As was widely expected, Genting Singapore and Melco Resorts & Entertainment (NASDAQ:MLCO) are the gaming operators that qualified to participate in Yokohama’s request for proposal (RFP) plans.
Japan’s second-largest city made the announcement yesterday. Ultimately, one of the companies will be selected to partner with the city in its approach to the federal government in an effort to land one of the first three Japanese gaming licenses.
Following the departure of Galaxy Entertainment Group from the Yokohama bidding competition two weeks ago, four contenders remained. But market observers widely saw it as a two-horse race between Genting and Singapore.
Japanese Shotoku Corp. advanced to the RFP, but its submission was turned away.
One Yokohama Surprise
While it’s not surprising that Genting and Melco are the last competitors left standing in the Yokohama fray, one somewhat unexpected scenario emerged.
In confirming that Genting Singapore advanced to the RFP round, the city also revealed the gaming company is partnering with local firms Sega Sammy Holdings and Kajima Corp. Sega Sammy was previously one of the final companies angling to get to the RFP.
However, that company, which is one of Japan’s biggest makers of pachinko machines, recently expressed concerns about the Yokohama bidding process and going it alone. It also said it might make sense to partner with a foreign company to better lure Chinese gamblers to Japan.
The combination of Genting, Kajima, and Sega Sammy is potentially potent, because it not only includes local companies but also has operators with Asia-Pacific gaming experience. Genting is one of the largest gaming firms in the region, while Sega Sammy is a minority partner in a South Korean integrated resort.
For its part, Melco is working with Japan-based Taisei Corporation.
What’s Next for Yokohama
Yokohama revealed its plans to pursue a gaming license in August 2019 and initiated a request for concept (RFC) round in December of that year.
Initially, there was a crowded field of competitors vying for the rights to partner with the city. But concerns about costs and lack of clarity on a policy framework led to the withdrawals of Las Vegas Sands (NYSE:LVS), Wynn Resorts (NASDAQ:WYNN), and, most recently, Galaxy.
Genting and Melco have until June 11 to submit proposals to Yokohama. From there, the city will begin its selection process, with the aim of bringing a pitch to the federal government in April 2022. Other competitors in the Japan integrated resort race include Nagasaki and Wakayama prefectures and the city of Osaka.
It’s unlikely that Yokohama officials will publicly comment on what group — Genting or Melco — is the leader. However, analysts are speculating it’s Genting’s competition to lose. That thesis could be further enhanced by the gaming company partnering with Kajima and Sega Sammy.
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