Competition for Osaka Casino License Is Heating Up

Aerial view port of Osaka City, large port city and commercial center on the Japanese island of Honshu, Osaka, Japan.

Japan has traditionally kept a tight leash on gambling in the country. However, following many years of debate, casinos were finally legalized in 2016. In July 2018, casino resorts were legalized after a lot of effort, and three licenses are currently up for grabs. Since this is an extremely lucrative opportunity, the competition among bidders is fierce.

Casino legalization in Japan

Near the end of 2016, casinos were legalized in Japan following more than 15 years of debate on the issue; however, casino resorts were excluded. This led to a separate bill to legalize resort casinos in the country.

Billions of dollars would be invested in these projects, so they would create a lot of jobs, as well as helping to increase tourism and stimulating economic growth.

The process of getting this bill passed was a long one, with many twists and turns along the way. The Integrated Resorts Implementation Bill went through many debates and political strife before finally being passed in July.

As part of the bill, there are three casino resort licenses up for grabs. With a lot of keen interest from casino groups, this is now leading to a bidding war. With each of these licenses being worth as much as $10bn (£7.55bn) each year in revenue, they certainly are an attractive investment opportunity.

Bidding war heating up

The Osaka license, in particular, is proving to be the potential jewel in the crown. Because there is already a site available in Osaka for this project and the fact that the Osaka metropolis has a population of more than 2.7 million people, this is most certainly the first location where a casino resort will open.

Underlying this point, the executive vice president of MGM, Ed Bowers, said: “Tokyo has not raised its hand, Yokohama has not raised its hand – Osaka has raised its hand.”

Other behemoths of the casino industry, such as Caesars Entertainment, Genting Singapore, Galaxy Entertainment, and Melco Resorts are also said to be interested. The Osaka license alone could lead to as much as $4bn (£3.13bn) in annual revenue for the casino.

Osaka has been in Tokyo’s shadow in recent years in terms of power, but this new casino could help swing the dynamic more in the harbor city’s favor.

Tourism levels will rise and wealthy tourists will spend in the local economy. The initial plans are for this casino to be open by 2024 but, after the bidding process, they will still need to get final approval from the government.

The bidders have started intensive campaigns to win support from local politicians and residents. Of course, Osaka is eager to keep everything above board and not to have any allegations of corruption being bandied about as part of this process. The city’s officials have been banned from going to parties, accepting gifts, or sharing meals with those who have an interest in the casino sector.

As many as eight large casino companies are looking into the Osaka location, and companies like Melco, Sans, and MGM have indicated that they would invest as much as $10bn (£7.55bn)  in this type of resort casino.

The Osaka casino will be on a man-made island that was built in the 1970s. While the area suffered significantly during recent financial crises, the last couple of years have seen an uptick in tourism levels, which makes it an ideal site for a new resort casino.

A recent poll of residents in Osaka, however, shows the level of opposition. Of those polled, 42% were against the creation of a casino and fewer than 20% were in favor. The local government is trying to convince the public that such a resort would have many benefits for the city, including the creation of over 80,000 jobs.

The question many are asking is whether relying on casinos for growth is a sustainable model. Only time will tell.

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