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Clairvest Group Inc. eyes Japanese integrated resort market

In December 2016, Japan’s National Diet approved a bill authorizing the establishment of integrated resorts (IRs). Since then, their promotion has taken off. With proposals often including hotels, as well as facilities for entertainment and even conferences, international companies are realizing that there are opportunities to grow roots in Japan and reap the benefits of a new market for gaming.

One of North America’s largest private investors in gaming properties, Clairvest Group Inc., is making the most of the chance. The Canada-based company operates and owns a variety of integrated resorts in Canada, the United States and Chile, and has just finished a project in India. Angus Cole, principal at Clairvest Group Inc., spoke to The Canadian about the company’s plans for Japan.

Location, Location, Location

Cole said the massive developments in Las Vegas are very different from the ones they work on in regional gaming. “With regional gaming, you’re building a smaller facility that’s much more integrated with the regional economy,” he explained.

Clairvest’s integrated resorts are built in response to market needs, typically including a hotel with 300 — rather than 5,000 — rooms, a convention center, restaurants, entertainment shows and
a theatre.

As a location for integrated resorts, one of Japan’s main draws is the economic potential. Cole highlighted steady jobs, training and education for people working at the casino, along with wider contributions to the local community, such as through grants, donations and scholarships.

The Japanese market has yet to be developed, and there is a strong focus on travel, tourism, culture and history that we think could really make Japan an attractive gaming destination not only for domestic Japanese tourism, but also for travel in the wider Asia region.

When asked about specific locations, although unable to reveal details, Cole said that major cities such as Yokohama, Osaka and Tokyo are off the radar. “We would
be looking in all of the smaller regional areas that would like to compete for a casino to help drive tourism and economic development.”

The Government of Japan has long endorsed the Golden Route, referring to Tokyo, Hakone, Kyoto, Nara and Osaka. But Cole believes this is doing a disservice to regional areas with rapidly aging communities.

“It’s good to have one or two large resorts in those big cities, but they should be thinking about putting two or three resorts in the outlying areas of Japan to be able
to spur economic development there,” he suggested.

Relationships Matter

Starting a business in Japan has its complexities, from the language barrier to an underdeveloped corporate governance system, and the long-game of building trust.

Building relationships is something Clairvest values no matter where they do business, but Cole emphasized the particular importance of this in Japan — especially when dealing with something new and unknown to the country such as IRs.

We believe that having a local presence and local support is critical to the success of the resort,” Cole explained. “Without that, it’s very diffcult to make it work.

The Japanese market has yet to be developed, and there is a strong focus on travel, tourism, culture and history that we think could really make Japan an attractive gaming destination.

Thee Asian market, although largely untapped by Clairvest, is not unknown to Cole, who lived and worked in Shanghai for a number of years and recently closed a transaction in India.

“I think the principles of business around the world — especially in developed countries like Japan — are largely the same. You need to go and find a local partner who really understands how to get things done locally. You need to be a partner with the utmost degree of honesty, integrity and respect, and you need to find other partners who think the same way as you.”

Cole added that there are multiple cultural and legal aspects to work through that are no doubt significantly different to other jurisdictions; but these are not unsolvable problems.

“The only thing I would say of Japan is there is some degree of uncertainty as to when the laws will be passed and how it will all come together. But that’s also fairly normal in gaming.”

Accept or Decline?

For many, gambling conjures up images of nineties movies on the Las Vegas strip, lled with crime and bad news. In a famously risk-averse society such as that of Japan, this could not be more true.

“They are worried about common concerns like ‘Will crime rise?’, ‘What will this do to the population?’ and ‘Will people get addicted to gaming?’ Those are all normal concerns, and they are not unique to the Japanese market. They certainly occur all over every jurisdiction in which we have ever had business.”

Cole suggested that this does change once the casinos are built.

As an operator, it’s very important to us that gaming is done responsibly and, first and foremost, when people are playing in casinos, that everyone games within their limits. We want the experience to be safe and enjoyable for all people.

In terms of crime, Cole said there is plenty of data available to suggest that crime actually goes down. Specifically, he explained that this was previously a grey market and somewhat illegal in Japan, run by unsavoury characters.

“You’re bringing all of that activity into the light, where it is highly regulated, and we have a massive financial incentive on our side to make sure that we run the casino properly and protect everyone in the casino. Once people see how seriously we take all of that, the reception we get is quite positive.”

Aside from this letters of support from local mayors, businesses and citizens help to further a sense of trust and provide evidence of the desire to integrate.

Roll the Dice

Cole says the company has been coming to Japan every five or six weeks to further strengthen their relationships with potential partners, and they look to continue doing so.

“We need to build relationships with people well in advance of anything actually happening,” he explained. This includes meeting with local chambers of commerce, politicians and prominent companies.

“This is a chance for people to get to know how we work, that our history and reputation is solid in this industry, and that we have a great deal of pride in that reputation.”

As an operator, it’s very important to us that gaming is done responsibly and, first and foremost, when people are playing in casinos, that everyone games within their limits.

There is no shortage of companies looking to invest in gaming and integrated resorts in Japan. Opportunities are rife, and industry giants such as MGM Resorts International and Las Vegas Sands Corporation are also eyeing the market. However, many will be focusing on developing these resorts on the Golden Route as opposed to Clairvest’s interests in regional gaming. When the law is passed — within the next 18 months — the race will pick up.

“As the law gets passed, very quickly thereafter, businesses will be moving in to compete for integrated resorts, so we believe now is when you must invest time in these relationships,” said Cole. “Investing the time up front lends you some credibility in Japan with the companies with which you have been spending time.

“It’s an extremely exciting place — obviously a beautiful country with a very long history, a very interesting culture — and our view on it is this: Investing the time in the relationships up front is critical to success in the long run, and you need to take that effort very seriously.”

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