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Wynn waiting in the wings

Aug 28, 2007 5:59 AM

Steve Wynn turned to Kazuo Okada when the casino mogul needed cash to fund his namesake Las Vegas Strip casino in 2000.

Now, Okada could be the ace up Wynn’s sleeve in the Japanese businessman’s home market.

The businessmen plan to submit a bid to operate Japanese casinos once the government opens the market, Okada said in an interview earlier this month.

Success in Japan would be a boon to Wynn Resorts Ltd. shareholders, said Michael Rudolph, who helps manage $9 billion at Gardner Lewis Asset Management.

"We want to do it with Steve Wynn," said Okada from Aruze Corporation’s Tokyo boardroom adorned with jukeboxes and a statue of Buddha. "An international bid is the best way. I think it’s possible in Tokyo to create something that will draw visitors from home and abroad, above and beyond Las Vegas."

Having Okada in his corner would give Wynn a distinct advantage in Japan, said Bill Lerner, an analyst at Deutsche Bank in Las Vegas. Wynn, Las Vegas Sands Corp. and Australia’s Publishing & Broadcasting Ltd. are among the companies pushing to open Japan to casinos. The government is considering legislation that could be approved within the next 12 months.

Prime Minister Shinzo Abe’s ruling Liberal Democratic Party lost control of the Diet’s Upper House in an election on July 29. That could slow down the passage of legislation because of political uncertainty, the 64-year-old Okada said. The LDP and its coalition partner, New Komeito, still control the more-powerful Lower House with a two-thirds majority and can override the Upper House in cases of disagreement.

"They should be able reach a compromise on legislation if they take a balanced approach," Okada said. Aruze started leasing jukeboxes and began selling the world’s first so-called pachislo machine, a hybrid slot and pachinko machine.

Wynn President Ronald Kramer will come to Japan in September, said Aruze Chief Executive Officer Kunihiko Yogo. Aruze will introduce him to local authorities as the partners ramp up their promotion of casinos to the government.

Japan’s government may be looking at Singapore, which awarded two casino licenses last year, as a model. Like Japan, Singapore wanted casinos to attract foreign tourists and add jobs. If all goes according to plan, Japan may have its first casino open by 2012, according to Toru Mihara, an adviser to the LDP’s casino study group.

"When you have a country as big and as wealthy as Japan, if the country were to open up to Wynn’s kind of casino gaming, it would be a monster opportunity," said Gardner Lewis’s Michael Rudolph.

Lerner expects Wynn shares to rise 18 percent to $120 in the next 12 months. Winning a license could push the shares up further, he said. Shares of Las Vegas Sands rose 9.4 percent the day it won the first of two Singapore casino licenses. Wynn’s shares have soared 6.5 times since its initial share sale to the public in 2002, eight months after winning its Macau license.

"We may see a very good jump in casino stocks when the legislation goes through" in Japan, said Dan Ahrens, fund manager of Ladenburg Thalman Gaming and Casino Fund in Dallas, which owns shares of Las Vegas Sands, Wynn and MGM Mirage. "We’ll see another good jump in casino prices when the actual licenses are issued."

Expansion into Japan has become more important for casino companies as the Chinese government considers limiting travel to Macau, the only Chinese region where gambling is legal. Gambling revenue in Japan could potentially match Macau’s, said Andy Nazarechuk, dean of the University of Nevada’s Las Vegas Singapore campus. Macau generated about $7 billion in casino gambling revenue last year.

The Chinese government in April began restricting visas allowing residents of neighboring Guangdong province to enter Macau. Concerns that the restrictions would curb visitors and casino revenues prompted Wynn to delay expansion at the Wynn Macau Resort.