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Bright Eyes, Big Pockets: Japan Approves MGM Resorts International Bid to Build Country’s First Integrated Resort

Japan Asia

The success of casinos in Macao and Singapore have not gone unnoticed, with Japan embarking on a six-year long effort to legalize gambling within its own borders. Now, despite local protests, MGM Resorts International’s bid to construct the first Integrated Resort on Osaka’s Yumeshima Island has crossed a major hurdle, cementing its $8.1 billion plan to open up one of the most attractive markets in the Indo-Pacific.

Inbound tourism from the Indo-Pacific has long been a driver of economic growth for Nevada, but Las Vegas companies have also come to realize the importance of bringing their signature casino businesses to the Indo-Pacific. Revenue from gambling in Macau has traditionally far outpaced revenue in Las Vegas while the success of the Marina Bay Sands in Singapore has demonstrated how an iconic destination can dramatically increase the economic output of a region’s tourism industry. Several other countries, including Japan, have been paying close attention to this trend.

Gambling in Japan continues to be a taboo subject due to its association with organized crime, addiction, and anti-social behavior. However, tourism became a key focus of Japan’s economic revitalization plan under the leadership of former prime minister Shinzo Abe, and with that came the push to legalize gambling. As a result, the Japanese Diet passed a series of contentious legislation in 2016 and 2018 which legalized gambling while imposing strict regulations on how these businesses would be allowed to operate.

Under Japan’s Integrated Resorts (IR) Act, an IR that features a casino must also have lodging space, convention space, exhibition space, and facilities related to Japanese culture and the promotion of regional tourism. The IR model comprised of these combined features has been the choice of international casino operators over the past few years as they look to broaden their market appeal, but it also reflects the need to make gambling more palatable for the Japanese public. Despite strong governmental regulations on residents, including limiting how often they may visit and the requirement of an entry fee, a national opinion poll conducted by Japanese public broadcaster NHK found opposition to the new law at 44%, with support at a meager 12%, and 34% of respondents undecided.

Nonetheless, progress has continued and in 2021, Osaka selected MGM Resorts International in partnership with Japanese financial services company ORIX to begin the bidding process for one of three operating licenses. Following a lengthy review from the local assembly and the central government, MGM’s bid became the first to receive approval on April 14, 2023.

The proposed project is estimated to cost $8.1 billion and will be located on Osaka’s Yumeshima Island, an artificial island at the mouth of the Yodo River. MGM has already committed $175 million to extending the Osaka Metro to the island, which is also the planned site for the 2025 World Expo. Current plans detail 2,500 total guest rooms, a variety of dining and beverage offerings, retail space, a spa, a fitness center, and banquet halls, all in line with its previous IR endeavors. MGM is also proposing approximately 400,000 square feet of conference facilities and approximately 330,000 square feet of exhibition space to be included in the resort. Projections for when the resort opens in 2029 estimate that it will bring in approximately 20 million visitors annually, significantly boosting current tourism numbers for the entire country.

The stakes are high for this venture to set the precedent for what tourism in Japan may look like for decades to come. Data from Asia Matters for America showed that in 2019, visitor spending from the Indo-Pacific in the tourism sector accounted for 1.26% of Nevada’s GDP, the highest of any US state, indicating strong demand for an IR operation. However, if currently unaddressed concerns from residents about the risks of gambling continue, it is highly likely to threaten the success of the endeavor. The need for Nevada companies to adapt to the locality they operate in is essential to a solid landing and unlocking one of the largest untapped markets in the Indo-Pacific.

Cecilia Winchell is a participant in the Young Professionals Program at the East-West Center in Washington. She is a recent graduate from the University of Nevada, Las Vegas with a major in Philosophy and a minor in Public Policy.