MGM in Favourable Position to Commence IR Japan Project

MGM Resorts has officially become the strongest candidate for opening an initial Integrated Resort (IR) In Japan. The position of the operator has been ameliorated this past month when Wynn Resorts unveiled the decision to give up the idea of the Osaka license.

Osaka is expected to become an initial Japanese city to issue a license in the state. As already known, other Integrated Resort contenders including Las Vegas Sands, Melco Resorts & Entertainment and Caesars Entertainment have dropped the idea of opening the first casino project in Osaka. All these point out that MGM has realistic chances to receive an approval from Japanese authorities.

After the award of licenses, Japan will have three new operators possibly located in Tokyo, Yokohama, and Osaka. However, Osaka is expected to receive the green light in the first place as the city is the host of World Expo 2025. There are only three candidates left for the IR project and they are MGM, Galaxy Entertainment and Genting Group.

IR Costs

According to the words of potential candidates, each of them is ready to spend about $10 billion on Japanese resort. Las Vegas Sands president, Robert Goldstein earlier mentioned:

"I think $10 billion is the starting point. And I don't think anybody's going to do [it] for less than $10 billion unless you're going to do something subpar."

Goldstein even stated that $12 billion would be a realistic amount for the upcoming project. However, Fitch Ratings consider that IR winner would need about $15 billion.

Activity of Applicants

MGM is doing all possible to persuade the Japanese government in its good intentions. The operator has recently issued the "Osaka First" policy where is includes details about IR plan. Additionally, MGM has concluded a joint venture with local financial services company Orix, which will hold and manage the entire business.

At the same time, Genting and Galaxy have made additional efforts to spur the interest of the Japanese government. Genting Group has recently commenced a 3.2 billion yen debt campagne to support IR construction. Galaxy Entertainment, on the other hand, has accentuated its links to Chinese tourists which would be visiting the future complex.

According to expectations, the upcoming resort will be located in Yumeshima, an Osaka artificial resort, which is presently accessible via a bridge. However, the city should make upgrades in traffic including underground rail systems and marine terminals which would handle large cruise ships.

Commenting on the IR finalization, MGM CEO Jim Murren concluded:

“It requires almost surgical precision, not just by the developer, but by the government, from a permitting perspective, from an infrastructure perspective. It's certainly not impossible. With anywhere from $10 billion to $25 billion being generated by casino gambling in Japan, it seems like a risk worth taking, and one that appeals to MGM Resorts.“

Source:

“MGM well positioned to open the first IR in Japan“, yogonet.com, November 11, 2019.