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Global Management Forum 2018

MGM Resorts stresses communal bonds for casino success

CEO ready to wager 'billions of dollars' on Japan

MGM Resorts International Chairman and CEO Jim Murren shares his vision for casino resorts at the Nikkei Global Management Forum in Tokyo on Nov. 6.

TOKYO -- The success of new casino resorts depends on engagement with the communities that host them, MGM Resorts International Chairman and CEO Jim Murren said on Nov. 6 in Japan, where his company hopes to put down stakes.

"We are committed to creating a business that's right for the community, not trying to create a community that's right for our business," Murren told the Nikkei Global Management Forum in Tokyo.

In July, Japan passed legislation that paves the way for legal casino gambling. The goal is to encourage the development of "integrated resorts" -- venues that offer both gambling and other types of entertainment -- with the first expected to open in 2024 or 2025. MGM is among the players committed to bidding for the three licenses up for grabs.

Murren stressed his company's various connections with Japan -- from holding kabuki performances and a modern art exhibit at its Bellagio resort to showing Japanese films during the National Cherry Blossom Festival in Washington and sponsoring Olympic gold-medalist boxer Ryota Murata, who came to Las Vegas for a championship fight.

The casino operator also partnered with a community in Japan's earthquake-hit northeastern region of Tohoku, where it sources more than $30 million worth of supplies a year from farmers, fishers and brewers. Murren said the idea was to bring "high-quality goods to MGM's customers and lift up the achievements of this remarkable community."

"I hope we have the honor to do business here," Murren said, "not because of what I know MGM could bring to Japan, but because I believe in what we would build together." He added that large metropolitan areas are the focus and that there are plans to invest "billions of dollars."

At the same time, Murren conceded that "problem gambling is a serious issue," and expressed understanding of Japan's regulations. Gaming areas will be limited to 3% or less of total resort floor space. Entry will be free to international visitors but cost 6,000 yen ($50) for Japan residents, who will also be limited to three visits a week and 10 per month. "Japan is the largest country in the world acting toward responsible gaming at the national level," he said.

With revenue plateauing in Western markets, international gaming companies have looked to Asia. The region's gambling sectors are opening up and, in many places, disposable incomes are rising.

Japan is the largest market to open the door recently, in the hope of stoking tourism and employment growth. The country is the "biggest prize in the region," Murren told the Nikkei Asian Review in an interview on the sidelines of the forum.

MGM also holds one of six casino licenses in Macau, where spending is recovering after the Chinese government's corruption crackdown in 2014 squeezed cash flows.

China-U.S. tensions have played a part in reducing visitors to MGM's resorts in Las Vegas, Murren said. The picture in Macau, meanwhile, has been mixed. While the numbers so far have been "largely immune," the local administration is attempting to branch out beyond its status as a gaming destination, making for a "fairly unpredictable" short-term outlook.

"I'm very optimistic in the long-term future of Macau, but social, political, economic pressures weigh on the day-to-day volumes, and I think will in the foreseeable future," Murren said.

Competition for Japan's three licenses is expected to be fierce. U.S. President Donald Trump urged Prime Minister Shinzo Abe to grant a permit to Las Vegas Sands -- a gaming operator owned by major Trump donor Sheldon Adelson -- in a Mar-a-Lago meeting last year, according to local media reports in October.

Murren acknowledged the report but said he is confident the licenses will be handed out based on each company's merits.

"I've been coming to this country for 30 years," he said. "I'm utterly and completely confident of the transparency, the clarity, and the professionalism of the [request for proposal] process. Companies such as MGM are going to win or lose based on our own efforts, and no other reason."

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