MGM CEO: Japan Could Be Single Top Growth Opportunity

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MGM Resorts International CEO Jim Murren wants to crack the door open in Japan for casinos and has big plans for a market that could be one of the top gambling hubs in the world.

Asia's No. 2 economy, where casinos are banned -- though horse racing isn't -- represents largely virgin territory for gaming giants.

Some projections of potential Japan casino revenue exceed $40 billion a year, nearing the Chinese gambling mecca of Macau's $45.2 billion haul last year.

In a recent interview from Japan,MGM 's ( MGM ) Murren told IBD that the country could be the biggest opportunity for incremental growth, if conditions are right.

Whetting developers' appetites, Japan's ruling Liberal Democratic Party in December submitted a bill to parliament that would pave the way for casinos like those in Las Vegas and Macau. Lawmakers are expected to debate the bill in April.

Las Vegas Sands ( LVS ) CEO Sheldon Adelson said last month that his firm is willing to spend "whatever it takes" to build a casino in Japan.Wynn Resorts ( WYNN ),Melco Crown ( MPEL ) and others are also champing at the bit.

In his interview with IBD, MGM's Murren discussed Japan prospects.

IBD: You've said tourism and travel revenue growth in Japan could top government estimates if casinos are legalized. On what do you base that?

Murren: Japan received about 10 million international tourists last year. Its government projects that will grow to 20 million by 2020 and 30 million by 2030. Those are aggressive but achievable goals if the infrastructure is put in place to drive more visits.

The injection of billions of (dollars in) capital through extremely large, elaborate resorts and networking into what's most important, the beauty of Japan, will drive that growth.

IBD: Can you give examples where building casinos has created that kind of economic change?

Murren: There are examples both far and near. In Singapore, visits by international tourists grew 60% by virtue of regional and international demand (after Sands and Malaysia's Genting Group built casinos there).

Las Vegas receives 40 million visitors a year; 20% are first timers, 18% from overseas. Macau has experienced tremendous growth in international tourism -- particularly from the Asian region.

In Japan, 60% of tourists come from Singapore, Korea and China.

IBD: What part do you see MGM playing in this transformation?

Murren: We have knowledge and information on all of the issues that have to be addressed when considering expanding into integrated resorts, including cultural, social and developmental issues.

Ultimately, we hope to participate in Japan through the operation of one or more casinos there.

IBD: If Japan approves casinos, when do you think the first MGM casino would open its doors there?

Murren: It's completely up to the government of Japan. It's a complicated process.

The process will begin this spring with the introduction of enabling legislation. It's our hope that an MGM-in-Japan integrated resort can open by the 2020 Tokyo Olympics.

Almost everything would have to go right for that to happen. It takes three years to build something like this.

IBD: How big an opportunity is Japan for MGM?

Murren: If the tax rates are reasonable and encourage major investment, Japan represents the single largest opportunity for incremental growth for both the casino industry and MGM on the horizon.

IBD: What would you do differently in Japan than what you've done in Macau and Las Vegas?

Murren: I was constantly struck by the natural beauty of the country and the friendliness and warmth of the Japanese people. In some people's eyes, everything should be in the resort. I think that's a mistake. The casino resort should be integrated within the community and nation and encourage visitors to explore and see what's so great about the country. Performing arts centers, arenas, restaurants and retail stores should create opportunities for everybody.

IBD: What do Japanese companies need to do to make this happen?

Murren: One of the areas I'm most passionate about personally is what we've been able to accomplish in the area of diversity and inclusion of women in the workplace. Right now, women are poorly represented in the executive ranks in Japan's companies. That drags down the overall economy.

The time has come to create a culture where women don't leave Japan after graduating.

IBD: Do you expect to work with partners in Japan?

Murren: We fully expect to work with partners there. We can provide valuable resources as part of a consortium. It's not a time for impatience. It's a process that plays out over weeks and years.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas

Referenced Stocks: MGM , LVS , WYNN , MPEL

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