture Sega Sammy and its integrated resort (IR) partner Genting Group were targeting for development in Japan — withdrew from consideration.

Opportunities for the domestic IR business may emerge in the next one to three years, but in the meantime, if there are opportunities to invest heavily in other areas, such as online betting which is gaining force overseas, there is the chance we prioritize them,” explained Haruki Satomi, president and CEO of the Sega Sammy Group.

Sega Sammy was formed by the 2004 merger of the Sega and Sammy corporations. Today, the Japanese entertainment conglomerate develops video and arcade games, manufactures pachinko terminals, and has a resort business unit.

Sega Hedging New Bets

Sega Sammy brass divulged that while Yokohama was a disappointment, it has no financial impact on the company’s immediate outlook. But the business is not in a holding pattern, instead opting to seek untapped endeavors.

The Sega Sammy reps didn’t specify which countries they were referring to regarding online betting “gaining force overseas.” But it’s presumably the US, where online gaming, esports, and sports betting continue to expand rapidly.

In Nevada, the largest gaming market in North America, the state’s Gaming Control Board recently formed its Esports Technical Advisory Committee. The group is tasked with better facilitating betting on esports.

Nevada’s gaming market is the gold standard of the US gaming industry, and numerous states have drafted their gaming regulations using the same conditions that govern Las Vegas.

Online esports betting in Nevada is currently permitted on 12 events and leagues, a few notables being League of Legends (LoL), Counter-Strike: Global Offensive (CS:GO), and Defense of the Ancients 2 (Dota 2).

Earlier this month, Sega and Microsoft announced a “strategic alliance” to explore and establish a “next-generation development environment.”

IR Dreams on Hold

Sega Sammy and Genting had partnered on an IR scheme for Japan’s Yokohama. Once a front-runner for one of the three forthcoming casino licenses, Yokohama in September elected an anti-IR mayor, who swiftly canceled the city’s casino candidacy.

Prior to Yokohama Mayor Dr. Takeharu Yamanaka’s election, longtime Mayor Fumiko Hayashi supported bringing a commercial casino resort to the area to spur economic and tourism activity.

After Las Vegas Sands’ shocking exit from Yokohama in 2020, Genting and Sega Sammy emerged as the odds-on favorite to find favor in Japan’s second-most populated city. Yokohama was mulling two qualified applications, the other coming from a consortium led by Melco Resorts.

But with many Japanese citizens angered with the country’s hosting of the Olympics amid a pandemic, Yokohama’s mayoral vote was viewed as a retaliation of the Liberal Democratic Party (LDP), which continues to hold power in the central government. Dr. Yamanaka is an Independent, while Hayashi is an LDP member.

The LDP is pushing the three casinos resorts. The three licenses are likely to go to Osaka, Wakayama, and Nagasaki.