Research Library

Rising Sun: Japan begins to enter the homestretch in 2020

Like the cherry blossoms in the spring in Japan, integrated resort developments will begin to emerge into full bloom starting in January 2020. The coming year will see significant progress at the central government level that will then launch the RFP process at the prefecture level.

If the level of activity in the second half of 2019 is any indication, 2020 will prove to be a very robust year. However, there is still a lot of work to do before Japan awards up to three of the coveted IR licenses established through the IR Promotion and IR Implementation Acts.

Since the market began to emerge some 20 years ago, Japan appears to be in the homestretch for the initial round of development of integrated resorts. The movements not only by operators but also by interested prefectures will continue to evolve in the coming weeks and months.

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Rethinking the Premium Players Lounge

Premium player lounges have become a fixture in many casinos in North America. These lounges provide higher worth players with a place to take a break from the gaming floor, catch up on text messages, and sit in a relaxed, non-gaming environment. They also offer hosts a place to connect with their customers. At some properties, the lounge may provide players with some form of food offering, yet rarely, if ever have they been considered part of a casino’s food & beverage strategy. In fact, in most player lounges food is treated as an afterthought, usually comprised of packaged snack foods or some items from the central kitchen that, after sitting out for a couple of hours, have lost their gastronomic appeal.

What is rarely recognized is that the premium players’ lounge, properly designed and maintained, can help the casino property provide its best customers with precisely the kinds of dining that they prefer for their everyday gaming experiences while reducing comp expense and the time gamblers spend off the gaming floor.

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Research Brief: Japan IR Timeline Update

Late last month, many stakeholders following the Japan Integrated Resort process believed they were thrown a curve ball, following reports stating that the process would be delayed by a year without the appointment of the Casino Management Commission and other cabinet and ministerial positions. However, the delay will likely not be as long as initially thought but would only be a minor delay in the marathon for integrated resorts in Japan.

First and foremost, this process is still in its infancy. While stalwarts of the process have been trying to get legislation passed for over twenty years, the race continues to move at a moderate pace as the government begins its official process to form the Commission and the 300-plus items that still need to be officially decided. It was thought that the Commission would likely be appointed before the end of the current regular session of the Diet. However, this part of the process has been delayed because of the upcoming elections that have been planned for the Upper House of the Diet. While it has not been confirmed that a double election would occur in July 2019, there is also the potential that a snap election in the Lower House could be held at the same time.

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Research Brief: Wire Act New Hampshire Case Ruling

On the afternoon of June 4th, a ruling was issued by United States District Judge Paul Barbadoro in the case between the New Hampshire Lottery Commission and Neopollard, a lottery vendor, against the U.S. Department of Justice (“DOJ”) regarding the Interstate Wire Act of 1961. The suit was brought by New Hampshire in response to the memorandum issued by the DOJ’s Office of Legal Counsel (“OLC”) on November 2, 2018 (the “2018 Memo”), which stated that the Wire Act applied to all forms of gaming and not just sports betting, reversing a previous opinion issued in 2011 (the “2011 Memo”). The 60-page ruling in the New Hampshire case confirmed the 2011 Memo, stating that the Wire Act applies only to sports betting and setting aside the 2018 Memo. The result in the New Hampshire case represents a shot across the bow of the authors of the 2018 Memo and others, in the DOJ and elsewhere, who have pushed this agenda for the last several years.

The case was one that many throughout the gaming and lottery industries had been watching since the 2018 Memo was released earlier this year. After the 2018 Memo was released, the DOJ offered a 90-day window before enforcement of the Memo would go into effect, which meant that enforcement should have commenced on April 15, 2019. The DOJ extended that deadline another 60 days earlier this spring, pushing the end of the non-prosecution period to June 14, 2019.

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Macau: The Future Beyond the VIP

Fifteen years ago, on May 18, 2004, Las Vegas Sands Corp. opened Sands Macao and changed the course of casino gaming in the region.

Macau was once considered a secondary gaming market that catered to a small base of customers from Hong Kong and Guangdong, China. However, Sands Macao and subsequent entrants demonstrated that by providing high-quality gaming, dining and lodging environments, markets will respond.

In the case of Macau, markets responded enthusiastically. In 2005, the city’s casinos generated $5.9 billion in gaming revenue, and by 2018, the industry had generated $37.9 billion.

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Rethinking Food & Beverage

Of all the issues facing casino leadership, there is no greater quandary than solving the food & beverage equation. Restaurants in particular, present a host of issues. They are notoriously expensive to operate, consuming copious amounts of labor and product costs. Rarely do individual outlets post a profit and departmental profit is often dependent on beverage sales. High levels of customer satisfaction can be difficult to achieve, given that many players visit the same restaurant outlets on each visit, and in turn get bored with the menu selection. Perhaps the hardest aspect is balancing the needs of very frequent players while using food & beverage as a tool to attract new customers. Given all this, it may be time for casino operators to rethink their food & beverage programs.

Both commercial casinos in regional markets and Indian casino operators have historically adopted the same basic restaurant strategies, offering a buffet, three-meal room, quick-serve outlet and perhaps a more upscale steakhouse/ special occasion restaurant. Before undertaking a wholesale redesign of food & beverage outlets, it is important to understand how this basic suite of restaurant products came to be and then ask if those products meet the needs of the business and the preferences of today’s customers.

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Crystal Ball Gazing

Predicting the future of any industry has always been an inexact science. It requires an examination of historical trends, possible changes in public policy, the application of a variety of macro-economic theories, the unlikely entry of a disruption industry that could emerge as a worthy competitor, and a substantial amount of guesswork.

The problem is, when it comes to Macau, more often than not the soothsayers have been unable to predict the future.

When predictions are made, word spreads quickly. The number of media outlets devoted to the casino industry has increased and amplified the distribution of news. Casinos are now part of
the 24-hour news cycle; the industry has its own forums, dedicated writers and avid readership.

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The Importance of Data in Sports Betting

As sports betting expands into new markets within the United States, operators and state governments are growing eager to capitalize on the opportunity.

In addition to Nevada, seven states now offer some form of sports betting in the post-PASPA (Professional and Amateur Sports Protection Act) world. This number will likely grow as 2019 continues to unfold, as a supermajority of states plan to look into the opportunity for sports betting within their borders. Global Market Advisors has previously estimated the sports betting market at $139 billion, but that figure is contingent on how the market is crafted in each state.

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The Road to Sports Betting

When the Supreme Court struck down the Professional and Amateur Sports Protection Act (PASPA) last May, casino operators across the United States were euphoric, envisioning crowds of enthusiastic bettors flocking to newly constructed sports betting lounges, holding exciting events during major games, and attracting a younger clientele to
their properties. Several states moved quickly to permit sports betting in some form. While casinos in some states were able to quickly build betting counters and initiate sports betting
activities, most others, particularly in Indian gaming, have come to realize that they must first navigate through a maze of obstacles before taking their first bet.

Sports betting is currently available in some form in eight states: Nevada, Delaware, New Jersey, Mississippi, Rhode Island, Pennsylvania, West Virginia, and New Mexico. Each of these states offers some form of sports wagering, but the products offered and where bets can be made vary by state.

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