On December 27, Nagasaki Prefecture learned that Japan’s central government had officially nixed its integrated resort (IR) development plan due to concerns about planned financing and potential investors.
As reported by the Japan News, the prefectural government proposed an IR with a casino adjacent to Huis Ten Bosch, a Dutch-themed resort in Sasebo City, with an initial investment of JPY438.3 billion (more than US$3 billion).
Of that, 60 percent was to be covered by bank loans. Concerns were heightened after the March 2023 collapse of Swiss financial giant Credit Suisse, which had been involved in the project fundraising.
The Ministry of Land, Infrastructure, Transport and Tourism confirmed that tourism and economic experts pointed to the lack of “objective materials supporting the certainty of financing” for the IR.
The panel of experts released a report stating, “We cannot eliminate the concern that the parties scheduled to invest/finance may continue to change in the future.”
Panelists were also skeptical about the investors’ operational ability, noting that only Casinos Austria International (CAI), which led the Kyushu Resorts Japan consortium, had experience in the industry, and CAI was expected to play a minor role in the project.
“Although CAI has a track record and know-how in developing and operating casino facilities, we cannot fully confirm (the rest of the consortium’s) track record in installing and operating IRs,” the panel wrote.
“Furthermore, as (CAI’s) investment ratio is extremely small and the level of commitment is not sufficient, it is difficult to say that CAI’s capital involvement in the IR business is sufficient.
The report continued, “Casinos must be operated and measures to eliminate harmful effects must be appropriately implemented … (T)here is insufficient evidence to expect the IR business, including casinos, will be carried out appropriately and continuously.
“Most of the investment will come from investment companies … and profits from the casino business will be utilized. Concerns cannot be dispelled as to whether priority should be given to returning profits to investors or taking measures to return profits to the IR business and eliminate the harmful influence of casinos.”
The Nagasaki government and Kyushu Resorts filed its proposal to the central government in April 2022. It is planned to open in the third quarter of 2027, and projected sales of JPY271.6 billion (US$1.9 billion) by the fifth full year of operation.
IR complexes with gaming were approved by the Japanese parliament in December 2016, during the administration of Prime Minister Shinzo Abe, a strong proponent of casinos as a way to boost tourism. Covid-19 put a halt to the planning, and global interest in the nascent market withered, though analysts once predicted a Japan casino market could be as important as Macau.
Though three licenses are available, last year MGM Resorts CEO Bill Hornbuckle said, “We’ll probably be the only casino for a very long time in Japan. I’m extremely excited about the potential of this, and the kicker is (Osaka) is closer to Shanghai, Beijing and the northern China cities than Macau.” MGM and Orix will each own 42.5 percent of the property, leaving 15 percent for a group of smaller investors.
The IR will be built on Yumeshima Island in Osaka Bay. Land remediation will be complete in the spring of 2025, after which construction will begin.
Once complete, the complex will have three hotels with a total of 2,500 rooms; 730,000 square feet of meeting and convention space; and other tourist attractions.
