Japan Approves First Ever Casino And Resort: Here's The Public Stock That Could Benefit

The passage of legislation in 2018 created the opportunity for three Japanese cities to build casinos. The first-ever casino in Japan has been approved.

Here’s a look at the parties involved and what it means.

What Happened: For the past several years, casino company MGM Resorts International MGM has been among the companies pushing to land a highly coveted position in the Japanese casino market.

On Friday, Japan’s government officially approved a plan for a casino resort in the city of Osaka from MGM and partner ORIX, as reported by the Associated Press.

The resort will be managed by Osaka IR KK, a joint venture between MGM Resorts Japan and ORIX Corporation. MGM and ORIX will each own 40% of the resort with the remaining 20% going to various partners and investors.

The casino resort is expected to open in 2029 with plans for conference facilities, a hotel, a theater and an exhibition hall.

Japan approved the casino in the hopes to get more foreign tourists to the country. The casino will open four years after Japanese city Osaka hosts a World Expo.

“It is expected to contribute to the local economy and the economic growth of all of Japan after the Osaka-Kansai Expo and become a tourism hub for transmitting the charms of Japan,” Japanese Prime Minister Fumio Kishida said.

The new casino will be located on an artificial island, accessible by a ferry. Projections call for 20 million annual visitors and $3.9 billon in annual revenue for the casino resort.

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Why It’s Important: MGM Resorts International praised the approval Friday, a move that has been years in the making for the company, calling it one of the final steps in the licensing process.

“It is an honor to be selected by the Government of Japan to develop a tourism project of this scale,” MGM Resorts CEO Bill Hornbuckle said. “We couldn’t be more excited to get started on the development of one of Japan’s first Integrated Resorts in the great City of Osaka.”

MGM Resorts International owns a portfolio of 31 hotels and gaming destinations globally, which make up its units of Las Vegas, Regional Casinos and MGM China. The addition of the casino in Japan could help the company with its continued diversification and focus on strong resorts.

MGM Resorts International announced record-adjusted property EBITDAR in the fourth quarter and full year for its Las Vegas Resorts and Regional Operations.

Revenue was up 27% year-over-year to $2.3 billion for the Las Vegas segment in the fourth quarter. The regional segment saw revenue up 10% year-over-year to $991 million in the fourth quarter. The MGM China segment saw revenue down 44% to $175 million in the fourth quarter, hurt by COVID-19 closures and travel restrictions in Macau.

While MGM has remained in the race for a casino in Japan for years, other casino companies like Las Vegas Sands Corp. LVS and Wynn Resorts, Limited WYNN dropped out.

Additional casinos in Japan could still be considered and approved. The city of Nagasaki submitted bids before the April 2022 deadline according to Reuters. The Japanese government said it will take more time to review the approval of the Nagasaki plan per the report.

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