30-second summary
- Casino resorts became legal in 2018 in Japan, with three licenses made available
- One of the licenses will probably be for Osaka
- MGM Resorts is focusing on winning this license
- The company has partnered with a local financial services firm
Casino resorts in Japan
For many years, Japan did not embrace gambling even though many other entities in the region, such as Macau, were making significant revenue from the sector.
Finally, commercial casinos were legalized in Japan in 2016. Then, near the end of the 2018 legislative session, three resort casinos were authorized.
While there are concerns that gambling addiction will get out of control, several innovative measures will be put in place to control the problem. Among them is the use of facial recognition technology at gambling facilities to identify problem gamblers.
Casinos advertising is also banned everywhere except for a few places such as the international terminals at airports.
The resort casinos will make Japan a major player in the gambling sector in Asia when they are up and running. They will boost tourism and will help the economy immensely. However, the process of selecting three cities or regions to host them has not yet begun.
When the licenses are given out, it will then be up to the regions or cities to find casino partners. With massive revenues up for grabs, most global casino operators are hoping to win one of these lucrative licenses.
It appears that Osaka is almost guaranteed to get one of the licenses.
MGM and Osaka
MGM Resorts International is making moves in anticipation of a license going to Osaka. The company’s chairman and CEO, James Murren, recently spoke about this when delivering MGM’s full-year earnings report.
He 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 it could be in the early months of 2020 that Osaka gets the green light. The World Expo will be taking place in Osaka in 2025, so the aim would be to have the resort casino open in time for this.
While there will be a lot of competition for the licenses, MGM is clearly well positioned. It has even hired the former governor of Nevada, Brian Sandoval, to help with this mission.
Sandoval will be mainly looking after the expansion into Japan. He has a long history of dealing with the casino industry in Nevada and has been to Japan on past trade missions. His ability to deal with politicians will be essential for MGM in order to secure this operating license.
MGM Resorts has a presence in Asia already with the MGM China in Macau, which recently got a short-term extension to its license.
What would an Osaka resort casino look like?
Osaka officials already have a site in mind for the potential resort casino. It’s on a man-made island called Yumeshima. It would be over 60 hectares in area and the development cost would be about $8.5bn (£6.4bn).
They plan to have it open by 2024 and estimate that it would attract about 25 million visitors annually. About 19 million of those visitors would not be gamblers. There would have to be enough space for 6,000 people and at least 10,000 square meters of hotel space.
MGM’s new partnership
MGM Resorts has entered into a partnership with ORIX, a financial services company. This consortium will combine forces to bid for the operating license of the casino they believe will be going to Osaka.
There is no indication as to what the equity split between the two companies may be. More companies may join the consortium in the future. While MGM wants to have a majority stake in the casino resort, it remains to be seen if this will actually happen.
The partnership was formed in December 2018, but it has only recently gone public. The CEO of MGM Resorts visited Japan last week and said that the company is focusing all of its efforts on winning the bid for this license.
A new mayor of Osaka will be elected soon and many believe that the bidding process will begin in Osaka after the election. Others vying for the Osaka license include Las Vegas Sands and Melco Resorts and Entertainment.