Just a decade ago, Asia was the next frontier for gaming companies. While that region remains key today, the focus has moved northeast a couple of thousand miles. Instead of Macau being a new growth opportunity for casinos, it's Japan that is drawing attention.

Las Vegas Sands (NYSE:LVS) and MGM Resorts (NYSE:MGM) have each said recently that they're prepared to spend $10 billion on a resort there, while Wynn Resorts (NASDAQ:WYNN) CEO Steve Wynn has indicated interest in spending billions there as well. Caesars Entertainment (NASDAQ:CZR) is already talking with partners about Japan, but given its balance sheet I'd say this is the least likely of the candidates right now to actually make a move in the island nation.

The questions now are whether Japan will allow gaming and how licenses would be awarded.  

Las Vegas Strip Image

Even if Japan opens up gaming, don't expect a Las Vegas Strip or Cotai by the 2020 Olympics.

The debate over casinos rages on
Japan has been talking about allowing casinos for years, but there's some urgency now ahead of the 2020 Olympic Games. Casino resorts could draw even more tourists to the naiton in the months around the Olympics and provide the government with funds needed to put on the games.

However, there are more questions than answers about what gaming in Japan would look like. Hiroyuki Hosoda, chairman of a cross-party group of legislators who support casinos, said he thinks a bill to allow gaming will be passed by June and wants deliberations over the issue soon. If that happens, it's unlikely casino licenses would be handed out before 2015, leaving a short time frame in which to build billion-dollar resorts.

There are also many outstanding issues, such as how many licenses will be awarded, if local partners will be required, and what locations will be allowed to have gaming. Japan may be a $40 billion gaming market, as analysts at CLSA predict, but that's only if several licenses are awarded and multiple resorts are built. That's no guarantee right now that will happen.

Marina Bay Sands

Las Vegas Sands won a hotly contested license to build Marina Bay Sands in Singapore, but the $5.7 billion project nearly bankrupted the company. Image source: Las Vegas Sands.

Who will win in Japan?
While MGM and Caesars talk about wanting to invest in Japan, they both have debt loads that may make it hard to win a license. MGM ended last quarter with $13.6 billion in debt; its most valuable asset is MGM China, which is only 51% owned by the company and requires billions to build a new resort in Macau. Caesars ended the third quarter of 2013 with $21.3 billion in debt and was forced out of a Boston bid in part because its financial operations were so poor.

Given the conservative nature of Japanese business, I think Las Vegas Sands, Wynn Resorts, and Melco Crown have a much better chance of winning licenses, at least among U.S.-traded companies. Each operates in multiple gaming markets and has demonstrated the ability to build a world-class resort, something that will be key to those who obtain licenses.

A rich opportunity
Japan is an opportunity that could be measured in tens of billions for gaming companies, but keep in mind that we don't know a lot about the market there. In Singapore, only two resorts were allowed: Las Vegas Sands won a hotly contested license for downtown and spent $5.7 billion to build Marina Bay Sands, and Genting Group won a license to build in Sentosa, spending $5 billion to develop a resort there. Macau only allowed six concessionaires but has been more open to expansion as the market has grown.

Japan will likely be a hotly contested market, no matter what the final rules are. Just don't assume that every company that wants a piece of the pie will get one.

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Travis Hoium manages an account that owns shares of Wynn Resorts, Limited. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.