Could Las Vegas Sands (LVS 0.28%) end up pursuing an integrated resort in Japan after all? It dropped out of the running for a concession earlier this year because the company said delays in creating a regulatory framework for legalized casino gambling made achieving its goals there "unreachable." But the country may still be the best bet to meet Sands' expansion plans.

With the mixed signals Sands has given about the direction it wants to take, investors just might see the casino operator jump back into the mix.

Spinning roulette wheel

Image source: Getty Images.

Back in the game?

Sands abandoned its dreams of a Japanese integrated resort in May, but then confirmed in October that it was mulling over selling off all of its Las Vegas properties to go all-in on Asia. 

Its largest market is Macao, where it derives about 60% of its revenue currently, and the regional government is about to begin the relicensing process there soon. There is a lot of debate about what the process will look like, and it may just be a two- or three-year extension of the existing concessions until the pandemic is in the rearview mirror. 

While Las Vegas Sands also has operations in Singapore, the nascent Japanese market could still be the biggest plum.

Backpedaling fast

That market was originally believed to be a $40 billion opportunity, one even larger than Macao at its peak. But analysts have since dramatically scaled back their predictions to around $8 billion.

It's likely why Sands, Caesars Entertainment (CZR), Wynn Resorts (WYNN -0.03%), Genting Singapore (GIGNY 0.89%), and others also dropped out of the lottery for a concession. While MGM Resorts International (MGM -0.49%) is still a contender, it has since said it only wants a 40% to 45% stake in a partnership, and is thankful it's not going solo on the project.

It's a far cry from when resort operators like Sands were saying they would willingly spend $10 billion or more to build an integrated resort in Japan in an effort to win one of the concessions. But now with just three concessions available, a policy for choosing the cities still not in place, and a public still mostly opposed to legalized casino gambling, it's a much smaller, less certain opportunity.

Still committed to casinos

But Las Vegas Sands might be persuaded to reenter. After the resignation of Prime Minister Shinzo Abe for health reasons, there was doubt whether his successor, Yoshihide Suga, would be as committed to integrated resorts. But he has since indicated it's still a full-court press to bring the plan to fruition.

The Japanese legislature is considering a number of tax proposals that would make the casino gambling industry more attractive, including exempting foreigners from taxes on casino winnings, limiting tax allowances on casino sales, and clarifying how casino prizes would be taxed.

And Yokohama, Japan's second largest city and one of those contending for an integrated resort license, is apparently ready to woo Sands to return.

Have a second look

The Yokohama integrated resort Operator Selection Committee has begun reviewing the submissions it received from the casinos that didn't drop out of the race for a license.

It is also going to reach out to resort operators that had dropped out previously and will seek new submissions and come up with a new schedule for choosing candidates. In addition to Sands, that would undoubtedly include Wynn, which had closed its Yokohama office in August, as well as Genting, which said it would bid for a license only if "conditions meet the Group's investment criteria."

Sands -- as a global operator whose Singapore resort is considered the epitome of gaming, entertainment, and hospitality -- would undoubtedly be the primary target of any overtures.

The biggest prize

But Las Vegas Sands is also reportedly eyeing casinos in Texas, with its top lobbyist saying it views the state "as a worldwide destination and one of the top potential markets in the entire world." He also spoke of expanding casino gambling in Brazil, New York -- and Japan.

With Texas having not even started the process for authorizing casinos, and Japan well on its way and interested in bringing Sands back into the fold, we may seen the casino operator going after that latter market soon rather than later.