GGRAsia – MGM-Orix not mulling Osaka IR escape clause: execs

MGM-Orix not mulling Osaka IR escape clause: execs

Mar 17, 2022 Newsdesk Japan, Latest News, Top of the deck

The consortium for an Osaka gaming resort tilt, led by United States-based casino operator MGM Resorts International and Japan’s Orix Corp, does not have thoughts about exercising its escape clause on the venture, its representatives told a Wednesday meeting of the Osaka City Council.

Ed Bowers, chief executive of MGM Resorts Japan LLC, and Toyonori Takahashi an executive officer at Orix responsible for integrated resort (IR) business, were the consortium representatives attending the gathering.

The escape clause in the agreement between the local authorities and the consortium, allows the latter to withdraw from the Osaka IR project if market conditions are deemed unsatisfactory. It also lists conditions that must be fulfilled, to ensure the clause cannot be triggered.

The initial investment amount for the complex (pictured in an artist’s rendering) has been stated at JPY1.08 trillion (US$9.1 billion), with a target date of 2029 for opening it.

During the Wednesday session, the consortium said its forecast that the property could generate JPY520 billion in revenue per year, was realistic and achievable, according to information collated by GGRAsia’s Japan correspondent.

The presentation to city assembly members added that – regarding economic stimulus for local small and medium-sized enterprises, which the local authorities see as an important policy goal of an IR – the investors are considering creating a formal system for the resort to procure goods and services locally, and collaborate with such businesses.

Wednesday’s meeting mentioned that ground investigation work by the consortium at Yumeshima, the artificial island where the Osaka IR is to be located, had revealed the possible need for fresh work to stabilise and clean up the land prior to construction.

The likely additional cost of JPY79 billion would be paid by the Osaka authorities. Any further improvements required for the land, would be borne by the consortium.

On February 16, the governments respectively of Japan’s Osaka prefecture and Osaka city reached what they termed a ‘Basic Agreement’ with the MGM-Orix consortium on an IR.

The deadline for local governments interested in hosting a casino resort – up to three will be allowed under the liberalisation programme – is April 28.

Japan’s Prime Minister, Fumio Kishida reaffirmed on Tuesday that casino industry liberalisation is an important measure to promote inbound tourism to Japan.

The national government is however to set an expert panel to evaluate plans submitted by the prefectures respectively seeking to host such a venue, looking at issues including economic-benefit calculations, and the financial-stability outlook for such schemes.