Wakayama Prefecture Assembly Kicks City Out of IR Race

There was a lot of hope pegged onto Wakayama’s chances of being one of the three Integrated Resort (IR) regions in Japan. These hopes, however, came crushing barely eight days to the April 28th deadline set by the powers that be. While it comes as a shocker to some, there have been echoes of pessimism from many who cast doubt over the ability of Wakayama to put in a serious bid to become one of the three IR centers in Japan.

From the latest developments, the doubters have sadly been proven right. After it came down to a vote in the Wakayama Prefecture Assembly, the IR measure received 18 votes in favor and 22 votes against it. The IR rejection has no doubt left a bitter taste in the mouths of all who had been pushing for the bill, led by Wakayama Governor Yoshinobu Nisaka, who called the defeat a “bitter blow.”

How Did Wakayama Find Itself in Such a Position?

So, what led to the downfall of an ambitious project that was initially meant to succeed? Some may look at it simply as a rejection of an Integrated Casino resort and nothing more. However, when you dig deep into the reasons the legislators give, you start to get an accurate picture of the happenings.

The vote against the IR can first be seen as a castigation of the governor’s economic development strategy for the resort. While the ruling Liberal Democratic party spearheaded drives to approve the casino resort, citing the need to bring up local economies, several members still opposed the move. The legislators opposed to the move, for instance, asserted that the IR venture had a sloppy fundraising plan that would not hold water.

The resort was touted to be a $3.8 billion mega plan from an initial estimate. With such a huge budget, you’d expect that there would be a comprehensive and well-laid-out structure on how to fund it. However, there was a consistent lack of information from the organizers of the IR casino that the legislators would ultimately not let slide.

Clairvest Neem Ventures, the organization which was primarily set to cover the financial obligations of the Integrated Resort, continued maintaining its silence. The initial plans were to finance the investment with 70% loans and 30% investment. Additionally, the Credit Suisse Group, which was expected to be the main financier in terms of investment, had still not committed itself in writing to be the principal investor. This move left doubts in the minds of many. The situation can best be summed up by a local assembly member, Kazumi Yoshii, who said, “The fundraising plan is vague and uncertain, so the central government won’t accept the project.”

The Covid 19 pandemic also undoubtedly left its mark on the Wakayama bid. Two firms that were previously in the Wakayama IR race before covid were eventually forced to bow out. The two firms were Groupe Lucien Barri’erre and Bloomberry resorts from the Philippines.

Caesars Finds Itself a Casualty of the Wakayama Failure

Caesars had initially announced in 2019 that it had no plans to seek a license in any Integrated Resort in Japan. However, after its $17 billion merger with Eldorado Resorts, the executives at the world-renowned gambling giant seem to have had a change of mind. It led to the Caesars partnership with Canadian firm Clairvest Neem Ventures to develop the said resort in Wakayama. However, those hopes have now come crashing with the defeat of the IR plans in Wakayama.

Two Japanese Cities Now Remain in the IR Race

With the Wakayama governor stating that the prefecture would likely give the idea another try should the opportunity come by again, it’s time to move on from Wakayama. The spotlight now firmly remains on Nagasaki and Osaka. And in Nagasaki, the fortunes of the Integrated Resort are well and truly alive, following the prefectural assembly firmly approving plans to have the IR at the Hui Ten Bosch theme park located in Sasebo. With the hurdle of the local assembly out of the way, Nagasaki will now forward the IR plan to the central government, hoping that the plans will be approved.

An estimated $3.42 billion budget is set to cover construction costs, and should the venture see the light of day; the prefectural government estimates approximately 6.73 million annual visitors. The ambitious project by the prefecture drew a partnership with Casinos Austria, the private casino partner selected by the prefecture in August 2021.

Nagasaki became the second prefecture to follow suit in the footsteps of Osaka, which had passed the Integrated resort bill. Osaka teamed up with MGM Japan together with its joint venture partner ORIX. The $14 billion vision by the partners in Osaka is now one step closer to fruition, should it be approved by the central government. The resort, which will be located in Osaka Bay, is expected to open in the year 2029. So far, it has been a much more collective pursuit of the Osaka dream as compared to the Wakayama experience. As a result, the bid has drawn endorsement from Governor Hirofumi Yoshimura and mayor Ichiro Matsui, together with the support of the municipal government assemblies.

What Next for Nagasaki and Osaka?

The wait begins for both Nagasaki and Osaka as the April 28th deadline set for submission of their proposals approaches. A committee of experts from the central government will then be tasked with examining the financial feasibility of the plans. To date, however, there is no particular deadline that has been given by the central government for the review.