Image of Osaka under Creative Commons
Japan is looking to approve licenses soon for the first casino properties in the country – and MGM has wasted no time in trying to get in on the action.
The Las Vegas casino giant has already submitted plans for a giant casino development in the city of Osaka – with speculation it will be the world’s most expensive casino development at close to $9 billion.
With three licenses set to be approved soon, it would be a big surprise if the MGM plan for an integrated casino resort, in partnership with local operator Orix, didn’t make the final cut.
Not as Expensive as it Seems
MGM first cosied up with Orix, a financial services conglomerate in Japan, over two years ago, and initial estimates were they would table a plan for a $10b to $15b resort in Japan’s third-largest city. The latest estimates represent something of a digestible cost-saving for MGM, which owns MGM Grand, Luxor, Mirage, and New York-New York in Sin City, plus others. But at that size, it would still host an unbelievable variety of games, much as you would find in an online casino.
Before anything can happen, the Japanese must sanction three city licenses. It seems reasonable that Osaka, given its size, would be one, putting the MGM project in prime position. Initially, the partnership would have hoped to be open, and trading before the high-profile World Fair arrives in town in 2025. But with time pressing, that looks unlikely.
Asia Gaming Brief suggests the project is more likely to be underway as late as 2028-2030.
Rival Bids for Casino Gaming
One of the most obvious competitors for the MGM/Orix plan comes from the city of Yokohama.
What makes Yokohama interesting is that there is an upcoming mayoral election. The present mayor, Fumiko Hayashi, has confirmed she is in favour of moving ahead with a casino project. But it is feared that if she loses, the next officeholder may knock the whole thing on the head.
That would put an early end to the hopes of Genting Singapore and Melco Resorts, which are both working with local partners on trying to bag the Yokohama rights, should it become available.
MGM Resorts on the Up
Far from feeling the pinch for COVID-enforced closure of its casinos, MGM is in a bullish mood. The company’s share price on the New York Stock Exchange had been flatlining at around $33 for several years before COVID hit. That sparked an instant dip in February last year as properties woke up to news they would be shuttered.
However, despite ongoing closures and issues, the share price not only recovered but, by January this year, was moving ahead of the previous average, moving as high as 43.89 in late June. That shows not only the deep pockets of the casino giant, but it also proves there is widespread encouragement about life at its casino resorts getting back to normal after the pandemic. Indeed, early reports from Las Vegas show business is booming now that The Strip is back with a bang. Casinos in the UK are also reporting keen trading.
More Details About the MGM Casino Plan
It is anticipated that the city of Osaka would lease the land for an integrated resort casino rather than sell it to a bidder like MGM. Instead, the US giant would lease the land, just as it did to financial powerhouse Blackstone at the Bellagio, Las Vegas deal.
City officials in Japan say the leasing arrangements means it would have better scope to speak with other operators should any sitting casino operator run into financial difficulties. The mayor of Osaka, Ichiro Matsui, has determined that the city budget would benefit more from a leasing arrangement over perhaps as much as 30 years than it would from selling a huge chunk of land in the Yumeshima or Osaka Bay district. A yearly leasing deal could bring in as much as $23 million annually to the city, yet a one-off sale would stand at around $554 million.
It is believed other gambling giants have dropped out of the running to secure a property in Osaka, should the city receive the Government green light. Las Vegas Sands, Wynn Resorts and Melco Resorts had been thought to be among those to have made tentative investigations. Galaxy Entertainment Group and Genting Singapore were believed to have taken things a little further, but now MGM with Orix is said to be the last man standing.
The process has already been ticking along for more than two years. MGM Resorts was first said to have been leading the race as long ago as September 2019.