Japan’s first casino is finally becoming a reality. A few months after the Japanese government greenlit a revised implementation agreement for Osaka’s integrated resort project, construction of the property has finally begun.

The property is a joint venture of the international casino juggernaut MGM Resorts International and Orix Corporation. The formal agreement was signed in late September, greenlighting the next phase of the project.

First of all, workers will have to solidify the land above to make sure that it can support the complex. Preparation works should cost roughly $173 million. The property owners will have to cover these costs now, although the local government has promised to return the money once the project is finished.

The Osaka integrated resort’s development will cost $8.6 billion, as per the September agreement. The 52-acre property is set to be built on Yumeshima, a 700-acre artificial island in Osaka Bay.

The completed resort will have three hotels from three different brands offering a total of 2,500 rooms for guests. The entire complex is expected to provide a huge boost to local tourism, which is why the property will feature a 730,000-square-foot convention space. The casino itself will only take 3% of the resort’s total indoor space.

Unless further delays impede the project, the resort should welcome its first guests in 2030.

Gaming Is Coming to Japan

The resort is de facto owned by the Osaka IR Corporation, in which MGM Resorts and Orix have a 42.5% stake each. The remaining stake is in the hands of various other investors.

Construction of the new resort was made possible by a new law Japan passed in 2018. Seeking to emulate the success of other tourism hubs in Asia, the country toned down its harsh stance on gambling.

While the new law got many companies excited, many of them were eventually disappointed by the country’s long legislative processes and the COVID-related delays. However, MGM Resorts opted to continue despite the setbacks and its bid is finally paying off.

While the Osaka IR Corporation is the only one actually working on an integrated resort project, there is another contender seeking to penetrate the local market. Casinos Austria is also looking to tap into Japan’s potential as a tourism and entertainment destination and is seeking to build a $3 billion resort in Nagasaki.

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The central government of Japan has greenlit a revised implementation agreement for Osaka’s integrated resort project. Compiled by the Osaka Prefecture and the MGM Resorts consortium, which are behind the project, the plan would allow a formal agreement to be signed later this month.

The approval was announced by Japan’s Minister for Land, Infrastructure, Transport and Tourism, Tetsuo Saito, last Friday. It follows the prefecture’s submission of a revised agreement earlier this month.

Under the revised agreement, the opening of the integrated resort will be further delayed to 2030. In addition, the initial investment in the property has been increased by $1.3 billion to a total of $8.6 billion. The agreement revisions came amid rising prices of construction materials.

The current approval means that the prefecture and the MGM Resorts consortium could sign the implementation agreement in September, securing the future of the highly-anticipated Osaka integrated resort project.

Depending on how the situation unfolds, construction of the main facility could start in spring 2025.

The IR Project Is Closer to Realization Than Ever Before

The MGM Resorts consortium is comprised of the international casino and hospitality giant MGM Resorts International and its local partner Orix Corp. The planned casino resort would be built on Yumeshima, an artificial island in Osaka Bay.

The property would include as many as 2,500 hotel rooms and some 730,000 square feet of MICE space and tourism facilities. The resort is expected to be a major driver of tourism and visitation, bolstering the local economy.

Some experts believe that the project could turn Osaka into a preferred destination for tourism, reflecting the effect similar projects had in places such as Singapore.

Despite all the arguments in favor of the resort, some groups remain unconvinced. A year ago, for example, an anti-IR group pushed for a referendum in hopes of squashing the project. Certain political groups also opposed the project because of various concerns.

In spite of the challenges, the Osaka IR project is now closer to realization than it has ever been, signifying an important triumph for its supporters. The success of this project can not only provide boons to the Japanese economy but may also change the country’s relationship with the gambling industry.

In other news, Osaka selected the business consultancy Deloitte Touche Tohmatsu for the provision of support services for the development of its upcoming integrated resort earlier this year.  

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The Osaka prefecture has selected the business consultancy Deloitte Touche Tohmatsu for the provision of support services for the development of its upcoming integrated resort. The construction of the new casino and hospitality venue is expected to revolutionize gaming in Japan.

Under its contract with the prefecture, the consultancy will be tasked with overseeing various aspects of the special-purpose company that is working on the resort on Yumeshima Island in Osaka Bay. Deloitte will, therefore, be responsible for watching over the financial, legal and technological details of the project.

During the financial year 2023-24, Deloitte Touche Tohmatsu will closely follow the business activities of the consortium working on the Osaka resort. As first reported by GGR Asia, Deloitte was the only bidder in the Osaka prefecture’s request-for-proposal. The fee for its work will be around $593,000, including consumption tax.

The IR Project Had to Be Delayed

The Osaka integrated resort is a multi-billion project backed by a consortium that encompasses major gambling powerhouses such as MGM Resorts and Orix. The two companies have a 40% equity stake each, while the remaining 20% is distributed among other investors in Japan.

The realization of the project will cost an estimated $8.4 billion and is expected to be completed by 2030. This is a significant delay from the original deadline, which expected the construction to finish in 2025, in time for the Osaka-Kansai Expo.

The original time frame was rendered unrealistic because of various setbacks, including the COVID-19 pandemic and the withdrawal of bidders. The political conflicts in Japan, which included accusations of bribery and influence peddling also affected the projected opening date.

Despite the setbacks, Osaka’s governor, Hirofumi Yoshimura, is confident in the success of the project. Speaking about the delay he said that the postponement might have been for the better. Yoshimura added that he believes the cultural significance of Japan will attract many tourists to the new integrated resort, once it has been completed.

However, not everyone is optimistic about the prospects of an integrated resort in Osaka. Last year, opponents of the project tried to push for a referendum that would cancel the development. Despite the pessimism of anti-gambling activists, MGM Resorts is convinced that the property will contribute millions to local taxes.

