Japan’s Osaka prefecture has a favorite for a future casino complex developer as part of the integrated resort (IR) that will transform the country into one of the most important destinations in Asia for gambling.
The consortium led by MGM Resorts, in collaboration with Orix Corporation, is proposing to invest $10 billion in building an IR that will include infrastructural improvements for the prefecture as one of the prerequisites to gain entry into the bidding process and realize a project.
Partners Ready to Invest Cash to Meet Expectations
Orix Corporation has already allocated $2.4 billion in cash to be able to execute a quick investment in Osaka in a bid to expedite the arrival of an IR, which was extensively delayed by the global COVID-19 pandemic.
MGM and Orix will split ownership of the IR based on a 40-40-20 ownership scheme. They each take 40%, while the remaining 20% will be held by a portfolio of companies that are interested in investing in what could be one of the most promising gaming endeavors of the century.
The main partners are still on standby as they await official approval before they can realize their plans to begin building an IR project in the chosen area of Yumeshima. Initially, plans were to have the IR open shortly after the Expo 2025 World’s Fair is to be held, capitalizing on the latter for additional marketing and publicity.
Nevertheless, there are challenges to be factored in, as Orix executive officer Hitomaro Yano recently told investors, adjusting their expectations from the project. To ensure the safe realization of the project, the companies would need to conduct a number of ground surveys, including boring so that the project can be carried out, with safety a leading concern.
Government Officials Still Have the Final Call
Orix and MGM will collaborate with Osaka government officials to ensure that the final blueprint gets regulatory approval and can then be used in Osaka’s bid to the Japanese government. The process of electing the first site for an IR – out of three potential developments – is long and sinuous, and reflects Japan’s tight regulations.
All bids must be submitted to the government by April 28, 2022. Osaka will also have to outbid Nagasaki and Wakayama, the two other prefectures that are preparing their own calls. The decision will be left in the hands of the central government to determine whether to approve one or all of the projects.
However, not everyone is optimistic about the opening date of the entire resort. MGM Resorts CEO Bill Hornbuckle argued in the company’s August earnings call that the date put forth by MGM and Orix as 2029 doesn’t seem realistic.
Hornbuckle, though, is confident that the two main partners in the upcoming projects are in a position to deal with financial contingencies, such as having the 20% stake from assorted companies failing to come through. Should this happen, Hornbuckle is confident that Orix and MGM will be able to step up and meet the difference.