MGM gets green light for $10bn project to build Japan’s first integrated casino resort
MGM Resorts has secured the next step in its bid to develop an integrated resort in Japan’s Osaka Prefecture.
Development plan gets green light
Japan’s Ministry of Land, Infrastructure, Transport and Tourism has officially certified an Area Development Plan submitted last year by Osaka Prefecture/City and Osaka IR KK, a joint venture between MGM Resorts Japan and ORIX Corporation.The certification is one of the final steps in the licensing process under Japan’s Integrated Resort Development Act, and allows MGM Resorts Japan and ORIX to finalise agreements with Osaka Prefecture/City on the construction of a development project worth around $10bn.
Final details of the proposed development were submitted to the prefecture last year, and MGM suggested the project would help “transform the region into one of the world’s top entertainment and hospitality destinations and to serve as a hub for tourism across Japan.”
“It is an honour to be selected by the Government of Japan to develop a tourism project of this scale,” said MGM Resorts president and CEO Bill Hornbuckle.
“We couldn’t be more excited to get started on the development of one of Japan’s first integrated resorts in the great City of Osaka, and we look forward to working with our partner ORIX and Osaka Prefecture/City to realise this long-held goal.”
Integrated resorts in Japan
MGM’s proposal is the first to be approved by Japan’s Ministry of Land, Infrastructure, Transport and Tourism.
The government passed its Integrated Resort Implementation Act in 2018, allowing casino operators to bid for a limited number of local licences across the country.
At the time, MGM had a full-time development team in the country and had spent four years engaging in discussions with Japan’s cultural and business communities with a view to positioning itself for one of the licences.
In 2021, Osaka selected MGM alongside JV partner ORIX as the region’s integrated resort partner.
Once selected by the prefecture, MGM was able to unveil the details of its $10bn development plan.
A further decision on an application for an integrated resort in the Nagasaki Prefecture is expected from the Japanese government in the coming months.
The Nagasaki Prefecture has partnered with European operator Casinos Austria for its integrated resort bid.
Following that decision, authorities may also consider one or more further unissued integrated resort licences, with the possibility for a further round of licence applications to then take place.
Details of the project
MGM’s initial plans for the resort included a total 2,500 guest rooms across three hotels, the MGM Osaka, MGM Villas and MUSUBI Hotel.
The resort is also set to include a variety of dining and food and beverage offerings, retail spaces, a spa, fitness centre and banquet halls.
Plans for the resort include some 400,000 square feet of conference facilities and 330,000 square feet of exhibition space, with capacity to accommodate more than 6,000 visitors.The 3,500-seat Yumeshima Theatre was also proposed as part of the resort.
The actual construction date of the resort is yet to be confirmed, but reports suggest the venue is unlikely to open before 2029.
MGM projected that the resort would welcome around 20 million visitors annually, while providing jobs for some 15,000 employees.
The operator also hopes to help establish Osaka as a gateway for wider tourism in Japan.
The city, which is situated on Japan’s largest island, Honshu, is home to around 2.7 million inhabitants. Osaka’s broader metropolitan area, meanwhile, is home to some 19 million residents.
According to CBRE equity research analyst John DeCree, the region’s large population leaves it well placed to surpass Singapore in terms of land-based casino GGR.
Osaka could generate annual EBITDA for MGM of more than $2bn, DeCree suggested, given the number of national and international visitors to the region.
The main concern for MGM should be building enough hotel rooms to be able to properly capture Osaka’s total addressable market, he added, which CBRE estimates at $5.75bn in GGR annually.
If done properly, DeCree concluded that MGM’s Osaka integrated resort could quickly become one of the most profitable casinos in the world.
Japan’s gambling sector
While the country is yet to open its first land-based casino, online gambling is popular in Japan.
Japanese companies are prohibited by law from offering online gambling, however there are no laws preventing Japanese residents from playing with operators based overseas.
The country is therefore a significant market for several companies in the international online gambling sector.
For affiliate group Catena Media, it is one of a few select markets offering stable, high-margin growth opportunities outside Europe and the US.
In its 2022 annual report, the business said it continues to observe exciting growth opportunities in Japan and sees strong scope for gaining market share as its market-specific expertise develops.
Catena remains focused mainly on online casino in the Japanese market, but has recently branched out into sports betting and esports sectors.
The market is also an important one for Bally’s Corporation, via its online-focused Bally’s Interactive subsidiary. The market has been a key focus of the firm’s international interactive segment, it said in its latest annual report.
In addition to the country’s grey online gambling market, there are some limited regulated options available to bettors in Japan. They include pari-mutuel betting via the Japanese Racing Association, and online lottery games via the Japanese Lottery.