MGM Wins Approval To Build World's Most Expensive Casino-Resort In Osaka

April 14, 2023
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Japan’s government has approved a development proposal by the MGM Resorts International consortium for an integrated resort in Osaka, heralding a new era for Japanese land-based gaming after years of commercial and political setbacks.

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Japan’s government has approved a development proposal by the MGM Resorts International consortium for an integrated resort (IR) in Osaka, heralding a new era for Japanese land-based gaming after years of commercial and political setbacks.

The announcement amounts to a green light for construction of Japan’s first land-based casino and the most expensive casino-resort in the world.

During a meeting of IR Promotion Headquarters officials on Friday (April 14), Japanese Prime Minister Fumio Kishida said the multi-billion dollar IR will be “important for attracting many tourists, both domestic and international, and to pursue the goal of being a tourism-oriented nation”, the Nikkei daily and NHK reported.

“We will contribute to the development of the Kansai region after the Osaka-Kansai Expo in 2025 and the growth of Japan,” Kishida said. “It is hoped that the city will become a tourist base that spreads the appeal of Japan to the world.”

Kishida’s comments followed a decision by the Ministry of Land, Infrastructure, Transport and Tourism (MLIT) to approve the Osaka City and Osaka Prefecture-endorsed MGM project based on advice from an expert panel.

The panel found that the bid met central government requirements for financial capability, responsible gambling promotion and likely economic and tourism impact, officials said.

MGM and its local partner, the leasing and financing giant ORIX, “hope to contribute to the sustainable growth and development of tourism in the Osaka/Kansai region, as well as the national economy”, MGM’s Tokyo-based subsidiary said in a Japanese-language statement issued on Friday afternoon.

“Under the partnership with ORIX, we will promote the realisation of the business through public-private partnerships.”

Initial Osaka government hopes that the MGM bid could be approved in time for a 2025 opening, in tandem with the World Expo in the city, were frustrated years ago as the wider bidding process suffered waves of setbacks, including corporate loss of confidence in the market and a government corruption scandal.

The construction timetable is now firming on a 2029 opening on the reclaimed island of Yumeshima in Osaka Bay, although costs are growing due to soil contamination, mass transport construction and other challenges.

A recent estimate by S&P Global Ratings put the total cost at around $10bn, although the projected outlay of ¥1trn is now equivalent to $7.5bn with the weakening of the US dollar. Reuters reported on Friday that initial investment will increase to ¥1.8trn ($15.1bn), without citing sources.

The Osaka prefectural government on Friday said in a statement that it will “continue to work with [the consortium] in collaboration with the public and private sectors to bring the Osaka IR to fruition and to open it as soon as possible”.

In any case, Osaka is set to host the world’s most expensive IR and rely more heavily on Japanese visitation, amid sharp falls in regional Chinese gambling tourism as a result of Chinese government crackdowns and years of pandemic damage to global tourism revenue.

MGM holds a 40 percent interest and ORIX holds the same percentage, with the remaining 20 percent split among 20 local investors.

MLIT minister Tetsuo Saito told reporters that the approval for the Osaka bid was “conducted thoroughly and carefully over the period of around a year”.

Reflecting ongoing public concerns over problem gambling that helped to scuttle IR campaigns in other cities, Saito said the MLIT has sufficient oversight for the Osaka project to “ensure that addiction prevention measures are implemented”.

The only other application for a national maximum of three IR licences, filed by a Casinos Austria-led bid in Nagasaki Prefecture, remains in the balance.

Saito on Friday declined to elaborate on the Nagasaki application, citing ongoing expert assessment of the bid.

“We are carefully examining the development plan, but without setting a deadline [for the decision],” he told reporters. “At this time, we cannot comment on the timing of any certification.”

Championed by assassinated former Prime Minister Shinzo Abe, the faltering nationwide IR initiative’s survival in Osaka is ironically indebted to heavily atypical support for the bid by local residents and politicians, with voters returning the pro-IR Osaka City mayor and Osaka Prefecture governor with handsome majorities on Sunday (April 9).

The central government had delayed the IR licence announcement until this result was known.

For MGM, the securing of central government approval is vindication of its commitment to the region, having stared down tough bids from Las Vegas Sands, Melco Resorts & Entertainment and other regional rivals to finish as the sole bidder for partnership with Osaka’s governments.

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