Osaka Council Votes Against IR Referendum, Bettering MGM Casino Odds in Japanese City

Time Stamp: February 11, 2022 1:04 PM

For years, Osaka has been pursuing an integrated resort (IR). But as costs continue to soar and with the host city now expecting to be on the hook for approximately $1.37 billion, much opposition is arising.

MGM Osaka casino Japan IR
A rendering of MGM Osaka, a proposed integrated resort on Osaka’s Yumeshima Island. MGM Resorts is expected to receive one of the three casino licenses in Japan later this year. (Image: MGM Resorts International)

Osaka city councilmembers who align with the Liberal Democratic Party (LDP) proposed holding a citywide ballot referendum to gauge support among the public for MGM Resorts’ nearly $10 billion IR presentation. However, the Osaka City Council rejected the motion, as members of the controlling Osaka Restoration Group and Komeito Osaka parties overruled the initiative.

A referendum would have had no legal bearing on the IR. Instead, referendums in Japan are simply mechanisms to help elected lawmakers and officials determine policy.

Osaka has long been viewed as the front-runner to land one of Japan’s three IR licenses. The central government is currently fielding casino proposals from interested prefectures/cities and their preferred gaming consortiums. The bidding period is to conclude on April 28.

Costs Ballooning

Inflation is skyrocketing in the US, and prices of goods and services are increasing in other parts of the world, too. Inflation in Japan, Reuters reported last month, is at a two-year high, and is expected to further climb in 2022.

MGM and its primary consortium partner, Orix Corp., have proposed a JPY1.08 trillion (US$9.5 billion) casino resort on Yumeshima, a man-made island in Osaka Bay.

MGM and Orix are to be equal partners, each firm responsible for 40 percent of the $9.5 billion investment. The remaining 20 percent is to come from nearly two-dozen local investors and Japanese-based companies.

The required capital doesn’t end there. Osaka officials have budgeted $691 million to assure the artificial island is structurally sound and capable of hosting such a large-scale casino resort. The city has set aside an additional $679 million to address any concerns raised during the review.

Combined, Osaka could spend $1.37 billion on the MGM-Orix IR.

Spend Money to Make Jobs

Osaka city officials in support of the IR undertaking and possible investing of more than $1.3 billion to bring the casino to realization justify the expense by way of new jobs, tax money, and overall economic activity.

MGM projects its Osaka IR would result in 15,000 new jobs. Unemployment has been historically low throughout Japan in recent years. But COVID-19 managed to alter that positive economic indicator. Japan reported its biggest loss of jobs in 46 years in 2020.

Employment rebounded in 2021. Japan’s unemployment rate is currently at a low 2.7 percent. By comparison, unemployment in the US stands at four percent.

But jobs wouldn’t be the only benefit of bringing Osaka an IR. MGM says the development would attract 20 million visitors annually to the city.

Along with gaming, MGM Osaka is to have 2,500 hotel guestrooms, an array of dining offerings, 730,000 square feet of convention and exhibition space, and a theater capable of accommodating 3,500 people.

MGM pledges to use its IR as a “gateway for wider tourism in Japan.”

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