GGRAsia – MGM Resorts places all-in bet on Osaka for Japanese casino

MGM Resorts places all-in bet on Osaka for Japanese casino

Feb 15, 2019 Newsdesk Japan, Latest News, Top of the deck

MGM Resorts International wants to build a casino resort in the Japanese prefecture of Osaka, the U.S.-based operator of casinos said on its full-year earnings call to analysts on Wednesday.

“We just recently opened up an office in Osaka. We’ve committed now to the mayor and to the governor of Osaka,” MGM Resorts chairman and chief executive James Murren told financial analysts. “MGM has adopted an Osaka-first strategy. We are focusing our considerable resources on Osaka.”

Mr Murren said the company was focusing its “energies” to help develop consortium partners and programming ahead of submitting a request for proposal from authorities to establish a property.

The confirmation of MGM Resort’s interest in Osaka supports earlier reports by GGRAsia and other media saying the United States’ entertainment and gaming giant “supported” the prefecture’s application for an “integrated resort” – the term used in some jurisdictions to describe casino resorts.

Mr Murren said on the conference call that MGM Resorts has a timeline of events it expects to unfold. “Our guess is that an operator will be selected by Osaka by early 2020. The next step for Osaka or any other jurisdiction is to go to the central government,” the CEO said.

“We think Osaka will be one of the three concessions that will likely be granted, but we know the central government has to select Osaka and its operator. That probably happens maybe 12, 18 months after Osaka itself picks its operator,” said Mr Murren. “Osaka’s goal is to have an IR opened by 2025. That’s when the World Expo is in Osaka.”

Mr Murren expects MGM Resorts to have to vie with other bidders to operate a casino resort in the industrial city that is at the heart of the second-biggest urban area in Japan.

“It will be highly competitive. But I think the cards are stacked in the favour of those who are prepared, who have been working hard, who will have the best programme, best strategy, the best understanding of the country, of the prefecture. And I like – a lot – MGM’s chances. I don’t think there’s any company in the world better positioned to win in Japan, and we intend to do that,” said the executive.

Asian casino entrepreneur Lawrence Ho Yau Lung, chairman of Melco Resorts and Entertainment Ltd, has mentioned Osaka as a front runner with Japan’s central government when it comes to hosting a casino, and an interesting target for his firm’s bid.

Osaka’s IR plan

MGM Resorts announced last month it had appointed a former governor of the U.S. state of Nevada, Brian Sandoval, as its president of global gaming development, to lead its effort to penetrate the nascent casino gaming market in Japan.

Sport would appear to be part of the MGM Resorts pitch for its Japan ambitions. In November, MGM and elite sports body Major League Baseball announced a partnership designed to promote each other’s business in the U.S. and Japan. Professional baseball is a 12-team league in Japan, where the sport is considered more popular than soccer, the sport of choice for many Asian gamblers.

Last week, Japanese newspapers reported that the Osaka authorities have a plan for a casino resort that requires a JPY930-billion (US$8.5 billion) investment in a development occupying 60 hectares of land to open in 2024.

The plan mentioned nearly 25 million visits annually, with 18.9 million visits from non-gambling customers and 5.9 million visits by gamblers. Macau managed to generate just under 36 million visits for the whole of last year.

The local government has also consistently voiced support for accommodating a casino resort on Yumeshima island (pictured), as a way to boost tourism to the region.

The Japanese national news agency Kyodo reported that hotels at the country’s casino resorts would be required to have an aggregate of 100,000 square metres (1.08 million sq feet) of hotel accommodation, and meeting space capable of catering to 6,000 people. The report says those figures outstripped anything currently offered by a Japanese leisure and conference facility.

During Wednesday’s conference call, Mr Murren said MGM Resorts was reinvesting in its present business and expected to begin to see the financial benefits in the second half of this year.

“We also remain committed to targeted growth opportunities such as sports betting and the pursuit of an integrated resort in Japan,” he said. “Importantly, we will continue to prudently allocate capital, with a focus of returning excess cash to shareholders.”

MGM Resorts is the parent of Macau casino operator MGM China Holdings Ltd. MGM China reported fourth-quarter revenue of HKD5.38 billion (US$685.1 million), up 33.2 percent from the same time a year earlier. MGM China’s adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) for the three months to December 31 rose by 9.1 percent to HKD1.41 billion, compared to nearly HKD1.29 billion a year earlier.