Tokyo to Explore IR Potential as Osaka’s Rising Costs Lead To Concern

Posted on: February 4, 2022, 07:10h. 

Last updated on: February 4, 2022, 10:20h.

Erik Gibbs Read More
Expertise: Asia Pacific Gaming, Gaming Business, Global Gaming.

There are still a lot of unanswered questions regarding Japan’s integrated resort (IR) industry. Tokyo is taking a step toward possible involvement, while Osaka’s exploding cost estimate is raising more flags.

Tokyo
A partial look at Tokyo’s skyline, seen above. In the future, it could add an integrated resort, with the city now beginning to seriously explore the possibility. (Image: Globe Guide)

Tokyo has always received a lot of support as an ideal candidate to host an IR in Japan. The city already receives significant international travel, and as the country’s capital, wouldn’t have much difficulty finding approval.

Although no serious discussions have resulted in a firm commitment of interest, that could change. The Tokyo Bureau of Port and Harbor will receive $87,000 to explore the city’s IR potential. The money is coming out of Tokyo’s fiscal year 2022 budget, according to GGRAsia.

Tokyo IR Idea Draws Interest

Japan’s ruling Liberal Democratic Party (LPD), aligned with the smaller but prominent Komeito party, can help direct Tokyo’s involvement. Tokyo’s governor, Yuriko Koike, also supports the idea of an IR coming to the area.

The government hasn’t indicated if it would try to add its name in the first round of IR approvals. The deadline for all projects to be considered is the end of this April. However, technically, those cities or prefectures that wanted in had to confirm their interest almost four months ago.

Still, the LDP (along with Komeito) controls the Japanese Diet, as well as Tokyo. It’s possible it could decide to bend the rules if necessary.

Alarms in Osaka Over Rising Costs

When MGM Resorts and Orix, the winners of Osaka’s IR contest, first presented their plan, the cost was going to be around $9.1 billion. It wasn’t too long before the amount jumped to $10 billion.

If the private casino partners are responsible for all of the costs and can show they have the financial stability to cover them, there wouldn’t be any issues. However, last December, Osaka revealed that it was going to have to spend $691 million for the project.

That money is only to ensure the ground under the IR is safe. Yumeshima Island, an artificial island on Osaka Bay, is the target for the resort. However, there is contamination in the soil that includes arsenic, fluorine, and other elements. There is also concern that the soil can liquefy – not a problem to have under a mammoth, $10-billion complex.

In addition, if the soil is bad under the IR, that means other areas that will see an increase in development for tourism could be bad. In a special IR meeting of the city council earlier this week, the question came up. The answer, however, wasn’t a favorable one.

Osaka Knows Issues Lie Ahead

The Osaka City Council is aware of the potential issue and is ready to spend more money as needed to correct any issues. Media outlet Nippon reports that the local government estimates it will need to spend around 78 billion yen (US$679 million) more to correct any issues.

The expense is on top of the $691 million the original plan allocated for the cleanup. This has some LDP members in the Osaka city council calling for a referendum.

If the costs are skyrocketing now, they could go even higher once the project is underway. The Innovation Party, which controls the majority of the city council in Osaka, doesn’t feel a referendum is needed. It has support from the Komeito party, as well.

However, a proposal for the referendum is coming when the council holds its regular meeting later this month. The Osaka government hopes to have its IR project ready to present to the Japanese Diet next month, at least a month before the April 28 deadline.