Few Local Governments Prepared to Take Part in Bidding for Japanese IR Licenses

Major gaming firms from around the world are lining up for the chance to win one of up to three integrated resort licenses that will be available from the Japanese government. But so far, there are few local governments in Japan that have taken steps to prepare to partner with those companies.

Japan has plenty of interest from gaming firms who want to build integrated resorts in the country, but few local governments have stepped up to partner with them so far. (Image: Tomohiro Ohsumi/Bloomberg)

While there are plenty of jurisdictions in Japan that have shown some interest in hosting casinos, many of them have run into difficulties that have stalled their plans.

Shifting Political Winds Could Endanger Proposals

For instance, the Hokkaido Prefecture has shown interest in pursuing an IR bid. But Governor Harumi Takahashi recently announced that she will not be seeking a fifth term in office next spring. That could deal a serious political blow to any effort to bring a casino to Tomakomai or other cities in the region, especially if anti-IR candidates are successful in local elections.

Several other jurisdictions have expressed interest in hosting a casino, but have yet to drum up the support or put together a real plan for making a bid. Those include some very attractive potential locations, including Tokyo, Yokohama, and Chiba.

There are exceptions, as a couple of municipalities do seem to be completely behind the idea of supporting an integrated resort.

The most notable example is Osaka, where local officials have already held talks with several major gaming operators and are looking to develop Yumeshima Island for both a casino complex and the 2025 World Expo. There’s also Wakayama Prefecture, which has received more than 30 proposals for an integrated resort from gaming companies who would like to develop a property in the southern coastal region of Japan.

Lack of Competition Could Open Doors for Unexpected Host Cities

If a wide range of major cities and tourism destinations were in the running for IR licenses, Wakayama might be the kind of location that would be seen as an afterthought, a longshot at best to host one of the maximum of three resorts that will be approved by the central government.

But with so few cities and prefectures ready to make a bid, the odds could improve for the few that do get their papers in order by the time bidding begins, a process Melco Resorts CEO Lawrence Ho has said he believes will begin in 2019.

At the moment, Osaka would seem like a clear favorite in the race for an IR bid, and even Wakayama could have a chance with so few suitable locations emerging so far. But the scariest prospect could be that the lack of interest from local governments creates a situation where Japan doesn’t even award all three available licenses – something that would come as a shock considering the amount of international interest in having a casino in the country.

Major Unknowns Remain in Bidding Process

While there has been lots of speculation over the bidding process for IR licenses in Japan, very little is known about how the central government will actually come to its final decision. For instance, the timetable is still in question: the IR Implementation Bill requires the creation of a Casino Control Commission to govern the casinos and help select the winning bidders, and the commission will need to be established by further legislation, which could take time to pass. Also unknown is whether all three licenses will be considered at the same time or whether each will receive consideration separately, which could greatly lengthen the approval process.

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