MGM Japan Commits $175M for Subway Extension to Yumeshima Island

Home » MGM Japan Commits $175M for Subway Extension to Yumeshima Island

Posted on: February 18, 2022, 07:06h. 

Last updated on: February 18, 2022, 07:07h.

MGM Resorts Japan, the US-based casino company’s subsidiary spearheading the group’s integrated resort (IR) development efforts in the East Asia country, has committed to covering Osaka’s infrastructure expenses in lengthening its subway system to Yumeshima Island.

MGM Japan Yumeshima Osaka casino
Yumeshima Island is viewed from above with downtown Osaka in the background. MGM Resorts, with approval from Japan’s central government, will build a $10 billion casino resort on the largely vacant artificial land. (Image: Getty)

MGM Japan and its IR partner Orix Corporation have pledged JPY20.25 billion (US$175 million) to extend the Osaka Metro to Yumeshima, an artificial island being targeted for a $10 billion casino resort.

Osaka’s Chuo Line currently ends at the Cosmosquare Station in Nankonaka, another man-made island adjacent to Yumeshima in Osaka Bay.

Extending the line west from Cosmosquare will require roughly one mile of new underground rail. The line will be expected to primarily service workers at MGM’s casino.

Development Agreements Signed

MGM Resorts has long been a front-runner for one of Japan’s three IR developments. The country legalized commercial gambling and as many as three gaming licenses in 2018, but the country’s slow legislative and regulatory process, paired with impediments caused by COVID-19, has resulted in the bidding period only now underway.

Japan was once considered the greatest casino opportunity in the global gaming industry since Macau welcomed five new operators around the beginning of the 21st Century. But COVID and Japan dragging its feet and setting governances regarding its new forthcoming industry have led to a mass exit of potential casino suitors and host cities and prefectures.

Today, only three prefectures continue to pursue IR projects. Along with Osaka, the prefectures of Wakayama and Nagasaki are pitching the central government for one of the three concessions.

Japan’s 2018 gaming law doesn’t require the government to issue all three licenses, but the odds favor each of the three prefecture candidates receiving privileges.

Officials representing both Osaka prefecture and the city this week signed the “Basic Agreement” with the MGM/Orix consortium. The ratifying solidifies MGM Resorts and its Japanese partners to be the preferred vendor to construct, own, and operate a large-scale integrated casino resort in the city.

Japan is fielding IR proposals from prefectures and their casino IR consortiums through April 28.

Osaka Spending, Too

Along with MGM Resorts and Orix spending as much as $10 billion on the IR, Osaka officials have agreed to dedicate many financial resources to Yumeshima.

Osaka is prepared to spend as much as $1.37 billion to bring MGM Japan to reality. The prefecture has set aside the massive amount of money to address potential concerns regarding building such a large-scale building on the artificial island.

The budget will also allow Osaka to build new roads and infrastructure on the island, which is predominantly vacant. The spending will help MGM pursue its IR dreams in Osaka, but will also play a critical role in Osaka’s hosting of the 2025 World Expo.

The global fair hopes to use Yumeshima Island in part of the international event. The World Expo is typically held every five years and allows nations to “showcase their latest and best inventions and innovations across a wide range of industries.”

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