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Japan May Have Killed Its Olympic Gambling Dream

Profile view of MGM Resorts' Osaka plans. Image source: MGM Resorts.

Why Japan is such a big deal in gaming

It's not hard to see why Japan is a desirable market for casino companies. It's the world's third-largest economy and consumers have a strong desire to gamble. Analysts at CLSA have predicted Japan could be a $40 billion gaming market, which would be about six times the Las Vegas Strip over the past year.

That estimate might be high, but we're talking about a potentially enormous market. That's why MGM's management has mentioned investing $10 billion in Japan and every other major company would be more than willing to invest billions in casinos there.

The Olympics are a huge international draw that would have brought billions in industry-boosting gaming dollars. That's why it is a milestone that gaming supporters want to see casinos open. But timing is getting tighter by the day.

Building megaresorts takes time

Las Vegas Sands won the bid for the Marina Bay site in Singapore in May 2006, and the official opening did not happen until June 2010. Along with that more than four-year stretch, there was over a year between passage of the bill legalizing gambling and the announcement of the winner. In total, it was five years and a month between the second round of proposals and the casino opening.

Right now, we're just over five years and three months from the Olympics and there's no legislation, no bidding process, no tax rates, and no land selected for construction. The further the can gets kicked down the road the less likely it becomes a casino will be built before the Olympics.

Gaming could still get done, but now is the time

Supporters have said they will bring the bill up again as early as this month, but that's before any legal challenges and any bidding process. It's not an impossible task, but a Japanese gambling industry that once seemed like a slam dunk is now a big question mark.

For gaming companies, that's bad news, especially with business in Macau slowing down and few opportunities for investment opening up. Stay tuned to Japan for more on gaming, but I'm less than optimistic something will get done in time for the 2020 Olympic Games.

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The article Japan May Have Killed Its Olympic Gambling Dream originally appeared on Fool.com.

Travis Hoium owns shares of Wynn Resorts, Limited. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

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

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