Licence renewal process raises concerns in Japan

The licence renewal process could turn out to be too expensive for potential investors, MGM Japan CEO Ed Bowers said.

Japan.- The casino industry is on the verge of finally getting its regulatory framework in Japan as lawmakers could pass the Integrated Resorts (IR) Implementation Bill before the current Diet session ends on June 20th. However, there have been some concerns raised about how licence renewals have been planned and how expensive to fund they could turn out to be.

Winning operators will score a concession with a ten-year lapse to develop their projects and a three-year casino licence. However, once the concession expires, it would need reapproval every five years, which would make it expensive and make the whole process unattractive to investors.

“The banks will look at this as a five-year licence and as it’s a shorter timeframe, the cost of funds will be higher and therefore investment levels potentially lower,” Ed Bowers, CEO of MGM Japan said at the Japan Gaming Congress in Tokyo. “Getting private business to invest [€7.65 billion] in a project with a contract that needs to be renewed every five years and have a local assembly approval is complicated and risky,” he added.

The casino industry still needs to get the IR Implementation Bill to be approved in order to lay out the necessary regulatory framework. However, even as the ruling coalition continues to push to get it passed before the Diet session ends on June 20th, lawmakers are divided on several details and its possibilities remain uncertain.