Japanese Casino Debate To Start Today, Is There Still Time For A Winning Bet?

The long awaited legislation to allow casinos in Japan is finally about to be discussed in the current legislation session. Is it possible to pass by the June 22 closing date? Here's the best bet to make.

Jun 18, 2014 at 9:00AM

Japanese Diet Via Wikicommons
The Japanese "Diet", the joint legislative session that decides on new bills to be passed,
hopefully prepared to make a quick decision on this one. Photo: Wikicommons

According to reports by BusinessWeek and other sources, discussions will start this Wednesday morning (June 18) to begin hashing out the bill that would allow gambling in Japan. The long-awaited talks, which have been anticipated to pass during this current summer legislative session ending June 22, has been repeatedly put off behind other pressing topics for the Japanese lawmakers.

Investors have been long waiting for Japan to pass legislation to allow gambling, which is currently forbidden in the country. Casino companies like Las Vegas Sands (NYSE:LVS), Wynn Resorts (NASDAQ:WYNN), and Melco Crown (NASDAQ:MPEL) are all set to win big from the coming Japanese gaming market, which is estimated could be a $40 billion industry by 2020.

Shinzo Abe In Singapore

Japan P.M. Abe at a conference in Singapore, where he lauded on the benefits of casinos in Japan. Photo: AP

Impossible to pass this session?
The bill itself holds multi-party support, including that of the prime minister of Japan, Shinzo Abe. It seems everyone is anxious for this bill to pass already. The fact that the discussions for this bill are starting during the current summer session is exciting news.

However for investors hoping for a quick pass this session, think again. The bill will open for debate in the Lower House first, but requires more discussion before it can move to the Upper House for a chance to pass by the June 22nd end of this session. Getting the required delegation completed to a successful vote just isn't likely to happen that fast.

One Japanese lawmaker, Hiroyuki Hosoda, said that the bill will not be passed before the end of the current session on June 22, and will be taken up again when the Diet resumes in autumn. And that, my Foolish readers, is what matters.

Why this is still a good bet
Japan is anticipated as the next major gaming hub of Asia thanks to its wealthy population who already love gambling. Las Vegas Sands, Wynn Resorts, and Melco Crown have each decided to invest billions in the country when allowed.

But will the legislation pass? For the short term, this might seem like too risky of a bet, centered on the hope that government will take certain action, which is never a sure thing. In the short term, especially for this current summer session, this is a risky bet.

Tokyo Bid Win

Tokyo's winning bid for the 2020 Summer Olympics could be a win for casino companies as well as Japan looks for a way to pay for the games. Photo: Japan Times

But long-term odds are still highly in favor of the bill eventually passing. Full support from the prime minister, support in both parties of the Japanese legislature, and the looming challenge of funding the 2020 Olympics in Tokyo all support that the bill will pass. The earlier you are to catch on to this, the more money you can make by being ahead of this new market.

The bill will eventually pass, Where should you place your bet?
As long-term investors, it's important to believe that Japanese gaming legislation eventually will pass. When it does pass, Foolish investors will want to have bet on the right company.

Melco Crown and Wynn are two companies already showing how willing they are to get in on this new market. Wynn Resorts already gets 75% of its global revenue from Asia and is hoping to increase that further with a bet on Japan. Wynn executive Matt Maddox recently said that "Japan is known for hospitality, high quality and precision. The culture of almost perfection here fits very well with Wynn and its details-oriented focus. That would allow Wynn to be a strong contender in the Japanese market."

Likewise, Melco Crown gets 100% of its revenue from Asia, as it is a Chinese company. Melco Crown's rapid expansion in Macau, as well as the company's first non-Macau casino to open in Manila, Philippines next quarter, and investment in a casino in East Russia show that the company is currently very focused on continued expansion. Company CEO Lawrence Ho has already been talking with Japanese officials making potential plans for his company's casino bid in Japan.

However, Las Vegas Sands is probably the best bet so far. CEO Sheldon Adelson has said that he would be willing to invest $10 billion in Japan if needed, and the company has the reserves to do just that. But its the company's track record of working with Asian governments that makes it more impressive.

Japanese lawmakers, as well as Prime Minister Abe, have already used Singapore as a model of how they want casinos to operate in Japan. Sands is the only U.S. casino company that was able to win a bid in Singapore, out of the many that tried including Wynn Resorts. When Prime Minister Abe recently visited Singapore, he visited its Marina Bay Sands resort. With its clear track record of successfully expanding in Asia, Sands is probably the company to back in the race for Japan as well.

Marinabaysands Evening
Sands Singapore resort, Marina Bay Sands is everything Japanese law makers
want a Japanese resort to be. Photo: Las Vegas Sands

Foolish takeaway: Waiting for the government, is that a good idea?
Japanese prime minister Shinzo Abe, who was previously quiet on the topic, has stated that he thinks that casinos could be a new pillar of economic growth for Japan, helping the economy recover to its pre-crisis levels. In the Japanese Diet (congress) itself, the bill has multiparty support. All the bill lacks is delegation time.

With all of this support for the bill, its highly likely that the bill will eventually pass. Starting discussions this current summer session, even if the bill itself isn't passed by June 22, is a good indicator that a bet on Japanese gaming will likely pay off for long term investors, hopefully as early as the autumn parliament session. And when it does, Foolish investors will want to make sure that they are making the right bet.

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Bradley Seth McNew owns shares of Las Vegas Sands. 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.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers