Integrated Resort (IR) Business Entry Support

PwC delivered support for Integrated Resort (IR) business entry

The Act on Development of Specified Complex Tourist Facilities Areas (“the IR Development Act”) was promulgated on July 27, 2018. In February 2019 a draft guidance was announced by the Cabinet Secretariat, and it is planned that in or after the summer of 2019 the establishment of the Casino Administration Committee and the basic policy of the Ministry of Land, Infrastructure, Transport and Tourism (MLIT) will be announced. These developments will herald the phase of operator selection by Japan’s prefectures. IR in Japan is expected to become a new growth industry, and inquiries from Japanese companies that have started to consider entering this business are also rapidly increasing.

While the IR business gathers more attention, with its network in 157 countries around the world, PwC has accumulated extensive experience in providing services to overseas IR operators mainly in Las Vegas and Singapore. Applying such expertise, PwC will support Japanese companies that are considering entering the IR business, and help create a new market that will stimulate the local economy through the IR business.

Assessments of the potential market including market size, growth potential, profitability, and customer needs are important factors to consider when entering a new market. At the same time, it is necessary to solve a wide range of issues including formulating an entry strategy that clarifies target regions, what sort of alliances will be entered into and with which sort of company, what value will be offered to customers, developing a highly feasible business plan, considering investment structure, and implementing the raising of funds.

PwC provides comprehensive support by utilizing our experience in providing business services to both casino operators and regulators, and the network we have cultivated overseas over many years.

The core services delivered by PwC

At PwC, there are many experts in consulting, deal advisory, tax consulting and assurance services specialized in gaming. We deliver services that match the needs of clients from support for strategies for entering the IR business to post-opening business support.

Support for formulation of IR vision

PwC supports IR vision design for local governments aiming to attract IR and companies playing a key role in this area.

  • Support for regional master plan formulation
  • Support for IR development plan formulation
  • Analysis of potential market size of each area

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Support for entry strategy development

As the IR market is comprised of multiple businesses, there could be various entry model patterns to maximize the strengths of an entrant. PwC supports the formulation of an appropriate entry scenario consistent with each company's vision and strategy.

  • Support for formulating an IR development plan
  • Latent market size analysis for each area/business area
  • Support for formulating an alliance strategy
  • Investment/funding structure review support
  • Support for the development of IR market entry strategies based on the strengths of each company

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Consortium support

Right from the consortium-formation stage, PwC supports various studies considered necessary by the municipality for selection as an operator.

  • Consortium formation support
  • Support for formulating business plan
  • Investment and financing structure development support

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Compliance support

Various restrictions are placed on IRs in order to control the social cost associated with their introduction. PwC provides support to respond appropriately to such restrictions.

  • AML regulatory compliance support
  • Support for compliance with regulations against gambling addiction
  • Support for building internal controls

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Preparation for start-up PMO support

PwC utilizes its experience and expertise in launching IR business overseas to provide project management support to operators selected by local governments for establishing IR businesses.

  • Design and construction management support
  • Organizational design, hiring recruitment, human resource development support
  • IT construction support
  • Support for building a risk management structure
  • Government/council response, and citizen response support
  • Support for implementing marketing strategies

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Support for public agencies/local public organizations

Local public organizations need to handle the following issues in order to apply for permission to operate an IR business in an area.

Feasibility of the business

  • Right sizing: appropriately ascertaining scale and functions of IR market
  • Differentiating the IR business from other IR businesses in the Asian region
  • Clarifying in advance the functions to be introduced and the measures that will result in regional contributions
  • Evaluation of contents of IR business proposal (clarifying Request for Proposal (RFP) conditions in advance)
  • Background checks on IR operator (including casino operators)

Social cost measures

  • Gambling addiction measures
  • Juvenile protection
  • Restrictions on entry to gambling facilities
  • Regional prevention of crime and safety measures

Local consensus building

  • Positioning of IR policy within the master plan
  • Encouraging the understanding of local residents
  • Approval by local government
  • Collaboration with local governments in vicinity
  • Coordination of visitor admittance volume and acceptable development scale (town planning, environmental impact assessments)

Economic ripple effect

  • Ripple effect and measures for regional economy
  • Collaboration with wide-area tourism bases
  • Improved quality of tourism/service sectors
  • Basic urban infrastructure as a recipient (transportation, housing, education, life support services)

IR/Casino business support track record (public agencies)

Government of Singapore

Support for the selection of operators and the system design

  • Provided strategic advice on key parameters for development that exerted a considerable influence on investor response: land value, concession period, gaming tax, casino exclusion restrictions.
  • Provided support for the design and development of requirements setting/evaluation processes for the selection of operators.
  • Assisted in the preparation and of Request for Proposal (RFP) for the selection of operators.

