Big in Japan? How James Packer’s push into Japan could help transform his empire

James Thomson Editor

Big in Japan? How James Packer’s push into Japan could help transform his empire

Published 30 September 2013 10:51, Updated 30 September 2013 12:52


Unlike his father and grandfather, James Packer is keen to expand his empire offshore. Photo: Louise Kennerley

There is a lovely scene in the recent television mini-series Power Games – which tells the story of a young Rupert Murdoch’s battles with Sir Frank Packer – where Sir Frank and his sons Kerry and Clyde are debating whether to follow Murdoch into the London market. Sir Frank scotches the move; the Packers will focus on Australia and let Murdoch blow himself up going global. Fiction though it is, the scene rings true. Neither Sir Frank nor Kerry Packer would make big investments overseas, preferring to build a formidable Australian empire that kept them amongst the richest and most powerful families in the country.But the next generation has taken a much different approach. James Packer’s shift out of media and into gaming has allowed him to take the Packer empire well beyond Australia’s shores.

Now he’s looking for new targets.

Melco Crown, Packer’s joint venture with Hong Kong entrepreneur Laurence Ho, has told the Japanese government it would invest $US5 billion ($5.3 billion) in a new casino in the country if it follows the likes of Macau and Singapore and legalises casinos.

“The potential is huge for integrated resorts in Japan,” Ho told Bloomberg at the weekend.

“If Japan opens up and allows integrated resorts in Tokyo, Osaka, the market could easily be in excess of $10 billion to $15 billion or more.”

Ever since companies like Melco Crown led the casino boom in Macau, Japan has been the subject of approaches from casino bosses to consider building casinos – or integrated resorts as they are politely described.

But the momentum has built further in recent months, following the announcement that the Japanese capital Tokyo will host the 2020 Olympic Games. There is now new legislation before the Japanese parliament, the Diet, and commentators believe the relatively strong political position of Prime Minister Shinzo Abe – who is seen as supportive of casinos – gives the push its best chance of success.

If the bill is passed during the next session of the Diet, which kicks off in October, then Japan could get a casino by 2019, just in times to help house the hundreds of thousands of visitors who will flock to the Games.

Huge opportunity

What attracts Packer, Ho and other casino magnates such as Steve Wynn to Japan is an affluent society that appreciates luxury and, frankly, loves a bet.

Japan has a strong tradition of horse racing and lotteries, but the real power behind the Japanese gaming market is pachinko, a pinball-like game, and its derivative, pachislot – which as its name suggests is similar to the standard slot machine we have in Australia.

Around $270 billion is wagered in Japan each year, with more than 80 per cent spent on pachinko. According to a research and consulting firm called Japan Productivity Centre, as much as 30 per cent of all leisure spending in the country is wagered in the nation’s bright and noisy pachinko parlours.

And while pachinko isn’t necessarily the favourite game of the wealthy gamblers that Melco Crown focuses on in Australia and Macau, the size of the market underlines Japan’s strong interest in gaming and makes Laurence Ho’s prediction the casino market could eventually be worth $US10 billion very believable.

Packer’s enthusiasm is clear.

“I hope Japan comes up,” he told The Australian . in August.

“If Japan comes on, it will be the second-biggest gaming market in the world. It has 100 million people who are all mad gamblers, but they are all doing it through horse racing and pachinko. Japan is looking at the Singapore story. Done wrong, gambling can be parasitic. But done right (through integrated resorts) it can be hugely additive.

“With integrated resorts done well, the good outweighs the bad. Singapore is proof of that.”

Hurdles still to clear

At $US10 billion a year, Japan could replace Las Vegas as the world’s second largest casino market. But there are plenty of hurdles to clear before Packer can start celebrating a Samurai success.

Firstly, the casino bill needs to pass – no sure thing given that previous attempts to legalise casinos have failed and given the weakness of the economy remains the biggest focus of politicians.

If the bill does pass the Diet, Packer and Ho will of course face competition from every major casino group on earth.

Reports from Bloomberg suggest that Las Vegas casino operators MGM Resorts International and Las Vegas Sands Corporation are already scouting sites in Japan, while Wynn Resorts has made a similar promise to Melco Crown, committing to spending billions if the casino market is opened up.

Exactly how many casinos would be allowed in Japan, and how quickly the rollout could occur, isn’t known. However, the likes of Packer and Ho are used to being patient in order to get these large-scale and potentially lucrative projects off the ground.

Packer’s empire in a decade

The prospect of an expansion into Japan raises some interesting questions about what the Packer empire might look like in 10 years time.

By then, his hotel and high-roller casino at Barangaroo will be up and running, adding the Crown chain in Australia.

By then, Packer will be into his eighth year of operation of a new casino in the Philippines capital Manila, which looms as yet another Asian gambling hotspot.

By then, Packer could also have his hotel and casino in Sri Lanka in operation.

And by then, Packer could be entrenched in the booming Japanese market.

When you add these to Packer’s existing business, it’s clear what a growth story he has to tell.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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