Ed Bowers, CEO of MGM Resorts Japan, insists the company has no plans to withdraw from its bid to develop an integrated resort in Osaka—even though MGM’s consortium partner says it’s concerned about the suitability of the chosen location, a manmade landfill called Yumeshima Island.
According to Inside Asian Gaming, the basic agreement between Osaka and the MGM Resorts-Orix Corp. consortium includes a so-called “escape clause” that would allow the operator to pull out of the deal if “market conditions are deemed unsatisfactory.” Those conditions could include a depressed tourism market due to Covid-19, a lack of competitiveness due to too-strict regulations, or failure by authorities to address soil contamination concerns on the island.
At an Osaka City Council committee meeting attended by MGM and Orix earlier this month, the operators were asked if they had any intention of triggering the escape clause. Bowers replied, “We have been working on this project for years, and just simply giving up is not something we are considering. We have already invested a great deal of money and personnel, and will continue to do so.”
Orix Executive Officer Toyonori Takahashi echoed that sentiment, but added that Yumeshima “is already sinking,” and may not be suitable for a multibillion-dollar long-term investment.
“We are now conducting additional boring surveys,” Takahashi continued. “The next step is to figure out whether or not we can design a building that the island can withstand, based on the expert findings. We have no intention of giving up, but there may come a time in which it is unavoidable.”
According to the Japan Times, in 2018 Typhoon Jebi pounded Western Japan and smashed a tanker into the only bridge leading to Kansai International Airport, which, like Yumeshima, is also based on an artificial island in Osaka Bay. The storm left the island under several feet of water and flooding forced the evacuation of thousands of people by boat. Afterward, Osaka officials denied that Yumeshima could be vulnerable to the same risks.
“The island of Yumeshima is higher above sea level than Kansai airport, so there is no problem,” said then-Osaka Governor Ichiro Matsui in a tweet. “Yumeshima is nine meters above sea level, so there would be no flooding at all.” But the Kansai flooding has prompted suggestions that Yumeshima would at least need extra flood barriers if the IR project is approved. Yumeshima Island is also set to host the World Expo in 2025.
In related news, according to the Asahi Shimbun, authorities in Osaka, Wakayama and Nagasaki prefectures are working to overcome a variety of challenges in their plans to host IRs. Osaka city assembly has received about 130 casino-related petitions against the project. Some demand the plan be dropped. Others call for a referendum on whether the area should host the resort. Wakayama Prefecture and Clairvest Neem Ventures had planned to release a draft IR development plan in November, but a special committee of the prefectural assembly called for a resubmission, citing uncertainties in the fundraising plan. The Nagasaki government is preparing a draft plan to build an IR in the Huis Ten Bosch theme park in Sasebo City. But officials and Casino Austria International Japan failed to announce any lenders or investors at a meeting with prefectural assembly members on March 10.
