Wynn Resorts (NASDAQ:WYNN) says its closing its Yokohama office, citing delays in the Japan integrated resort licensing process. But the company claims it remains interested in the Land of the Rising Sun.
The news emerges less than three months after rival Las Vegas Sands (NYSE:LVS) said it’s bowing out of the Japan competition. That’s because of bureaucratic delays and burdensome requirements that could make a high-end casino resort project in the world’s third-largest economy too costly to generate an adequate return on investment.
The company stated COVID-19 is the major factor in the decision, stating Wynn had to evolve their business strategies in response.
The pandemic is having an unprecedented negative impact on integrated resort development, and resort companies,” according to a statement issued by the operator.
The Las Vegas-based operator said it still has a long-term interest in Japan and that it will continue to “monitor the situation closely.”
In July 2018, Japanese policymakers approved integrated resorts, pledging to award three licenses to start with the possibility of several more in the future.
For nearly two years, enthusiasm among operators for Japan ran high, as analysts estimated the country could eventually become the world’s second-largest gaming market, behind only Macau and well ahead of Las Vegas. Japan’s population, proximity to other Asian nations with throngs of gamblers, and the country’s status as one of the wealthiest in the world were among the traits that had operators champing at the bit.
However, it later became clear that a single, plush integrated resort in Japan could cost $10 billion to $15 billion to build, making it the most expensive project in industry history. Additionally, consistent delays in proposal submission deadlines and other regulatory hurdles are drawing the ire of some operators.
Initially, it was hoped that Japan would award licenses this year or in early 2021, keeping alive the hope of gaming venues opening in 2025. Now, it’s clear the request for proposal (RFP) process could extend into the middle of 2021, and it could be 2026 or later before a casino there opens its doors.
“The environment there just wasn’t suitable to make the kind of investment that this company demands in terms of returns,” said LVS President Rob Goldstein on a recent conference call. “We couldn’t make it work. We sure tried. We spent endless time and endless dollars pursuing Japan.”
Wynn declared an intent to focus on Yokohama last December. But with that operator and LVS now appearing to be out of the picture, the field of competitors for a license in Japan’s second-largest city is thinning.
Genting Singapore and Melco Resorts & Entertainment are among the other operators that previously expressed interest in Yokohama. Those companies have experience running integrated resorts in Asia, and the financial resources to put a large-scale project together — traits viewed as positive by Japanese regulators. Neither has recently given an indication about possibly scrapping Japan plans.
Last week, executives from MGM Resorts International (NYSE:MGM) reiterated commitment to Osaka, where the company is the lone bidder, expressing no dismay that the RFP process there is likely to be delayed because of COVID-19.