While analysts have suggested that the Japanese government will need to resolve several outstanding issues by Q2 2020, in order for Osaka to have an IR open in time for the World Expo in 2025, MGM chairman and CEO Jim Murren acknowledged that whoever wins a licence “is going to have their work cut out”.
It will be a challenge for Osaka officials to realise their goal of opening an integrated resort by 2025, unless Japan’s central government makes key appointments and finalises its regulatory framework, market analysts suggest.
In a recent report, Global Market Advisors (GMA) contended that unless the government establishes its Casino Management Commission and finalises its IR regulations by Q2 2020, it will be a tall order for Japan’s second city to have a casino resort open in time for the World Expo, which will take place over a six-month period from May 2025.
“If there is not a process in place by the second quarter 2020, it is unlikely that a full integrated resort would be open in time to meet the desires of Osaka for the World Expo in 2025,” the report stated.
“Even under the most aggressive timeline, it would have been a challenge to get an IR open on Yumeshima by 2025. This is because of the challenges that would face any structure of this magnitude being built anywhere in Japan, let alone a man-made island that may have its own challenges in construction.”
GMA noted the Japanese government is still working through a number of key steps in the run up to selecting locations, including the formation of the Casino Management Commission, which it had previously been thought would be appointed before the end of the current regular session of the Diet on 26 June.
“This part of the process has been delayed because of the upcoming elections that have been planned for the upper house of the Diet,” the report continued.
“While many reports have stated that this will delay the process up to a year, it will likely only be a small delay in the overall process to establish gaming regulations, which would create the… commission and the subsequent regulations that will need to be made.”
In the case of Japan, GMA proposed that “the full development timeline” for an IR would be likely range from between 54 to 64 months. “There are 67 months until the start of 2025. As such, licences would have to be awarded within the next 12 months to have a chance at opening a complete integrated resort that is ready to go by 2025,”
The Osaka authorities have publicly named five of the seven entities that are participating in its request-for-concept (RFC) phase that began in late April. The companies include: Genting Singapore; Las Vegas Sands; Melco Resorts and Entertainment; MGM Resorts International; and Wynn Resorts, while the two remaining firms declined to be identified.
Nevertheless, the Osaka IR promotion bureau – jointly-run by the prefectural and city governments – has confirmed that participation by casino operators in the region’s RFC stage is not compulsory for entry to the request-for-proposal (RFP) process.
Jim Murren, chairman and CEO of MGM Resorts International, recently addressed the tight timetable for building an Osaka IR to coincide with the World Expo 2025.
“Whoever wins is going to have their work cut out, because the goal is to try to get the IR open in time for the World Expo in 2025,” he said, speaking at the Strategic Decisions Conference 2019, hosted by brokerage Sanford C. Bernstein. “It requires almost surgical precision, not just by the developer, but by the government; from a permitting perspective, from an infrastructure perspective. [However] it’s certainly not impossible.”
Murren added that the despite the concerns regarding the 2025 deadline, Osaka continues to be the company’s location of choice for a Japanese IR venture.
“Osaka was the only city, the only prefecture that early on said ‘we absolutely want to host an IR bid’,” he clarified. “I’ve been all round the country for five years, and although there are great potential host locations, we decided early on to pick Osaka.”
Brokerage Morgan Stanley suggests that MGM Resorts and Las Vegas Sands are the two prime contenders for an IR licence in Osaka.
As part of its “Osaka first strategy”, MGM has teamed up with Orix, a Japanese financial services group, a move which Morgan Stanley analysts propose could give the company a slight edge when the selection process begins.
Speaking at an event on 13 May, Ed Bowers, CEO of MGM Resorts Japan, emphasised that while Orix will play a central role in the consortium, “Osaka corporations” are also expected to participate as minority partners.
Meanwhile, George Tanasijevich, president and CEO of Marina Bay Sands and MD of global development for Sands as a whole, suggested that the company is in a prime position to compete for an IR licence in Osaka.
“We’re positioned quite well. We’re the only operator that has active operation in the top three integrated resort markets in the world, and they’re all distinctively different,” Tanasijevich stated, speaking on the first day of the Japan Gaming Congress 2019.
The company was also “very interested” in locating Japanese partners for its IR bid Tanasijevich confirmed. “We’re meeting with companies, engaging their interest, understanding how is it that they might fit into our strategic plan …the contribution they might make to our understanding of the local market,” he added.