MGM Resorts is set to put forth its proposal for a resort casino license in Osaka. It will be submitting its application in conjunction with the ORIX Corporation. The CEO of MGM Resorts Japan, Ed Bowers, announced the news at a media event in Japan’s second city.
Starting the application process
The request-for-concept application process in Osaka began on April 25 and will be open until May 24. Bowers did not give any details as to the content of the proposal. He did say that MGM’s partnership with ORIX is not exclusive. The company expects other corporations from the city to get on board for the project as minority partners.
As part of the bid process, all applications need to adhere to the core attributes given by the national government on March 26. These are: having a large-scale hotel; acting as a tourism gateway for other regions in Japan; being a promotion that will attract people to Japan and its culture; have exhibition space; and have convention capacity.
The proposal must also outline countermeasures relating to problem gambling and how the operator plans to approach the issue of community safety.
The arrival of casinos
Japan’s long resistance to gambling crumbled in 2016, when the government legalized casinos after more than 15 years of debate on the issue. Towards the end of the 2018 legislative session, resort casinos also became legal.
The government is to offer three licenses for resort casino. This will position Japan as a major player in the gambling scene in Asia. The government has yet to issue any of the licenses to the cities and regions vying for one. It has, however, recently published its regulatory framework for the sector.
Naturally, global casino operators are showing a lot of interest in the three resort casino licenses. They will be extremely lucrative operations, which means the bidding process is likely to be very competitive.
Osaka’s resort casino
Although no licenses have yet been awarded, Osaka is practically guaranteed to receive one. The city is a tourist hotspot and will be playing host to the World Expo in 2025, which will see a massive influx of visitors into the region.
The metropolitan authority is already looking at potential partners to develop and operate the resort casino in the region. And officials have already chosen a site – on the man-made Yumeshima Island. The resort casino will be more than 60 hectares in size and will cost around $8.5bn to develop.
The aim is to have the resort casino open by 2024 and the city hopes it will draw as many as 25 million visitors per year. Of these, 19 million would not be gamblers but would come to enjoy the resort and its on-site entertainment facilities.
A requirement for the selected operator is to build a hotel of a minimum 10,000 square meters, as well as providing gathering areas for 6,000 people or more.
MGM and the Osaka license
MGM Resorts is constantly looking to expand its global profile. It sees the Osaka opportunity as the ideal vehicle to cement the company in the core of the Asian market. Its main casino facility in Asia currently is the MGM China in Macau.
The company has made significant moves in anticipation of bidding for the Osaka license.
CEO Jim Murren spoke about this when he was delivering the most recent full-year earnings report for the company. 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.”
Expectations are that Osaka will officially get approval for the license at the beginning of 2020. As part of MGM’s strategy to obtain this license, it has hired former Governor of Nevada Brian Sandoval. He will be heading up MGM’s Japanese expansion team.
Sandoval has a lot of experience dealing with casinos, having also been the chairman of the Nevada Gaming Commission in the past. He is a skilled politician who has past experience of dealing with Japanese officials, having visited the country on previous trade missions.
MGM Resorts is also partnering with local financial services company, ORIX Corporation, to help win its bid. There has been no indication as to what the equity split may be.