Two years after Japan passed its long-awaited IR Implementation Bill, the future of the nation’s prospective casino industry is looking clouded as ever. Having finally overcome years of red tape to set the wheels in motion, the financial uncertainty proliferated by COVID-19 has planted seeds of doubt in the minds of once single-minded candidates and given rise to newly empowered opposition groups that threaten to derail the gravy train.
And there is no better example right now than Yokohama.
In August 2019, after mayor Fumiko Hayashi announced Yokohama’s intention to pursue an IR bid, five of the world’s largest IR operators quickly dumped their interest in Osaka to focus on another of Japan’s metropolitan centers instead.
Las Vegas Sands (LVS) said at the time that Yokohama provided the best opportunity for the company to realize the returns on investment it traditionally expects.
Melco Resorts declared a “Yokohama First” policy with a focus on “bringing to Yokohama the best IR the world has ever seen,” according to its Chairman and CEO Lawrence Ho.
Wynn Resorts, Galaxy Entertainment Group and Genting Singapore quickly followed suit, joined by local contender Sega Sammy Holdings.
As of today, two of those – LVS and Wynn – have dropped out of the race citing regulatory concerns and a need to focus on existing operations, another (Genting Singapore) has shown signs of wavering for the first time and Yokohama’s own IR interest is hanging by a thread.
In November, a local group called “Yokohama Citizens’ Group to Decide on a Casino” submitted more than 200,000 signatures collected from residents calling for a referendum they hope will vote down the city’s IR pursuit. The figure, although representing only 6.6% of the Yokohama population, was three times more than required to request a referendum.
So what does that mean for Yokohama? Assuming a referendum does indeed go ahead – and good judges suggest it’s now more likely than not – residents will almost certainly vote against any IR development.
This doesn’t necessarily mean the end for Yokohama. First of all, it is ultimately the City Council’s decision whether to heed the people’s request and hold the referendum. Given the City Council supports IR development, that is no foregone conclusion.
Second, even if a referendum does go ahead and locals say no, the City Council is under no obligation to abide by their decree. The result of the referendum would be non-binding, and dropping Yokohama’s IR bid would require full support from both the City Council and Mayor Hayashi.
That said, prospective IR investors must still be concerned given the uncertainty surrounding Yokohama’s future, which thanks to delays brought about by COVID-19 will include a risky mayoral election next autumn – just before the IR submission period to the central government begins in October.
IAG has been told that Yokohama’s referendum would most likely take place in February at the earliest, spring at the latest, leaving little time for the city to run its RFP, tipped to start by March.
With investment levels expected to edge over the US$10 billion mark and Tokyo still rumored to be considering its own late entry into the IR race, the big question now is how willing operators will be to continue committing resources against the very real risk that Yokohama will be snatched away from them at the last minute.
