The day we thought might never come has finally arrived. On Friday 14 April, Japan’s central government finally approved development of the nation’s first integrated resort with legal casino gaming – Osaka’s successful bid having completed a process that was decades in the making. The Osaka IR, to be developed by a consortium led by US casino giant MGM Resorts International and local partner ORIX Corp, is set to cost somewhere in the vicinity of US$10 billion with a tentative opening date of 2029.
Yet a single IR in the middle of the country (Nagasaki’s bid to develop a second IR in Sasebo City is still being reviewed) isn’t exactly what those who first envisioned legal casino gaming had in mind.
Japan’s IR Integration Bill, which passed through parliament in 2018, had allowed for the government to certify up to three IR developments nationwide and, according to IAG’s own count, at least 20 operators and 12 cities and prefectures made their interest known at the time.
Fast forward to the government’s April 2022 deadline for submitting final development proposals and only two bids were entered for the three licenses on offer. It’s like a game of musical chairs with more chairs than people.
If the government’s goal in developing world-class integrated resorts was to boost its global tourism appeal, then the absence of an IR in either Tokyo or Yokohama is an opportunity lost – even more so given the incredibly impressive plans that were unveiled by both Genting Singapore and Melco Resorts before Yokohama pulled the pin.
The challenge for MGM, therefore, is to develop an integrated resort of such quality and uniqueness as to draw the eyes of the world regardless. That certainly seems likely given the massive US$10 billion construction cost being touted. Osaka’s IR will not only be the most expensive ever built, it will cost twice as much as the current front-runners: SJM’s US$5 billion Grand Lisboa Palace in Macau, Genting’s US$4.3 billion Resorts World Las Vegas and Wynn’s US$4.1 billion Wynn Palace, also in Macau.
But what does US$10 billion buy you in Japan? Not as much as you’d hope, it seems. Japan is a notoriously expensive place to build in the first place due to its high wages and the need to build earthquake provision measures into all new developments.
Throw in global supply chain issues post-COVID and concerns over liquification and soil contamination on the chosen Yumeshima Island site – concerns that will need to be addressed at considerable cost prior to construction getting underway – and that US$10 billion might not look much different to the circa US$5 billion spent elsewhere.
As one of the world’s leading integrated resort operators with hugely successful developments in Las Vegas and Macau, MGM will no doubt present an integrated resort worthy of admiration. But for those who envisioned Japan’s IR industry being the envy of the world, the hope now will simply be that something is better than nothing.
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