The JPY 1.27 trillion ($8.9 billion) resort celebrated the start of construction with a groundbreaking ceremony. Representatives of MGM and Orix both attended the ceremony, alongside Hirofumi Yoshimuda, the Governor of the Osaka prefecture.

Inside the $8.9 Billion MGM Osaka and Orix Project

The resort, which will be completed and opened by Q3 2030, will feature 2,500 hotel rooms, 330,000 square feet of exhibition space, 400,000 square feet of conference facilities, and a theater with 3,500 seats.

However, local media reported that construction might be scaled back because of the international Expo 2025 Osaka event, which will require heavy machinery until 13 October.

Regardless, construction is expected to end in the fall of 2030. It will contribute to Japan’s tourism industry and be a unique project in the Kansai region and wider Japan.

Plans to launch the facility were initially reported in September 2023, when MGM opted not to withdraw from the Japanese casino sector. At the time, Rhino Entertainment’s Country Manager for Japan, Maya Yazaki, said there was growing sentiment in favor of regulating online gambling.

She added that the brand would be essential to success in the Japanese market, giving it an edge over Thailand, one of the market’s main competitors. 

Later that same month, plans for building MGM Osaka were finalized in partnership with Orix Corp. MGM and Orix have both stressed a desire to contribute to the sustainable growth and development of tourism in Osaka’s economy.

MGM’s President and CEO, Bill Hornbuckle, said this was a significant moment for the company, as it closed the certification process and started focusing on executing its vision. The plan is to create Osaka’s best-in-class gaming, entertainment, dining, and retail experiences.

The State of Gambling in Japan

The creation of the resort marks a significant change for Japan, which has banned casinos and all other forms of private gambling. MGM Osaka will be the first casino property built in the country since a 2018 integrated resort law allowed the government to permit up to three IRs in the country.

This is also a big move for MGM Resorts since it was among the first casino firms to express interest in going to Japan after the country started considering gaming legislation. 

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Interviewed on Bloomberg Daybreak: Middle East, Murren said that the US-based operator was confident Osaka would be leading the line when Japan finally confirms the three IR locations.

“We believe Osaka will be the first IR location,” said Murren. “The government is very anxious to get the World Expo 2025 site in Osaka developed soon,” he said, adding that this would give Osaka the edge over the other two IR locations – none of which have been officially confirmed.

Referring to the anticipated invitation to submit interest in developing and operating an IR site in Japan, Murren confirmed that MGM would respond to a Request For Proposals should the opportunity arise. “MGM is going to be one of the bidders for the RFP,” he said.

“I am confident Osaka will be one of the three (IR sites) and I am working hard for MGM to be the IR operator in Osaka,” Murren reiterated.

“We’re meeting with Japanese companies and hope to form a Japanese consortium. We’re trying to outwork our competitors a little bit, so well see.”

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This regards the implementation of a specified integrated resort facilities area development plan for Yumeshima, Osaka, and marks the finalisation of the certification process. 

The casino and entertainment operator has long been the front runner regarding such a development, despite competition once coming in the form of Melco, Las Vegas Sands, Genting Singapore, Galaxy Entertainment Group and Wynn Resorts in gaining the green-light.

Osaka has long since stressed a need to develop a Japanese-style IR to advance tourism across the country, in addition to promoting the region to the rest of the country. 

In a 2021 review document, the prefecture identified a trifecta of overarching ambitions. These were the formation of a world-class all-in-one MICE hub, strengthening its ability to attract visitors from home and abroad and forming a gateway to sightseeing in the country.

Regarding these ambitions, MGM and Orix have stressed a desire to contribute to the sustainable growth and development of tourism and the economy Osaka, the wider Kansai region and the country as a whole.

Earlier in the year, officials approved a plan to build the country’s first casino, the gross floor area of which is limited to three per cent or less, with the ¥1.8tn ($13.5bn) resort in the western city of Osaka thought to have targeted an official opening in 2029.

“This is a significant moment for our company as we officially close the certification process and begin to focus on executing our vision, in partnership with Orix, to build a world-class integrated resort in Osaka,” said Bill Hornbuckle, President and CEO of MGM.

“We remain passionately committed to this project and look forward to bringing Japan and Osaka best-in-class gaming, entertainment, dining and retail experiences. 

“Our vision is to bring MGM’s ‘wow’ DNA from Las Vegas to Osaka and build a resort that will be a source of great pride in the community.”

