According to Bloomberg, MGM Resorts International (MGM) is eyeing Tokyo’s Tsukiji market, the world’s biggest fish market for the casino resort it wants to build in Japan. In 2001, the Tokyo government had decided to relocate the market from Tsukiji to a less crowded area being built on reclaimed land in Tokyo Bay. However, the shift has been delayed due to the toxic soil that needs to be removed from the new site.
Post completion of the work and the shift of vendors to the new site, which is scheduled for early 2016, the government would reportedly sell the Tsukiji piece of land.
Per media reports, Tokyo’s Tsukiji market is one of the largest available spaces in Japan and is said to be a close alternative to the Odaiba district – the top contender for a gaming resort. Located near the luxury shopping enclave of Ginza, this site promises greater visitation pattern due to its easy accessibility. In fact, the Tsukiji fish market draws 42,000 visitors daily. This justifies the company’s decision to explore this region for its first casino resort.
Japan is one of the largest untapped markets for gambling in the world. Currently, gambling is illegal in Japan with the exception of betting on boat, bicycle and horse races. In June this year, the Japanese Prime Minister, Shinzo Abe reportedly announced plans to legalize gambling in the country before the Tokyo Olympics in 2020. Shinzo Abe aims a unanimous vote in the parliament to legalize gambling by the end of 2014 for the bill that was submitted in Dec 2013.
MGM Resorts is not the only one planning a foray in Japan. Other casino operators like Melco Crown Entertainment Limited (MPEL), Las Vegas Sands Corp. (LVS), Wynn Resorts Ltd. (WYNN) and Caesars Entertainment Corporation (CZR) are all trying to make the most of the opportunity and have plans to invest billions of dollars to build casinos in Japan.
Japan is expected to generate about $40.0 billion of gambling revenue a year from 2025 onwards, once gambling is legalized. This should translate into more profits and cash flows for these leading casino players. Moreover, with easing of visa rules, it is expected that tourism will pick up fast in the country and would possibly be at its peak during the Olympics. MGM Resorts presently has a Zacks Rank #2 (Buy).
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