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State of Maryland, Department of Legislative Services

Support for the selection of operators, requirements setting and evaluations of operators

  • Was involved in the review of statutory evaluation criteria established by the Department of Legislative Services ("DLS") for the selection of license applicants, and assisted the DLS in establishing the operator identification process.
  • Performed commercial and economic analyses of the development proposal by the operator; estimated the revenue potential and economic impact of the proposal and analyzed the project’s viability as part of these analyses.

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Kansas City, Missouri

Research into issues and impact arising from introduction of casino PPP business

  • Prepared an assessment of the casino business in a Public Private Partnership (PPP) scenario, identifying various issues (social, fiscal and legislative), and analyzed the effects and impact on the industry through a survey of the key players in the market.

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Undisclosed client (A casino business feasibility study)

  • Conducted reviews of business plans presented by casino operators.
  • Analyzed the growth factors (number of visitors, customer profile, amount spent, etc.) for casinos taking into consideration past results, the economic growth status of the district, and the various regulations.
  • Analyzed and evaluated risk factors that affect future revenues, such as commissions to junket operators, taxes, and fixed asset maintenance costs.
  • Analyzed and evaluated the competitive environment taking into account existing and future casino facilities, relationships with junket operators, accessibility, and attractiveness of non-gaming facilities.
  • Evaluated future growth opportunities for casinos, including analyzing and evaluating airport expansion scenarios targeting VIP customers from financial and technical perspectives.

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Tokyo Metropolitan Government

Market research for the creation of a MICE/international tourism center, and consideration of the development concept

  • Conducted market research of international conferences in Japan and elsewhere, exhibition trends, and the status of facilities.
  • Developed case studies of foreign IR facilities.
  • Analyzed and forecast the outlook for MICE Demand in the Tokyo Waterfront City.
  • Provided recommendations regarding the required facility size and functions based on the research results.

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Support for private companies

Companies aiming to enter the IR business and its related solutions need to have sufficient understanding and internal consensus on the following themes from the initial stage of planning.

1. Consistency in their own business domains and the IR business

  • Efficiency and competitiveness of own services for IR operators
  • The significance of investing in the IR business

2. Understanding of the relationship between IR operator and casino licensing

  • What is a license (license/permission)? Are there two licenses in Japan?
  • What is the license (license/permission) corresponding to the project in which participation is planned?

3. Understanding the background checks

  • The essence of background checks
  • Content of the examination and its target
  • Expected cost burden

4. Building relationships with appropriate overseas operators

  • Understanding that not all the operators are the same
  • Characteristic analysis of operators (customer base, management and operation policy, state of management)
  • Consistency with the entrant's business stance, corporate culture

IR/Casino business support cases (private companies)

* The names of the companies for which PwC provided the following services are not disclosed.

IR startup support in specified area

  • Supported the formulation of IR basic concept for local government administration (including prior consultation on issues such as urban plan changes)
  • Supported overseas communication in invitation activities (participation in overseas exhibitions, matching with casino operators, etc.)
  • Provided advisory service on differentiation in domestic invitation competition
  • Provided advisory service to affiliated companies and companies keen to start participating

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Japanese IR market size analysis

  • Conducted research on trends in the global IR market with focus on the United States, Macau and Singapore and the current status of IR planning development in East and Southeast Asian countries; Also reported on the competitive environment in Asia for the Japanese IR market going forward.
  • Assessed the size of the IR market in Japan, mainly in Tokyo and Osaka, and gained an understanding of potential customer needs through interviews with foreign experts and research on foreign laws as well as online questionnaires targeting customers in Japan and abroad.

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Support for study of investment structure and so on expected for IR in Japan

  • Investigated overseas casino regulations (licensing system, back surveys etc.) and considered the types of licenses assumed to exist with regard to IRs in Japan, their grantees, and back-survey levels.
  • Investigated overseas IR/Casino investment and financing structures, and the assumed investment and financing structures in Japanese IRs.
  • Investigated and compiled data on the financial situation of major overseas casino operators, the characteristics of marketing functions by customer segments, etc.

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Formulation of basic concept of solution development related to the IR business in Japan

  • Assessed tourism resources and created databases of tourist numbers, economic indicators, etc. in various places in Japan, visualized their potential attractiveness as tourist destinations, and investigated areas suitable for IR attraction.
  • Investigated past cases related to overseas casinos and supported the formulation of basic concepts for solutions including payment services to be introduced in Japanese IRs.

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Analysis of the scale of IT investment in the Japanese IR market

  • Investigated the types and contents of IT-related investments made when overseas casino operators launch IR facilities, the investment amounts for each system, etc.
  • Supported investigation of the types and contents of IT-related investment required by operators of Japanese IRs and the assumed investment amount for each system by taking into account the uniqueness of Japanese IRs and the investment scale of assumed IR facilities.

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