Japan’s Ministry of Land, Infrastructure, Transport and Tourism announced on Wednesday that it will not approve the development plan for an integrated resort with casino gaming in Nagasaki, citing concerns around financing and the track record of investors.
Following local media reports earlier in the day which claimed the application submitted by Nagasaki prefecture and its partner consortium Kyushu Resorts Japan would be rejected, the Ministry released the results of a review by a committee of experts which confirmed that stance.
The panel said, “It is difficult to say there is sufficient evidence to support the certainty of financing” and the lack of “objective materials supporting the certainty of financing” from potential investors and financing parties. Specifically, it pointed to an insufficient level of commitment in provided letters while noting that the parties scheduled to invest in and finance as of September 2023 had changed significantly since the time of application.
As such, “we cannot eliminate the concern that the parties scheduled to invest/finance may continue to change in the future,” it said.
The panel also expressed doubt over the ability of investors to successfully operate a large-scale IR, stating that only Casinos Austria International (CAI) – which was leading the Kyushu Resorts Japan consortium – displayed any track record or know-how in such activities. However, CAI’s direct investment into the project was to be minor, raising further questions over the level of its involvement.
“Although CAI has a track record and know-how in developing and operating casino facilities, we cannot fully confirm [the rest of the consortium’s] track record in installing and operating IRs,” the panel wrote in its assessment.
“Furthermore, as [CAI’s] investment ratio is extremely small and the level of commitment in the letter is not sufficient, it is difficult to say that CAI’s capital involvement in the IR business is sufficient.”
While the panel acknowledged that Nagasaki would appoint individuals with IR experience to management and director roles, it added, “It is not enough for IR operators to provide know-how from CAI etc. Considering that casinos must be operated and measures to eliminate harmful effects must be appropriately implemented, there is insufficient evidence to expect the IR business, including casinos, will be carried out appropriately and continuously.
“Most of the investment will come from investment companies … and profits from the casino business will be utilized. Concerns cannot be dispelled as to whether priority should be given to returning profits to investors or taking measures to return profits to the IR business and eliminate the harmful influence of casinos.”
Taking these measures into account, the panel concluded that the “Kyushu/Nagasaki Specified Complex Tourist Facility Area Development Plan” does not meet the required standards and that it is not appropriate to certify it.
Nagasaki Prefecture and Kyushu Resorts Japan submitted its area development plan to the national government in April 2022, pushing for development of an IR alongside Dutch-inspired theme park Huis Ten Bosch in Sasebo City. The plan was to open around the fall of 2027, with sales estimated to be reach JPY271.6 billion (US$1.9 billion) by the fifth year of operation.
In April 2023, the central government approved Osaka Prefecture’s area development plan, which was submitted at the same time as Nagasaki, but said it needed more time to review the Nagasaki application given a lack of clarity around funding as well as future estimates.
As reported by IAG, there have also long been questions around the selection process that led to CAI being chosen as Nagasaki’s preferred partner to develop an IR.