Osaka, a major port city and economic hub in Japan, is making significant strides in the tourism industry with the launch of the first Japanese integrated resort. The mayor, Hideyuki Yokoyama, stated that an ambitious proposal to establish Japan’s first integrated resort (IR) under the banner of MGM Osaka Integrated Resorts is already in the works. This groundbreaking project aims to draw a staggering 20 million tourists annually to the region. The highly anticipated resort’s opening is currently slated for 2029, although it seems more likely to occur in the autumn of 2030.
Full certification of the Osaka Integrated Resort
The journey towards the legalization of gambling in Japan has been a lengthy and contentious one. However, a significant milestone was reached when the Ministry of Land, Infrastructure, Transport, and Tourism approved a trial integrated resort (IR) zone in Osaka. This certification was officially issued in April 2023, designating the development plans for Yumeshima, Osaka. Subsequently, Orix Corporation and MGM Resorts collaborated in late September 2023 to commence planning for the prestigious casino resort. The actual construction is scheduled to begin in the summer of 2024.
In a statement, MGM Resorts’ CEO stated, “We are excited and passionate about this project. In collaboration with Orix, we plan to provide world-class gaming, top-tier retail experiences, gastronomy, and modern entertainment to Osaka and the rest of Japan. Our strategy is to harness MGM’s considerable industry experience to establish Japan as the future of resort entertainment.”
Japan’s Transition to Legalized Gambling
Traditionally, Japan has not been one of the world’s countries that allow legal gambling. The accreditation of Osaka IR is the culmination of years of effort. Only in 2018 did the Japanese Diet parliament pass legislation allowing for the exclusive building of IR resorts in designated entertainment districts around Japan. This measure did not become law until mid-2021. Among the various factions competing to lead the project, MGM won the contract to build the resorts in collaboration with Japan’s Orix business. The flagship project in Osaka was expected to cost up to $2.09 billion, or 1.8 trillion Japanese yen. However, unprecedented conditions have increased the construction cost and resulted in a one-year delay, shifting the anticipated completion date from Autumn 2029 to Autumn 2030.
Responsible Gaming in Osaka: Measures and Initiatives
Although the Integrated Resort will encourage tourism, generate jobs, and boost the local economy, Osaka is equally focused on promoting responsible gaming practices. To address gambling addiction, the city is implementing a new ordinance in line with the National Law on Measures Against Gambling Addiction. You can read more about Osaka’s new gambling prevention measures at casinosnavi.com. This new ordinance will establish a counter-addiction Promotion Department in Osaka that will raise public awareness about gambling addiction.
Increased Construction Costs
The Osaka integrated resort (IR) project administrators faced a significant challenge as the initial construction cost skyrocketed by $1.29 billion, equivalent to 190 billion Japanese yen, reflecting a substantial 17.6 percent increase. This increase stemmed from ongoing negotiations and discussions regarding land-related issues on Yumeshima, the designated manmade island for the project. To cover the elevated budget, both the MGM-Orix collaboration decided to increase their share ownership from 40% to 42.5%, resulting in a 5% reduction in share value for minority investors, decreasing from 20% to 15%. According to Hirofumi Yoshimura, governor of Osaka Prefecture, one of the reasons for the project’s delay is the national government’s sluggish approval of new plans.
The amended Osaka IR agreement, influenced by increased expenses and altered share values, needed some time for the government to ratify. The agreement now includes the independent developers’ right to terminate the contract if business criteria are unmet. The document also included provisions on the project’s tax regime, land improvement, and fundraising structures. If the independent developers decide to stop their involvement in the project, they will not be required to pay any fees or damages.
Soil Remediation at the Osaka IR Site
The Osaka prefecture reported in September 2023 that the project would require an additional $174.6 million, or ¥25.7 billion, to develop land on the site and prevent soil liquefaction. The artificial island required substantial ground preparation before building could begin in the summer of 2024. The financial responsibility for these expenses will ultimately fall on taxpayers. Still, their allocation is deemed necessary to prevent potential future losses and mitigate hazards associated with constructing on soft ground, soil contamination, and subsurface impediments. The city swiftly gathered ¥78.8 billion to support the land reclamation activities. The budget reportedly included ¥41 billion to address soft ground issues on the artificial island. By late September, the city had begun convening specialists to budget and plan for project preparation.
Recap
The Osaka integrated resorts will soon become a reality based on the commitment to the ambitious project shown by its various implementers. The project has the potential for significant profits, which justifies the large investment capital. Experts predict 10 million tourists in the first year of operation, boosting consumption in Osaka by a whopping ¥1.1 trillion. Even before the casino resort’s official inauguration, Osaka is considering hosting the Expo 2025 Osaka Kansai on the artificial island, highlighting the necessity to hasten construction plans.
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