Japan’s dreams of a casino are escalating as Osaka IR abandons its exit clause and takes a leap. With rising costs and public uncertainty, the stakes have never been higher. Will this gamble work, or are Japan’s chances of making a costly mistake on a competitive market high?
Peden Doma Bhutia
Japan is on schedule to welcome its first casino in 2030. According to reports, Osaka IR has forfeited the right to withdraw from Japan’s first casino resort within the next two-years. Osaka IR was initially allowed to withdraw from the project if Japan’s tourism did not recover at pre-pandemic levels, or if other financial and logistical hurdles were insurmountable.
This clause was extended twice by the operator, giving him more time to evaluate the feasibility of the move. The operator has chosen to abandon this safety net. Nikkei Asia reports that the operator has officially waived their right to exit.
Osaka IR was formed as a joint venture by the Japanese arm of U.S. casino operator MGM Resorts International, and Japanese financial services group Orix. MGM and Orix both own 40% of Osaka IR. 22 other investors, including Panasonic Holdings & West Japan Railway, also contributed. Nikkei reported that the operator plans to start the preparatory work this month, after the city of Osaka has handed over the planned site. The opening is projected for fall 2030.
Cost Increases and Delays
The project is not easy despite the firm commitment. The resort was originally scheduled to open in fall 2029 but has been delayed due to delays in getting central government approval. Construction costs are also on the rise. The estimated cost of the project has increased by JPY 1 trillion ($7.5 billion) and JPY 1 trillion ($8.9 million), due to inflation and supply chain disruptions. The resort will be built in Yumeshima Bay, an artificial island that will also host World Expo 2025.
A Strategic Location with High-Rise Expectations
The resort will be an entertainment hub that attracts tourists from all over the world. The complex will include hotels, a shopping mall, a museum and a ferry terminal. A helicopter pad will be available to wealthy visitors. According to the project forecasts, around 80% (JPY520 billion) of that revenue is expected to come from casino activities. The developers are betting that six million foreign tourists and fourteen million domestic visitors will visit the Osaka IR annually. This is one of the biggest tourism projects Japan has undertaken.
But there’s much more at stake than just the numbers of tourists. This project is seen by many as a key part of Japan’s post-pandemic strategy to boost the economy. With the country’s proximity to Asia’s wealthy gamblers and a domestic population of 126 million, industry analysts believe the resort has strong market potential — if executed properly.
Public Concerns & Regulatory Hurdles
The development of Japan’s very first casino was not without its critics. Many Japanese citizens still remain skeptical about the project. In 2020, a survey conducted by the Asahi Shimbun found that 64% of respondents wanted to freeze government plans for integrated resort-casino projects. The government has also introduced a JPY 6, 000 ($42) entry charge for Japanese residents and foreigners, in an effort to discourage excessive gambling. This fee will not apply to foreign tourists.
In Japan, casinos and other private gambling were illegal. However, a 2018 integrated resort law allowed casino games like poker or baccarat in officially approved establishments to be played as part of a tourist-attraction effort. While the operator is confident about its long-term potential, they enter a crowded region. Macau, Singapore and the Philippines are already flourishing with integrated resorts, and other countries, such as Thailand, are considering legalizing casino gambling to attract foreign investment.
