MGM has the better prospects of moving forward amid local financial concerns
As local governments in prefectures of Osaka, Wakayama and Nagasaki try to ride the anti-casino storm in the country, they only have until April 28 to submit final IR development plans to the central government after they are approved by their local assemblies. Opposition against casinos has grown among local residents, and problems for proposal encounter financial and social constrains.
The Osaka prefectural and municipal governments have already drafted a plan to build an IR on the artificial Yumeshima island in the city. Las February, Mayor Ichiro Matsui told a plenary session of the city assembly that the IR, “will be an engine of sustainable economic growth for Osaka and the Kansai region. We will work as one with the prefectural government to realize the plan at an early date by promoting citizens’ understanding and taking measures against gambling addiction.”
Matsui said the IR plan won a public mandate when it was part of campaign platforms in mayoral, gubernatorial and other elections won by himself and his political allies, including Osaka Governor Hirofumi Yoshimura. However, the Osaka city assembly has received about 130 casino-related petitions showing doubt on the project, with much demand for the plan be dropped. Others call for a referendum on whether the area should host the resort.
As anti-casino petitions mount, the city assembly’s secretariat has put in doubt plans to reorganize the prefectural capital of Osaka into a metropolis like Tokyo, which would need great investment, especially some 79 billion yen (US$687 million) at the request of the project consortium led by MGM Resorts International to cover in part, costs to prevent soil liquefaction at the site on Yumeshima island.
In Wakayama and Nagasaki prefectures, the prospective operators appear to be struggling to secure lenders and investors for the IR projects, as Wakayama Prefecture had plans to release a draft IR development in November, but a special committee of the prefectural assembly called for a resubmission, citing uncertainties in the fund-raising program. Since then, there was no overall picture of prospective investors and lenders presented at a meeting of the special committee in early February.
Officials from the prefectural government and Canadian investment company Clairvest Group told the committee that 70 percent of the initial investment of 470 billion yen will be financed by loans and 30 percent will be covered by investments, and while Credit Suisse Group will lead a syndicate of banks, no other financial institutions were identified.
Clairvest and U.S. casino operator Caesars Entertainment will shoulder 55 percent and 5 percent of the investment portion, respectively, but out of the 10 or so investors expected to put up the remainder, only Nishimatsu Construction Co. was named. The resort is planned at Wakayama Marina City in the prefectural capital of Wakayama.
Finally, in Nagasaki, the prefectural government is preparing a draft plan to build a casino resort in the Huis Ten Bosch theme park in the city of Sasebo. However, prefectural government officials and the Japanese arm of Casino Austria International failed to announce any lenders or investors at a meeting with prefectural assembly members on March 10. According to the plan, the project calls for 438.3 billion yen in initial investment, 60 percent of which will be covered by loans and 40 percent by investments.
Kengo Oishi, who was elected governor of Nagasaki Prefecture on Feb. 20 and took office on March 2, has maintained the IR is necessary for revitalizing the regional economy, has plans to hold public hearings, receive the prefectural assembly’s approval for the draft IR development plan, and complete other steps by the end of the month. However, some said the time frame is too short for publicizing the draft plan and having it discussed thoroughly.
Koji Araki, secretary-general of ‘Stop the Casino!’ a Nagasaki Prefecture residents’ network advocacy group, said: “Many are concerned not only about the funding capacity of the resort operator but also about the plan to build the resort in the Huis Ten Bosch, a popular destination of school excursions. “We call for ample explanations.”
