Japan’s central govt. Has approved $13.5B MGM casino resort for Osaka

Japan’s central govt. Has approved $13.5B MGM casino resort for Osaka

mgms_casino_resort_in_osaka_japan_approved_by_central_governmentThe Prime Minister of Japan announced Friday that a key committee had approved the development of an integrated resort casino (IR) in the Prefecture of Osaka.

Prime Minister Fumio Kishida heralded the decision by the Minister of Land, Infrastructure, Transport and Tourism’s review committee to greenlight after a meeting of the Headquarters for the Promotion of Integrated Resort.

MGM Resorts will participate in the operation and own a significant portion of the project along with Orix Corporation, a Japanese financial firm that is listed on the Tokyo and New York stock exchanges. The two firms will reportedly control equal 40% shares.

The resort will be operated by a newco. The consortium will include about 20 local companies.

Long Road to Arrive at Osaka Casino Resort

The central government’s approval comes after years of struggles and delays as there were initial hopes that the supporting legislation and approval could happen in enough time before the 2020 Tokyo Summer Games to capture revenue from the surge in tourism.

However, it wasn’t until 2018 when the Japanese Diet (parliament) finally authorized the construction of integrated resorts (after supporting legislation was passed in 2016) as part of a tourist resort. Several more years passed as the complicated framework was hammered out and the proper political coalitions could be found. The law, originally championed by former Prime Minister Abe finally came into effect in 2021.

The massive casino resort complex on the man-made island of Yumeshima in Osaka Bay will not be opened before the ward of Osak holds the World Expo in 2025. While the target date and final build cost estimates are certain to change over time, it is now expected to cost some US$10 billion to build with an opening anticipated in 2029 or 2030. Current cost estimates range between $8.5m and $13.5 billion (¥1.8 trillion).

Most multi-billion dollar casino developments around the world are allowed to open a temporary casino prior to full completion of the surrounding resort amenities, but Japan is a law unto itself when it comes to such matters. It’s currently unclear how the hotels and conference centers, shopping malls, museums, and ferry terminal will be phased in or if the casino will be allowed to open after certain benchmarks are achieved.

While several regions across the country were initially open for proposals, in recent years it has boiled down to Osaka and possibly Nagasaki. The 2018 legislation authorized the building of up to three IRs.

Already More than 7,000 Gambling Parlors in Japan

While this will be Japan’s first legal casino, gambling on Pachislo slots or pachinko machines that resemble vertical pinball games has always enjoyed a carve-out as a cultural exception. Players left as much as ¥14.6 trillion yen in those machines as of 2021.

More than 7,000 parlors featuring those games are scattered across the county, particularly in high foot-traffic areas such as near train stations. Other forms of gambling that were allowed before the casino bills passed include horse racing, motorboat, and motorcycle racing, bicycle race betting, and a restricted form of soccer betting as well as a lottery.

The MGM/Orix resort is expected to bring around 20 million visitors a year to the area who are expected to spend as much as $8.5b (¥1.14 trillion) each year once the full resort is open. Peak employment for the entire facility is expected to reach as high as 15,000.

Japanese citizens will have to pay a fee for every 24 hours they spend in a casino and there is a cap on the number of times one can visit. Family members will be able to request that any member be excluded from entering the premises.

Nagasaki is Still “in the running”

Asian media reports indicate that while Nagasaki is still “in the running” for a second IR for Japan, that issue didn’t come up at Friday’s meeting. However, GGRAsia reports that it has confirmed with local officials that the authorities in Nagasaki are still in discussions with central government officials about its plan for a casino resort.

The Nagasaki casino resort would be located in Sasebo City next to Huis Ten Bosch theme park, according to currently known plans.

In announcing the IR’s approval, Prime Minister Kishida said: “The Minister of Land, Infrastructure, Transport and Tourism has decided to certify Osaka’s area development plan. Osaka’s IR will contribute to the development of the Kansai region after the 2025 Osaka-Kansai Expo and to the growth of Japan. It is expected that it will become a tourist base that spreads the charm of Japan to the world.”

Earlier, Brian Sandoval President of Global Gaming Development at MGM Resorts said: “We want to provide guests with a new IR destination experience that is uniquely Japanese. Japan is advanced in technology innovation. It is also known as the best in class in terms of hospitality, rich in arts, culture, and food. We respect the spirit of “Omotenashi” and Japanese vibrant traditions. We have already learned so much from Japan that we have been able to export to other markets in which we operate.”

Source: Japan approves building of first casino, The Guardian, April 14, 2023

Author: Henry Brown