MGM Resorts Going All In with Japan Casino Resort Bid

30-second summary

  • Casinos only became legal in Japan in 2016 and casino resorts were legalized in 2018
  • Three casino resort licenses are up for grabs
  • Osaka is the favorite to get one of these licenses
  • MGM Resorts is planning already to obtain this license by any means necessary

Background to Japan casino resorts

For many years, casinos of any kind were illegal in Japan, which had a staunch anti-gambling culture. However, the Japanese legislature approved a law legalizing casinos near the end of 2016 making casinos legal after almost two years of debates on the issue.

At the very end of the 2018 legislative session, casino resorts became legal. Three licenses are up for grabs and many global casino groups are vying to get one of them.

The development for each of these resort casinos likely will be in the region of $10bn (£7.7bn). However, the annual revenue for these resort casinos is also expected to about $10bn. Japan is well located to be a major gambling destination in the region.

The bidding process for these licenses is yet to begin. The first step will be to decide which cities will host the resorts, and a strict regulatory framework needs to be established before the licenses are handed out.

Some concerns continue about the increasing levels of problem gambling in the country. The government is looking at ways to combat this. It is now implementing a ban on advertising casinos in the country, except in a handful of places, such as the international terminals at the country’s airports.

MGM Resorts vying for a license

MGM Resorts International is confident that Osaka will be one of the cities hosting a casino resort and the company is determined to obtain this license.

Talking recently when the company issued its full-year earnings report, the CEO and chairman said: “We just recently opened up an office in Osaka. We’ve committed now to the mayor and to the governor of Osaka. MGM has adopted an Osaka-first strategy. We are focusing our considerable resources on Osaka.”

They believe that Osaka will choose a resort casino operator early in 2020. MGM does acknowledge that the central government still has to select Osaka as one of the host cities.

The World Expo is coming to Japan in 2025 and the country hopes to have a resort casino open by then. There will be a huge amount of competition for these licenses. However, MGM seems to be ahead of the curve since it already has significant operations set up in the city.

Industry experts in the country believe that Osaka is currently number one on the central government’s list for awarding the licenses.

MGM Resorts already has a presence in Asia, a casino in Macau known as the MGM China. MGM China saw a fourth-quarter rise in revenue year on year of more than 33% and the company plans to pour more resources into their operations in Asia.

What would this casino look like?

As part of MGM’s new strategy, Brian Sandoval has been put in charge of expansion efforts in Japan. He is the former governor of Nevada is very familiar with dealing with politicians, which will be key to winning one of these licenses.

The authorities in Osaka already have rough plans for a casino resort. It would be built on 60 hectares, cost more than $8.5bn (£6.5bn), and be ready to open by 2024. They are estimating it will draw almost 25 million visitors each year, including almost 19 million non-gamblers. To put this in perspective, Macau as a whole had 36 million visits in 2018.

The idea is to have the casino resort built on Yumeshima Island to help boost tourism in the area. The central government will require the hotels at the casino resorts to have at least 100,000 square meters of hotel accommodation.

They also need to have enough space to allow 6,000 people to congregate. This would make these facilities the best in the country for conferences and leisure facilities.