Posted on: August 8, 2024, 05:51h.
Last updated on: August 8, 2024, 05:51h.
MGM Resorts International (NYSE: MGM) could face two scenarios it was hoping to avoid in Osaka: a delayed opening date and higher construction costs for its planned casino hotel in Japan’s third-largest city.
As widely reported during the years through which MGM pursued a Japan gaming license with a long-standing focus on Osaka, the city is scheduled to host the World Fair, also known as Expo 2025. Japanese media reports recently surfaced that the Bureau International des Expositions (BIE), which is overseeing the event, wants construction on the gaming venue to be halted for six months.
Should Osaka IR KK — the corporate entity developing the integrated resort — oblige, the construction pause would almost certainly postpone the opening of the venue and potentially lead to increased costs for a project that already has an estimated price tag of $9.1 billion.
Expo 2025 is slated to run from April through October on Yumeshima. That’s the man-made island in Osaka Bay on which the MGM property — Japan’s first regulated casino hotel — is being built.
Another Possible Delay for MGM in Osaka
When MGM initially set out on its quest to land its Japan license, there was some optimism that the Osaka venue could be ready in advance of Expo 2025. That would’ve allowed the operator to benefit from the lengthy event, but a series of bureaucratic delays and snafus in Japan’s gaming regulatory process quashed that dream.
Now, BIE wants construction there halted and covered up on the basis that it could harm aesthetics tied to Expo 2025. That request comes at a time when there signs of progress on the integrated, which highlighted by MGM CEO Bill Hornbuckle on the company’s second-quarter earnings conference call last week.
I just recently returned from Japan and that it’s moving along nicely,” Hornbuckle told analysts. “We are in the ground as we speak and we hope to start pylons by May or June of next year with a target date still of middle of 2030 for opening.”
That call was held prior to publication of the reports indicating BIE wants a six-month pause on construction of MGM Osaka.
If MGM Osaka Is Delayed, Thailand Could Benefit
The potential cost increases associated with a construction pause at MGM Osaka aren’t yet known, but they’re likely to be significant. Additionally, if BIE gets its way and work on the gaming venue is halted for six months, that could push opening into 2031.
Such a delay could further benefit Thailand’s casino gaming aspirations. That country is rapidly advancing gaming regulations with the aim of having at least one integrated resort up and running before MGM Osaka comes online.
Currently, that goal appears within reach, but MGM can defray some of that potential risk by participating in the Thailand bidding process — something the operator said it will do via its MGM China unit.