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Now, though, the project is set to begin construction and to be finally completed by a 2030-set deadline. Osaka governor Hirofumi Yoshimura feels confident that there is nothing that would disrupt this progress or makee it harder for the project to succeed in the future.

Osaka Is Confident in Project’s Success Come What May

Of course, the new deadline for the project’s completion is already a far cry from what was hoped to be the original opening date set for 2025, when the Osaka-Kansai Expo will be taking place.

That time window was of course rendered unrealistic by a number of factors, among which the withdrawal of bidders, the shutdown of the global economy due to COVID-19 and not least, internal rifts and accusations of bribery and influence-peddling in Japan.

Yoshimura is confident that it has all been for the better, as he hailed the cultural significance of the prefecture and the area in general. Speaking to the public and quoted by Yahoo News, the governor said:

Kansai is an area very deep in history. Traditional Japanese culture is something you don’t get in Macau, Singapore, or South Korea. And those unique points are what we will promote from the resort.

Osaka governor Hirofumi Yoshimura

The future project will be built as a partnership between MGM Resorts International, a US casino giant, and Orix Corp, which is the local Japanese partner for the company. The estimated cost of the resort is not quite yet pinpointed but it will run into the neighborhood of $10 billion. The initial cost needed to be invested to start construction on Yumeshima, an artificial island in Osaka Bay, is put at almost $8 billion.

Opportunity for an Economic Boom

Japan has been keen to see this project through as it largely sees it as an economic boon waiting to happen. According to CLSA analyst Jay Defibaugh, the upcoming resort will have a significant impact on tourism and the economy, as similar projects had in places like Singapore.

Of course, not everyone is convinced that would be the case, with all but a few companies pulling completely out of the race and considering other opportunities. MGM Resorts International is pressing on with its own plans, however, and it will be a weathervane for the success of this undertaking. Should it prove successful, however, the race for the second license for an IR will be cut-throat.

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The 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

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MGM Resorts International announced on Friday that Japan‘s central government has officially green-lit the Osaka prefecture’s bid to construct an integrated resort in partnership with the gambling and entertainment company. This will set in motion the company’s plans on opening the facility by 2029.

Japan decided in 2018 to launch into the burgeoning leisure tourism industry in Asia when Prime Minister Shinzo Abe decided to legalize commercial casinos. Ever since then, the government has been involved in a process of considering bids from two of its prefectures interested in hosting the first commercial casino in the country– Osaka and Nagasaki.

However, speculations on where Japan’s first IR will be located has ended now that the Ministry of Land, Infrastructure, Transport and Tourism has officially certified the Area Development Plan submitted last year by Osaka Prefecture/City proposing a joint venture between MGM Resorts and ORIX. This plays right into former MGM CEO Jim Murren’s prediction in 2014 that Osaka will be the first to host an IR.

MGM plans to spend JPY1.08 trillion (US$8.1 billion) to construct and outfit the facility that will be built on 122 acres of Yumeshima island, the man-made island in Osaka prefecture. The facility will include a casino, hotels, convention space, retail shopping, and several other amenities and attractions.

Industry expertd project that the facility will generate about $4 billion a year while attracting nothing less than 20 million guests per year. This is largely attributed to how close Osaka is to Tokyo, Japan’s capital.

In a statement to the press concerning the news, MGM Resorts CEO & President Bill Hornbuckle expressed his excitement over the approval while looking forward to beginning the project in earnest. He said: “It is an honor to be selected by the Government of Japan to develop a tourism project of this scale. We couldn’t be more excited to get started on the development of one of Japan’s first Integrated Resorts in the great City of Osaka, and we look forward to working with our partner ORIX and Osaka Prefecture/City to realize this long-held goal.”

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The news was confirmed early on Friday, with the government of Japan finally picking the first location to host the country’s inaugural integrated resort which will seek to boost tourism and generate an economic boon.

Osaka Wins in Expected Decision by Government

The first of the three resorts is set to open by 2029 and it will cost $13.5 billion to pull off. It will be built on Yumeshima, a man-made island in Osaka Bay, and come with a range of amenities, facilities, and venues. The integrated resort will have a dedicated Las Vegas-style resort casino as its central piece but it will feature so much more as well.

This new project will come along with hotels, conference rooms, shopping malls, a ferry terminal, and a range of other leisure and business additions. There will be dedicated helicopter pads to bring in and out well-heeled guests and customers. Overall, the first integrated resort, developed by MGM Resorts International and ORIX, a local company, is set to be a big success when it finally welcomes its first guests.

Once this happens, Japan hopes to see many of Asia’s richest gamblers flock to this new gambling Mecca. Each of the two companies developing the project owns a 40% stake in a dedicated company that they have set up to place an official bid with the government and realize the project. The other 20% of the stake is held by the local government.

As to the Japanese government, Prime Minister Fumio Kishida seems confident that the incoming integrated resort should contribute significantly to the economic growth of the Kansai area in Osaka and beyond. The resort is expected to generate more than 520 billion yen worth of revenue annually and bring in as many as six million international tourists and 14 million domestic visitors.

Japan Still Hesitant about Other Bidders

Of course, there have been some concerns about the future of the project. Some have objected to it arguing that there were serious environmental concerns with the reclamation of the island. Others still have objected to gambling on principle, arguing that gambling could bring more societal ills than it would benefits.

The entire process was plagued by setbacks as well – as the pandemic struck, companies willing to bid for the realization of integrated resorts dropped out of the race. By the April deadline in 2022, only two prefectures had completed an application process, with the other one being Nagasaki.

However, there has been no official confirmation whether Nagasaki will secure the rights to host an integrated resort as well. The government said on Friday that it needed more time to review the proposal submitted by the prefecture.

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