Japan had previously banned casinos and other forms of private gambling, but the resort will be the first casino property built since a 2018 integrated resort law that permits the government to green-light up to three IRs nationwide.

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Marking “an important step” in MGM‘s long-term bid to develop one of Japan’s first integrated resorts, details of the proposed approximately $10bn development have also been unveiled. 

The proposal showcases a vision to bring a “world-class resort experience” to Osaka, with a view to transforming the region into one of the world’s top entertainment and hospitality destinations. Set to be located along the water on Osaka’s Yumeshima island, the project is designed to “help establish Japan as a top global tourist destination”.

“It is an honour to be selected as Osaka’s partner in developing an integrated resort,” commented Bill Hornbuckle, MGM Resorts CEO & president.

“I commend the city for undertaking a comprehensive and thoughtful process to meet its goal of developing a world-class integrated resort in Osaka. 

“We will work closely with prefectural/city municipal governments to deliver an iconic, uniquely Japanese destination warranting Osaka’s selection as home to one of Japan’s first integrated resorts.”

Osaka’s selection of MGM-Orix is one of several steps in the licencing process following the 2018 passage of Japan’s Integrated Resort Implementation Act. 

The next step is for MGM, together with Osaka and Orix, to submit an area development plan to Japan’s central government during the application period between October 2021 and April 2022. 

“Nowhere in the future of tourism and hospitality is more exciting than Japan, and Osaka is the perfect location for that future to begin,” added Hornbuckle.

“We couldn’t be more excited for the opportunity to help enhance and grow Osaka’s reputation as a world-class destination and gateway for the world to the wonders and rich history of Japan.”

Integrated resort licences are expected to be issued by the central government in 2022. If selected to receive a licence, MGM anticipates an opening date in the second half of the 2020s for its Osaka project.

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With the aim of opening in 2028, MGM hopes the investment will see the company secure the license, despite being the only candidate in Osaka’s IR race – with Genting Singapore, Galaxy Entertainment, Las Vegas Sands, Melco Resorts & Entertainment and Wynn Resorts all previously pulling out.

MGM’s president of global gaming development, Brian Sandoval, said: “Osaka is an incredible city that is passionate about business, food, and having fun. MGM and our Japanese partners intend to deliver a Kansai-focused IR that will wow visitors from far and wide. 

“We expect that the IR will attract both international visitors, as well as people living in the Kansai region and Japanese tourists from other parts of Japan. Regional IRs in the United States, including MGM’s properties in Detroit and Maryland, receive millions upon millions of visitors every year.”

Submitting its formal proposal on July 20, the group plans to spend $182m on extending Osaka’s subway to the location of the casino in Yumeshima.

Sandoval added: “We want to provide guests with a new IR destination experience that is uniquely Japanese. Japan is advanced in technology innovation. It is also known as the best in class in terms of hospitality, rich in arts, culture and food. We respect the spirit of “Omotenashi” and Japanese vibrant traditions. We have already learned so much from Japan that we have been able to export to other markets in which we operate,” 

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The investment management firm, which owns a 7.5 per cent stake in MGM, is urging a sale of the aforementioned percentage as it says that it would be in the “best interest to introduce a leading Chinese consumer internet or travel and leisure company” as a strategic shareholder.

The long-term market potential for the gaming industry in Japan is likely very significant, says Snow Lake, adding that, from the examples of the Venetian in Macau and Marina Bay Sands in Singapore, “the first integrated resort to open in a large, untapped market enjoys significant first-mover advantages in terms of occupying consumer mind share and establishing brand power”.

MGM has long since been an admirer of gaming developments within the country; forming a consortium with Orix Corporation in March 2019 to bid for the Osaka project. Subsequently becoming the only accepted bidder in February 2020.

Estimations suggest that the IR’s total projected cost will be around US$12bn, which will be equally financed by equity and debt. Orix and MGM will each take 40 per cent equity stake, while a consortium of local companies will take up the remaining 20 per cent. 

Furthermore, it is also said that three large Japanese banks have also agreed to the project financing, with MGM’s 40 per cent per cent participation noted as a key precondition.

The project’s total gross floor area will be 1.3 million square meters, with four hotel towers totaling 3600 rooms, and a three per cent area for gaming. With a 5-year construction period, its opening date should be around 2027 to 2028.

According to the projections listed above, the company would need to invest $2.4bn, with Snow Lake suggesting that a 20 per cent MGM China would generate $1.3bn at its current stock price. 

Snow Lake asserts that “the Japanese government has always favoured the top US operators,” placing MGM in prime position following the withdrawals of Las Vegas Sands and Wynn Resorts.

