The tale of Osaka and the casino

Gambling Insider looks at Japan’s recent decision to give final approval to MGM and Orix’s casino resort in Osaka, how it happened, where it is and where it may be going

The Past

For a decade, Japan has seen a rising number of people within the country wish for the legalisation of gambling. Yes, it already had its famous Pachinko parlours, which have become a central part of its cultural landscape – a practice that whet the appetite for those people in Japan that wanted the gambling experience – but outside of that, Japan’s attitude towards gambling was staunch and unmoving. Then, after decades of sure-footed rejections from various governments, times started to change. Some of this can be attributed to changing opinions of gambling in general, but a significant portion is down to the unexpected impact that Covid-19 had on Asia.

When the virus began its march across the globe, ruthlessly taking lives and bringing the world to a standstill while scientists desperately tried to get it under control and develop vaccines, the gambling industry had only one refuge – the online market. As every door to every casino had to close, the online world was all that could satisfy the needs of players that wanted to alleviate the boredom of the pandemic, which meant that China’s landbased gambling hub in Macau was left on its knees.

The pandemic itself wasn’t something that Japan thought would change its mind over the idea of casino gambling; however, once places such as Singapore and Manila began to emerge in the dawn of a new world – while Macau was buried by China’s zero-Covid policy – Japan looked on as these places tore

Macau’s market domination away and saw something surprising as a result. Not only did places such as Marina Bay Sands make large sums of money, but it also contributed to the stability of the state through taxes and contributions to the areas where the buildings were based.

The Present

Japan is at a crossroads. Not enough young people are being born to sustain the economic needs required to generate enough money that will ensure the same level of taxation in the future, and a large generation of people that are currently on the cusp of retirement. Taking all of this in, Japan has had to look at itself to see what it could do to generate further income and plug the economic hole that has become more and more prominent as the years have gone by.

So, as the need for money has risen, attitudes towards gambling have changed – people have actively campaigned for gambling to be legalised in Japan, pointing at places such as Singapore and Manila as an example. Although it must be said there has also been an appetite for an integrated resort in Japan for some time. The plan in Japan was to issue three licences to gambling operators, each of which would then build casinos.

The interest in the country was heavy at first, with the likes of Las Vegas Sands, Wynn, Melco, Genting and MGM all declaring intentions to build in Osaka. But in the end, only MGM bid for the licence, with the other operators focusing on other potential locations in the country. Those locations have, thus far, failed to come to fruition, and after a long back-and-forth in Japan, Osaka has been officially unveiled as the site of the country’s first casino resort. The casino will be run by MGM and Orix – a Japanese financial services company – with both now ready to open the property’s doors in 2029.

Initially, alongside Osaka, Nagasaki and Yokohama were seriously considered; however, Yokohama’s regional election put an end to that after its previous Mayor, Fumiko Hayashi, failed to secure re-election – with many in her region against the idea. Following Hayashi’s defeat, Yokohama’s new Mayor, Takeharu Yamanaka, put the idea to rest and threw the idea out completely. Then, there’s Nagasaki, which may yet still have a casino built there, but plans for a 2027 opening have stalled – though recent news has revealed that the discussions between developers and the Japanese Government are ongoing. With its partner, Casinos Austria, it may still open within the next few years.

Ultimately, there are still two other licences on the table for those that want ones, but the significant cost of building and getting those licences in Japan has seen interest wane from the other big companies. Many will surely be looking at the performance of the Osaka location before deciding whether or not to invest further, though this strategy will risk others coming in and snapping up a licence before the doors of the MGM/Orix Osaka can open.

THE FUTURE

MGM and Orix’s investment is a risk, being the first casino in a country that has only known Pachinko as its primary form of gambling; however, choosing to wait and see if the venture is a success is also a risk for those that want more market share in Asia.

If Japan ends up becoming a major hub for international players, one that competes with the likes of Marina Bay Sands and Resorts World in Singapore, then the scramble to get a licence could drive the cost up – if there is even a licence to be had. Of course, then there is the other side of that coin, where the venture in Osaka fails and the country goes back to having Pachinko as its primary form of gambling – leaving the country in a sore state without the tax revenue that gambling can bring.

In a lot of ways, this casino resort has to work for the country of Japan, as it can aid the significant economic issues it now faces. Should the MGM/Orix Osaka prove to be a success, then the country may open up more than the initial three licences, thereby embracing gambling across the country. Sports betting, esports, iGaming, table games – all of them could become legal across Japan if Osaka succeeds. The sun may be rising on a new era for casinos in Japan, but this could just be a precursor to a sea-change that redefines the landscape of Japan’s tourism and economic outlook for decades to come.