Yokohama Pulls Out of Integrated Resort Project in Japan
Japan’s long-awaited integrated resort casino development project was dealt another blow this week as Yokohama’s anti-gambling mayor rejected plans. The city has been considering the venture for several years, as the appeal of involvement in a potential $25 billion annualized revenue stream was quite enticing. However, Yokohama’s mayor has taken a staunch anti-gambling approach since assuming office and withdrew the city’s application to be part of the project.
The city of Osaka has firmly taken the lead as the favorite city to win the Japanese integrated resort race. Should their bid be successful, the lucrative contract will see the city build an enormous casino-leisure complex to open by the year 2027. ©mkitina4/Pixabay
The four-horse race to become one of the major cities in Japan’s grand vision for an integrated resort-focused casino industry is down from four to three, following the withdrawal of Yokohama’s bid. That’s not to say that there won’t be a surprise late entry from another city in Japan, but at this late stage of the game, it looks unlikely. Yokohama was seen as a strong contender for a winning bid, but unfortunately, the local political environment has changed in a big way, and the new mayor in the city is not a supporter of the bid.
As a reminder, the integrated resort complexes in Japan will offer a multitude of services for custodians. At the very core will be an emphasis on luxury casino gambling, supporting leisure services such as restaurants, spas, hotels, and shopping malls will also fall under the same roof. Casinos are currently outlawed in Japan, so this change in direction is being seen as a huge cultural phenomenon and business opportunity.
The cities interested in becoming host locations for an integrated resort will have until the end of April 2022 to submit their proposals. Under the current roadmap, the very first integrated resorts are expected to open their doors from early 2027. Yet there have been many unforeseen roadblocks already, domestic resistance is growing and fears that the integrated resorts may lead to wider societal issues has been vehemently voiced by a few politicians. The revenue allure is large, though, considering the industry is conservatively estimated to be worth US$25 billion.
Four Becomes Three in the Integrated Resort Race
At the beginning of the integrated resort project, only four municipalities in the entire Japanese peninsula had stated their intention to become a host city for the venture – those being Yokohama, Osaka, Wakayama, and Nagasaki. The process for launching a bid has been particularly laborious, as it involved drawing up highly detailed business plans, pitching to potential casinos to invest in the project, and developing concrete revenue models.
The demographic of the applicants to be the first integrated resort host city has been shaken up dramatically following Yokohama’s dropout. According to business analysts familiar with the situation on the ground, Osaka is now a firm favorite to take the bid. Out of the three remaining applicants to be the host of the new integrated resort, Osaka is the only city. The advantages of being in a metropolitan area are clear for hitting the delivery schedules.
Osaka has already begun making astonishing progress on the commercial side of its preparations. The city has secured the backing of Las Vegas’ MGM Resorts Intl, and Japanese financiers to help establish the capital reserves required to build the mega-complex on the Yumeshima island just off the coast of the main city. The joint venture between the Japanese financial firm Onix and MGM will see the consortium front some 1 trillion yen on the implementation.
The plans already indicate this project will deliver a resort on an incredible scale; with such a large budget this fact is hardly a surprise. The casino will feature a massive hotel covering over 100,000 square meters of floor space, this will be able to hold over 2,000 rooms. There will be numerous support services at the resort, from leisure, bars, fine dining, shopping malls, and more. On top of this is of course the main attraction, which will undoubtedly be a super casino of the highest order.
Other Cities Still in Contention to Host the Resort
Wakayama is already undergoing the same processes that Osaka is undertaking, they have selected a casino partner in Clairvest Group, a Canadian-based group that will help the investors implement the practical services. The consortium in this case has already pledged some 500 billion yen and will build a hotel with 2,700 rooms.
Nagasaki is also working towards a final version of its integrated resort vision. The fundamentals of their plan will see the Casinos Austria conglomerate brought in as the initial partner to execute the proposal. This bid will see the company put forward around 460 billion yen to build an integrated resort on the south-westerly island of Kyushu.
Clearly, the race to win these lucrative contracts is heating up, and with several cities laying out extensive and detailed plans, it will be exciting to see how the selection and awarding process unfolds. As always the possibility of a late applicant into the process is always an outside chance.