The investment firm also suggests that MGM’s commitment to the project is the crucial facet which could determine the development’s overall success, as well as saying that the group’s inclusion could possibly be key “to the success of the development of the whole Japanese gaming industry”.

In a lengthy communication urging MGM to consider the sale of stake in its majority owned subsidiary, Snow Lake concluded: “MGM Resorts’ negotiation power will likely also be significantly enhanced, if it were to stay committed to Japan despite the negative impact on its domestic operations due to the virus. 

“It will likely gain a tremendous amount of goodwill both from central/local governments, as well as its Japanese partners. It’s possible that it can even gain an upper hand in the overall industry policy formulation.”

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With Japan’s basic policy said to have been revised several times, and uncertainty of when a final publication date will arrive still looming, under the current circumstances it is reported that the region would find it “difficult to proceed” with its request for proposal process.

The Osaka prefecture and city has now followed the lead of Yokohama in stating that it will wait to see the basic IR policy of the government, as well as assessing the COVID-19 impacts, before determining a strategy to move forward.

“Under the coronavirus situation, the process related to IR has been suspended from the time when previously the prefecture and city announced the postponement of the RFP submission deadline, on June 23,” Hirofumi Yoshimura, the governor of Japan’s Osaka prefecture, is quoted as saying.

When the process does resume, however, it will be done so alongside MGM Resorts International, who are fronting the only bid on the table, with Yoshimura stating that it has “maintained its positive, forward-looking stances” on an Osaka IR.

The Las Vegas-based casino and hospitality operator is in partnership with Japanese financial services group Orix Corp, and has consistently asserted confidence in its ‘Osaka First’ policy.

Following a series of drop-outs announced earlier this year, MGM shot into prime position to win one of three IR licenses that were expected to be granted by the national government next year.

Previous competition in the region was thought to be coming from Galaxy Entertainment Group, Genting Singapore, Las Vegas Sands, Melco Resorts and Entertainment and Wynn Resorts.

MGM has previously vowed to “develop a truly unique destination that will generate significant economic activity for the region and increase employment opportunities while delivering an attractive return for all stakeholders”.

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This comes as Melco Resorts and Entertainment last week followed the earlier lead of Las Vegas Sands to pull out of the running in the region, with the latter focusing on Tokyo and Yokohama as the former adopts a ‘Yokohama first’ policy in pursuit of a casino resort licence.

It is thought the MGM currently faces competition from Genting Singapore, a subsidiary of Genting Group, Galaxy Entertainment Group and Wynn Resorts, to secure the Osaka green-light.

Given its position as a major tourist destination, Osaka has always been thought of as a likely integrated resort destination, with Alex Bumazhny, an analysts from Fitch Ratings, telling GGRAsia: “The exit of Las Vegas Sands and Melco [Resorts] from Osaka certainly increases the probability that the MGM/Orix consortium, which was already a strong contender, wins the RFP [request-for-proposal] there.

“However, a handful of other operators that have not pulled out [of Osaka] yet, such as Genting [Group] and Wynn [Resorts Ltd], also have a decent chance.

“Our sense is that whatever ends up being built [in Osaka] will be world class, and will be the maximum investment the winning operator could make before jeopardising their return on investment thresholds. 

“None of the major public operators that are left in the race are known for under investing when looking at their recent portfolios, and all have solid financial profiles as well as development and operating experience.”

Last month LVS abandoned its previous plans of pursuing an integrated resort within Osaka, as the company has stated that its future outlook is focused on development opportunities in both Tokyo and Yokohama.

The surprising announcement came after the firm had made several concerted steps to gain a favourable position within the jurisdiction.

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The move comes as Osaka unveils plans to proceed with its request for proposal process next month, proceeding ahead of national government who are yet to publish a finalised version of its basic policy. 

Representing the first stage of Japan’s casino liberalisation, plans state that Osaka authorities would make a submission for a casino resort in January 2021 with an eye on beginning construction work later that same year.

The city is thought to be targeting a completion date before it hosts the 2025 World Expo, with the six month event commencing in May 2025 at Yumeshima in Osaka Bay, the proposed site of its IR.

Completing its request for concept stage recently, Galaxy was joined by MGM Resorts International and Genting Singapore as the three entities that stuck with the process to the end.

However, it has been asserted that any organisation, and not just the three previously named, can partake in the RFP process. This comes after Las Vegas Sands, Wynn Resorts and Melco Resorts and Entertainment all ditched plans to proceed in Osaka.

