MGM Scrubs Right-to-Termination, Commits to $8bn Osaka Casino

MGM Resorts International signaled its commitment to building a casino in Japan by ignoring a contractual right-to-termination clause.

The Osaka Prefecture, one of the country’s 47 regional administrations, selected MGM as its casino resort development partner in September 2021. It then granted MGM Japan’s first casino license in April 2023, including a condition that allowed the global entertainment brand to back out of the deal. 

MGM’s recent decision to ignore the clause signals its maintained interest in developing the first casino on Japanese land.

A sign of dedication

The Japanese casino project has been coming for a long time. Officials spent years planning and obtaining approval from various entities before they selected MGM and its affiliates as their partners for the groundbreaking endeavor.

MGM and Japanese financial services company Orix Corporation both hold a 42.5 percent stake in the casino project, known as MGM Osaka. The remaining 15 percent is separated between Japanese companies such as Panasonic, Kansai Electric, and West Japan Railway. 

Early estimates pinpoint the project as having a total value of $8 billion.

MGM was granted the right to remove itself from the deal due to declining tourism caused by the early days of the pandemic. It was also offered an out if it could not secure fair financing terms or it encountered unexpected issues at the construction site on Yumeshima Island, a man-made island just to the west of Osaka.

Japanese media publication Nikkei reported that MGM struck down the right-to-termination clause due to concerns raised by construction companies. According to the reports, the companies in question were hesitant due to MGM’s ability to leave the project.

A site of global development 

Construction for the casino site began at a slowed pace in December 2023. With MGM fully on board, progress is expected to increase. 

The casino is expected to be completed in six years. Construction will include the development of 2,500 hotel rooms at three different resorts, 730,000 square feet of meeting and convention space, dozens of restaurants and bars, a live theater, and a shopping mall.

Japan’s gaming law passed in 2018 limits casino floor space to three percent of the facility’s overall indoor area. Using just the meeting and convention space, that would be at least 21,900 square feet.

Yumeshima, once a landfill, is planned to be a “smart resort city” and will feature heavily when Osaka hosts the 2025 World Expo from next April-October. The “Designing Future Society for Our Lives” theme will match the development occurring at the casino site. 

Japan still does not have any operational casinos, though it has thousands of Pachinko parlors (which feature slot machines) and lottery stands.