The French casino and hotel operator Groupe Partouche has ended its partnership with Oshidori International Holdings and is withdrawing from the development of an integrated resort (IR) in the Japanese city of Nagasaki. The US operators Las Vegas Sands and Wynn Resorts also recently ended their cooperation. How is the Japanese casino dream coming true?
The French casino company Partouche has temporarily terminated its IR partnership with Japan, the agreement with the listed investment group Oshidori International Holdings Ltd. from Hong Kong was untied. The two companies had actually teamed up to look for ways to develop a casino resort in the Japanese metropolis of Nagasaki.
In a statement, Partouche stated that it will continue to closely monitor developments in IR projects in Japan. They are still interested in participating in one of the three planned projects. However, the company did not disclose any information about why it severed its relationship with Oshidori. It is speculated whether Covid-19 is decisive, which has slowed the Japanese liberalization process considerably.
Partouche was founded in 1973 and operates over 42 casinos in France, Switzerland, Belgium and Tunisia. Partouche and Oshidori announced their partnership earlier this year. The Hong Kong company announced in its 2019 annual report that it would participate in the build-up phase in Nagasaki. An overall concept for an IR was presented to the authorities there. This included plant designs, marketing strategies and operational guidelines.
The investment company Oshidori, on the other hand, announced that the Partouche partnership in Japan had broken down due to different visions and strategies. As Inside Asian Gaming reported, the agreement was terminated on May 19, 2020, but the notification was only made public at the beginning of this week, almost three months later. The reason for the delay is completely unclear to date.
In this regard, Oshidori only stated that the discussions with Partouche were at a very preliminary stage anyway. So far, both parties have not been interested in actual cooperation efforts, and no final agreements have been reached. As a result, Oshidori does not believe the termination will have any particular impact on Nagasaki’s plans or pose a threat.
Furthermore, Oshidori has now hired the industry veteran and legendary IR boss Alex Yemenidjian to manage his IR project. He is working hard to bring the best possible IR experience to Nagasaki. Under the leadership of the new CEO, Oshidori says he will present a portfolio that is far more exciting than any other project. It remains to be seen whether this will actually be implemented.
What is clear is that Nagasaki Governor Hodo Nakamura said late last month that there could be a significant delay in the IR process if Japan’s central government delays fundamental progress on the creation of the casinos. Although the set of rules had actually been in place since August last year, the global Covid-19 crisis resulted in further modifications to the law.
The Japanese Prime Minister Shinzo Abe set the course for casino resorts in March 2019 – a bill was signed that allows the creation of three casino resorts for the time being. Many large operators, mostly from the USA, have since sought a Japanese casino license. For this, the companies had to present their own operating concepts.
The establishment of a casino regulatory authority is already planned for compliance with and verification of the license criteria. Nevertheless, two of the most promising participants in the licensing process dropped out in the course of the Covid 19 crisis. Wynn Resorts has closed its Yokohama office, which opened just eight months ago. The company cited the reason that the health crisis is having a negative impact on business.
In addition, Las Vegas Sands has withdrawn from Japan. The market giant had actually toied with the locations Tokyo and Yokohama. The company founded by billionaire Sheldon Adelson has been trying to gain a foothold in Japan since 2005. They wanted to invest a whopping 10 billion US dollars in the IR project.
Sands explained the sudden withdrawal with a license period of 10 years, which was too tight, with a construction period of five years. In view of
Eight of the high investments raises the question of whether Sands can operate profitably enough in Japan in the long term. Now the operator has also been hit hard by the corona crisis. Hardly any other provider is currently experiencing such a dramatic crisis.
As a result of the Corona crisis, Sands recorded a decrease in sales of 73.1 percent compared to the previous year in the six months to June 30, 2020. In the second quarter, revenue was almost zero. The reason is that Sands operates several resorts not only in the US, but also in China and Macau. This was where the losses were most devastating. Revenues fell by a full 80.4 percent.
The Marina Bay Sands resort in Singapore also posted a 56.4 percent drop in revenue, while revenue from the Las Vegas operations, which also saw the casino shutdown, plummeted 53.4 percent. This resulted in an operating loss of $ 867 million for the first half of 2020, compared to a profit of $ 1.87 billion in 2019.