Francis Lui, Galaxy’s vice chairman, responded to the latest development with the following statement: “Galaxy Entertainment Group remains fully supportive of the Japanese government’s goals to introduce a globally renowned IR and MICE industry to Japan.

“In support of this, we have been conducting a thorough evaluation of multiple locations, and have been an active and willing partner with many cities, prefectures and government agencies, in sharing information, ideas and our experience, to assist them in thoroughly evaluating the opportunities that IR’s can create for Japan. 

“To date, we have responded to eight cities and prefectures for requests for information or requests for concepts, including most recently in Osaka and we are now preparing for Yokohama. And we look forward to continuing with this process to ensure the best possible IR will be developed for Japan.  

“We are encouraged to see news this week of the Japanese government’s timeline relating to IR certification applications which will take place in the first half of 2021, signalling the beginning of the formal bidding process for selected sites, which is scheduled to take place in 2020.   

“With extensive experience in developing world-class IRs and considerable financial strength including a strong balance sheet, Galaxy is well positioned to assist in developing a uniquely Japanese IR experience, attracting in-bound travellers from around the world and arranging for tourists to visit locations throughout the country.”

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$850m

MGM Resorts International and MGM Growth Properties have announced the completion of transactions to acquire Empire City Casino, located in Yonkers, New York.

MGM Resorts acquired the property for approximately $850m, with the company agreeing to pay an additional $50m if Empire City is awarded a license for live table games on or prior to December 31, 2022.

Following the purchase MGP secured the developed real property from MGM for in the region of $625m, and leased it back to an MGM subsidiary that is to undertake daily operations.

Jim Murren, chairman and CEO of MGM Resorts, commented: “We are pleased to welcome the 1,200 employees at Empire City Casino to the MGM Resorts family.

“Over the past three years, we have established a meaningful presence in the northeast with Borgata in Atlantic City, MGM National Harbor in Maryland, and MGM Springfield in Western Massachusetts.

“With this new addition to the MGM Resorts portfolio, we have now gained a foothold in the high-density New York City region, and we look forward to leveraging the MGM platform to maximise value in this evolving marketplace.”

2024

Japan’s Wakayama Prefecture has announced further details of its integrated resort plans, should it win one of up to three licenses that are set to be issued by the country’s central government, report Asian news outlets.

The confident region, one of only three to confirm its interest in being a host thus far alongside Osaka and Nagasaki Prefecture, has earmarked Wakayama Marina City as its preferred site.

Chosen due to its established infrastructure, its location in close proximity to the Kansai International Airport, in addition to tourist spots such as the Shirahama Hot Springs and the Koyasan World Heritage Site, was also praised.

Wakayama is reported to have set aside $1.8m in next year’s budget for related costs, including IR research and wider financial concerns, with it estimated that an additional four million visitors will be attracted per year, bringing $2.75bn as a result.

It is intended that a grand opening will commence in 2024, alongside Osaka which is widely expected to be successful in its bid to host an IR.

51

Paddy Power Betfair has announced that it has secured number one position in the “fast growing regulated online Georgian market,” via the purchase of a 51 per cent stake in Adjarabet for an initial cash consideration of £101m.

The organisation has also agreed a further stipulation, under the terms of which it expects to acquire the remaining 49 per cent after a period of three years, at a valuation equivalent to seven times of 2021 EBITDA.

In a media statement Paddy Power Betfair released further details of its latest deal: “This acquisition provides the group with exposure to two attractive, fast-growing, regulated markets.

“The online Georgian market is estimated to have grown at a CAGR of 40% from 2016 to 2018 to an estimated £180m of gross gaming revenue, with the nascent Armenian market providing a further growth opportunity.

“We believe that the combination of the market-leading brand and local operational expertise with Paddy Power Betfair’s technology, and leading sports capabilities, positions Adjarabet very well to capitalise on this opportunity.”

1

Las Vegas headquartered Caesars Entertainment has announced plans to debut its first non-gaming hotel in the United States, which is to be located in the Arizona city of Scottsdale.

Falling under the organisation’s new Caesars Republic brand, the four star property is to be developed by HCW Development and operated by Aimbridge Hospitality, with Caesars licensing its brand, in addition to advising on design elements and integrating its total rewards loyalty network.

Stated to tap “into the unique pulse of each host city,” Caesars stressed that no two Republic entity’s are to be exactly alike, with “everything from the décor to the culinary offerings inspired by local traditions and taste-makers”.

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