Japan is one of the countries that have great potential for casinos. The country is yet unoccupied with the gambling resorts, though is making significant progress with these terms.
Japan has a lot of visitors and the offshore of the country, as well as the cities, have been the primary destination for the casino operators. Japan has recently unrestricted licenses for the casinos in the country. This has boosted the interest of the casino operators willing to occupy spots for the casinos in Japan.
Several major casino operators have already bid for the license. MGM Resorts is one of the main competitors in the gambling industry of Japan.
Initially, there have been eight casino operators bidding for the Chinese casino license in Japan. Now, as the procedure has almost been finished, the MGM Resorts look like the last one standing on the battlefield. The MGM Resorts won in a bid in Osaka, Japan. This happened soon after, the Genting Singapore dropped out of the game.
The governement still needs to solve some issues regarding the casino license and completely legalizing the casinos in several cities in Japan. Though, the chance of the validation is really high, due to the fact that Osaka will host the 2025 Wolrd Expo. This also means that the MGM could be the potential early winner.
Japan will issue three licenses for the casino operators. Those will be in Osaka, Tokyo, and Yokohoma. The licenses will be issued under the newly implemented resorts law. As mentioned before there were eight competitors on the Japanese casino industry floor. The narrowing process began very quickly and several of the competitors were disqualified swiftly.
The initial competitors were Las Vegas Sands, Melco Resorts and Entertainment, Ceasars Entertainment, Eldorado Resorts, Genting, MGM Resorts, and Galaxy Entertainment. The last three competitors were Genting, MGM and Galaxy Entertainment.
Genting Entertainment dropped due to the inconvenience among the shareholders. In the end, they commented that they were very sorry to be quitting the bidding process, but they had after the common decision and due to the Osaka IR project going forward.
On this ground, MGM is the potential winner, as according to the inside information, the MGM Resorts is the partner of the Japanese financial services Orix. They have already submitted the request for the concept to authorities. Despite Genting has dropped out of the Osaka casino license bidding process, both casino operators, the Genting and the MGM Resorts will continue bidding for the Yokohama casino license.
The high cost
Yokohoma is the second most populated city in Japan. Thus, it is no surprise that all the left players have focused on this city. Melco Resorts has adopted the “Yokohama First” policy due to its proximity to Tokyo. An additional reason is that Yokohama is the primary day trip destination.
Casino operators have suggested a $10 billion price tag has become the starting point for the construction of an integrated resort, which includes casino gambling as well as shopping and non-gambling related forms of entertainment. Some have said as much as $15 billion may be necessary.
But Las Vegas Sands sounds like it’s beginning to balk at the escalating costs. Recently its COO questioned whether shareholders could earn an appropriate return on the investment and said the board of directors will ultimately make a decision on whether to move forward for a market that’s been valued at $20 billion.
The planned site for the Osaka integrated resort is an artificial island off the coast of the city called Yumeshima. Currently, an industrial port accessible by a bridge is being upgraded with a subway system and it is also the site of the 2025 World Expo.
While that could delay the ability of MGM to build its resort, having the infrastructure in place will ultimately be beneficial.
Both Sands and Wynn have seen their casinos in the Cotai section of Macau disrupted because of construction that deterred visitors from accessing their resorts. Now that the debris has been largely cleared, they’re realizing more of the benefit from their sites.
Whether Osaka is a winner remains to be seen, but there is a lot to like about the city, and MGM Resorts could be ready to hit the ground running if it’s approved.