MGM Willing to Build $10 Billion Japanese Casino

Japan is still a country with strict gambling laws and no land-based casinos. But MGM Resorts International is willing to spend nearly $10 billion if this situation changes.

MGM Chief Executive Jim Murren said that his company would invest between 500 billion yen ($4.8m) and one trillion yen ($9.5m) on a Japanese casino resort.

Murren called the potential project an “integrated resort,” which would combine casinos with hotels, shopping and conference space in Osaka, Tokyo, or Yokohama.

Reuters reports that multiple blue-chip companies would help MGM invest in such a project, given that the Japanese gaming market is worth up to $40 billion annually.

“We think there would be a tremendous amount of demand, and ultimately a public listing of these types of Japanese resorts would be very appealing,” says Murren.

But MGM isn’t the only company that wants to be the first with a Japanese casino resort. The Las Vegas Sands Corp stated in 2014 that they’d invest up to $10 billion on building a resort in Japan.

Before the country decides on which company to license, they need to legalize gambling. Based on a shift in Japanese parliament, this could come as soon as next year.

If they legalize gambling, it could also mean smaller regional casinos throughout the Land of the Rising Sun.

These regional casinos would likely cost between 100 billion and 300 billion yen, Murren stated. However, his company is only interested in building a major casino near a big metropolitan area.

Possible sites for regional casinos include the islands of Hokkaido (north) and Kyushu (south).

Murren told Rueters that he envisions a Real Estate Investment Trust (REIT), where an MGM-controlled company responsible for investment and expenses would pay rent to a property business owned by private investors and domestic and foreign companies.

“That could be an interesting way to expand the level of involvement, as there are many investors who are risk averse and looking for yield and others who are more risk tolerant,” said Murren.

Assuming Japan legalizes gambling soon, Murren believes that a major casino could be built in Osaka, Tokyo, or Yokohoma between 2022 and 2023.

In April, MGM launched a publicly traded REIT that consists of 10 of its US properties. This REIT could play a role in any potential Japanese casino too.