GGRAsia – MGM hopes for Osaka construction late 2023 if IR approved

MGM hopes for Osaka construction late 2023 if IR approved

May 03, 2022 Newsdesk Japan, Latest News, Top of the deck

If given the go-ahead to build a casino resort in Osaka, Japan, then MGM Resorts International would hope to see foundation work take place in late 2023, said Bill Hornbuckle, the group’s chief executive and president, during its first-quarter earnings call on Monday.

He added that MGM Resorts – which has Japan’s Orix Corp as its main partner for the tilt at Osaka – hoped to get a decision “in October this year” from Japan’s national government on whether the scheme has been approved.

Osaka’s resort complex (pictured in an artist’s rendering) would – according to previous statements – require an initial investment of JPY1.08 trillion (US$8.3 billion), with a target date of 2029 for opening it.

MGM Resorts already has a casino business in Asia, via its majority ownership of Macau resort operator MGM China Holdings Ltd.

MGM China saw its first-quarter adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) fall 45.8 percent year-on-year, amid continued restrictions on travel, linked to the Covid-19 pandemic.

The closing date for Japanese local governments to make submissions for that liberalising market was April 28. Only Osaka and Nagasaki respectively submitted bids, although the rules permit up to three resorts to be approved under the current liberalisation procedures.

MGM Resorts’ Mr Hornbuckle stated during the earnings call for the three months to March 31: “Last week, we submitted our area development plan to the government of Japan with our partners at Orix and the city of Osaka. This is the final milestone before a licence decision will be made, hopefully in October of this year.”

Asked about the timetable for building a resort, if approved, Mr Hornbuckle said, referring first to basic structural work at the intended site at Yumeshima, an artificial island in Osaka bay: “I’d hope to be doing pylons by late 2023, early 2024.”

He added that due to its scale, it was a “four-and-a-half-year project to build”.

The CEO further noted: “So this is a… late 2028 into 2029 project,” in terms of opening.

Mr Hornbuckle described MGM Resorts as “one of the long-standing survivors,’ in terms of being a suitor for a Japan casino licence.

He observed, referring to the benefit to the group of being able to work in the Japan market: “To think we have a crack in this market, at scale… will be pretty compelling for all of us.”

The group CEO also offered some commentary on the Macau market, where in March, casino gross gaming revenue (GGR) had registered the lowest monthly tally since September 2020. April GGR was worse.

He stated: “We continue to see headwinds in the short-term with public health policies impacting the ability for customers to enter Macau.”

Mr Hornbuckle added however, that MGM China’s “market share” – understood to be a reference to GGR – stood at 13 percent, which he said was “higher than we have seen historically, and our properties are well-positioned to capture premium-mass business as volumes begin to return”.

Regarding the anticipated fresh public tender for Macau casino concessions, associated with the current six licences expiring this year, Mr Hornbuckle said MGM Resorts “remain confident in the government’s judicious and fair approach to this process”.

“Macau is an important part of our future, and we will continue to work with the government to ultimately get our licence renewed,” stated the CEO.