Wynn Drops out of the Osaka Resort Race
The race for a license to build an integrated casino resort in Osaka has lost one of its major contenders following Wynn Resorts Ltd. announcement on Monday. The major resort brand is still looking to expand into the Japanese market, but it will no longer be making a bid within Osaka prefecture. This leaves MGM Resorts International with a much clearer shot at their goal.
In a statement released earlier this week, Wynn revealed that it would be focusing its efforts on the Kanto region, which includes the capital city of Tokyo and the surrounding metropolitan area. Although Osaka is expected to be the first city in Japan to develop a resort, other cities, such as Yokohama with its 3.7 million population, are better suited for Wynn according to Brendan Bussmann, a partner at the casino research firm Global Market Advisors.
“Wynn offers a high-end brand with an exceptional customer experience. The site in Yokohama also offers an advantage to Wynn because it sits in an urban environment similar to what they recently opened in Boston. Osaka is much more of a mass market,”“ said Bussman.
In its statement, Wynn sent its best wishes to the city of Osaka: “Wynn Resorts is grateful for the many months of positive dialogue we have enjoyed with the City of Osaka and its citizens, and we appreciate the gracious hospitality we have received from them.”
Is Wynn Missing Out?
Osaka, which has long been considered Japan’s “second city”, has recently experienced a major boom in tourism. Although it is still not as well-known internationally as Tokyo or Kyoto, it is quickly catching up. Foreign visitors to the regional capital reached 11.1 million in 2017, which represents a five-fold increase from 2012. This surge has now made it Japan’s fastest-growing tourist destination. Many see this trend continuing with the real estate consulting firm CBRE estimating that the city could reach 26 million tourists per year by 203o.
Property development in the area has slowed down as of late, but that is only seen as a temporary dip. Why? The 1 million-square meter casino and conference center resort that Wynn Resorts Ltd. recently forfeited. It is set to be completed by 2024, and many see it as the Japanese answer to Singapore’s Resorts World Sentosa. 2.2 million visitors are expected to visit this new Osaka complex by 203o with an estimated economic impact of 760 billion yen (approx. 7 billion USD) per year.
” Tourism in Osaka is growing faster than in Tokyo, so I am certain that one day soon we will overtake Tokyo”– Hirofumi Yoshimura, Mayor, Osaka City
Who Will Pick up the Prize?
Since the race for the first three Japanese casino licenses began last year, there have been several US-based casino operators making their bid at a resort on the island nation. Hard Rock International, MGM, Wynn, Sands, Mohegan Gaming & Entertainment, Caesars Entertainment, and Rush Street Gaming along with a host of international contenders have entered the race.
This new gaming market is estimated to be worth more than $25 billion a year after the three resorts open. If this is true, then Japan is set to be the second-largest gaming market in the world behind the Chinese gaming enclave of Macao.
Osaka only has three major bidders for a resort left: Genting Malaysia Berhad company, MGM Resorts International, and Galaxy Entertainment Group Limited. Honshu officials had revealed earlier this year that seven international companies originally expressed interest in the area.
According to a statement released after the Wynn news, MGM stated their sincere commitment to opening an integrated resort in Osaka. In their words:
“We announced our ‘Osaka First’ strategy and have not wavered from that plan. We have always had confidence in our position, as what we will bring to Osaka is something only MGM Resorts can deliver.”
MGM has been firm on its commitment to Osaka since its original announcement in January. However, even with Wynn gone it is not a clear win for the company, according to Bussman.
“No one’s going to give anyone a free pass to a large site like Osaka. This is too competitive of a market for three licenses for anyone to get a pass in any prefecture,” he said.
Japan Takes a Bold Step
The Japanese Government’s decision to allow the construction of three gambling resorts on the island nation was major news for the gaming industry last year. This move, led by the prime minister Shinzō Abe, will allow the country’s first legal casinos, and continues to be a controversial subject among locals. Tokyo, Yokohama, and Nagasaki are also potential areas for these new resorts.