Osaka Council Votes Against Integrated Resort Referendum

Following the passage of the Integrated Resort Implementation Act in 2018, there have been ongoing plans to establish Integrated resorts across Japan. Three locations have emerged as strong candidates for the setup. Osaka has been the frontrunner for this vision, alongside Wakayama and Nagasaki. Currently, Japan’s government is reviewing proposals from interested cities/prefectures and the gaming consortiums they have chosen to team up with for the IR venture. The bidding period will be closed on 28th April this year.

In Osaka, the United States-based MGM Resorts, in conjunction with its main partner Orix Corporation emerged as the leading investors in the proposed Integrated Resort (IR). The planned MGM IR is scheduled for construction on the artificial island Yumeshima will be awarded a license that runs for an initial 35 years. After the first 35 years elapse, there will be a possibility of renewing the license.

Recently, a referendum proposal was tabled by some members of the Osaka city council to ask the public whether the city should pursue a plan to have the integrated resort. However, most members of the city council voted against the referendum. What does this mean for the Osaka IR project? Let’s go back a little and look at how we got here:

The Reasoning Behind the Proposed Referendum and its Rejection

Osaka’s referendum proposal was submitted by the local branch of the Liberal Democratic Party (LDP). It specifically sought to gauge how much support the people of Osaka have for the planned MGM Integrated Resort referendum. But then, the proposal was shot down by members of the Osaka Restoration Association and those of the Komeito Osaka. The coalition of the duo was enough to put a spanner in the works of the proposed referendum – they commanded 58 votes out of the 83-seat council.

It’s worth noting that in Japan, referendums are simply instruments that assist elected officials and lawmakers in the policymaking processes. As such, had the referendum been okayed, it would still have had no legal implication on the Osaka IR.   

Before the vote, there was strong opposition and support on the referendum matter in equal measure. The school of thought as to why the proposal for the referendum was rejected presents two key arguments. For one, implementing a referendum is a very expensive undertaking, and secondly, as we’ve already pointed out, the referendum would have no legal bearing either way.

On the other hand, was the reasoning that deems the processes as a non-democratic move if the public is not involved. Supporters of the referendum now view the loss as denying the residents of Osaka the right to vote for something that will impact them at the end of the day. In the eyes of some, this deal looks like a few corporate execs went and sat in a board room and decided on something that will mainly benefit them without the public’s input.

So, even though it would have had no legal bearing, the referendum could have swayed the legislators’ vote as they would have likely listened to their constituents’ opinions in the long run. Depending on how you look at it, now that the referendum is out of question, a potential obstacle in the name of unfavorable public opinion, has been eliminated for the MGM-Osaka IR.

What the Future Holds for Osaka’s Integrated Resort

Now that the referendum is out of the way, the Osaka Council and the Osaka Prefecture are set to vote on the prefecture’s District Development Plan. This district development plan will include plans for the IR, to be discussed in meetings scheduled for around March. If things go to plan, Osaka is looking at a debut date of the fall or winter of 2029

The MGM-Orix consortium has proposed an initial investment in the region of a staggering $9.5 billion or JPY 1.08 trillion. The massive budget also includes a $692 million investment for soil improvement measures such as site purification and control measures for soil liquefaction.

Additionally, the proposal indicates that the two leading IR investors (MGM and Orix corporation) would have a combined stake of 80% in the Integrated resort. Each party is to take a 40% share. The remaining 20% will go to 20 Osaka firms, including the railway operators Hankyu Hanshin Holdings Limited and Kintetsu Group Holdings Company Limited. Suntory Holdings Limited and Panasonic Corp are also among the 20 Osaka companies backing the IR development.

MGM’s Osaka IR is planned to host 6,400 electronic gaming machines and 470 table games. Alongside gaming, the IR is to have a theatre with a capacity to accommodate 3,500 people, 730,000 square feet of exhibition and convention space, 2,500 hotel rooms, and a massive assortment of dining offerings.