MGM Resorts International (NYSE: MGM) could encounter significant setbacks in its ambitious Osaka casino hotel project, with the looming threat of delayed timelines and escalated costs. These challenges stem from recent Japanese media reports indicating that the Bureau International des Expositions (BIE) — the organization overseeing Expo 2025 in Osaka — is seeking a six-month halt to construction on the integrated resort (IR).
The MGM Osaka project, which is Japan’s first regulated casino hotel, is currently being developed on Yumeshima, a man-made island in Osaka Bay. This site is also the designated location for Expo 2025, which will run from April to October next year. The BIE’s request for a construction pause is reportedly due to concerns that ongoing building activities might detract from the aesthetics of the World Fair.
Potential Delays and Rising Costs
If the corporate entity behind the project, Osaka IR KK, complies with the BIE’s request, the construction halt is likely to push back the opening of MGM Osaka. This delay could extend the project’s timeline, potentially moving the opening date into 2031 — a year later than the previously targeted mid-2030.
Additionally, this construction pause could lead to significant cost increases for the MGM Osaka development, which already carries a hefty price tag of $9.1 billion. While the exact financial impact of the delay is yet to be determined, such a halt in progress could inflate expenses related to labor, materials, and other construction-related activities.
Impact on Expo 2025 and MGM’s Strategic Plans
MGM initially hoped to have the Osaka venue operational before the start of Expo 2025, allowing the company to capitalize on the influx of visitors expected for the event. However, bureaucratic delays and complications in Japan’s gaming regulatory process have already dashed those hopes, and the potential construction pause further complicates MGM’s plans.
MGM Resorts CEO Bill Hornbuckle, speaking on the company’s second-quarter earnings call last week, highlighted the ongoing progress of the Osaka project. “I just recently returned from Japan and that it’s moving along nicely,” Hornbuckle noted. “We are in the ground as we speak and we hope to start pylons by May or June of next year with a target date still of middle of 2030 for opening.” These comments came before reports emerged of the BIE’s proposed construction halt.
Thailand’s Casino Aspirations Could Gain Momentum
The possible delay in the MGM Osaka project could inadvertently benefit Thailand’s burgeoning casino gaming industry. Thailand is swiftly advancing its gaming regulations with the goal of launching its first integrated resort before MGM Osaka opens its doors. Should the Osaka project be pushed back to 2031, Thailand’s gaming industry could gain a competitive edge by bringing its own IR online ahead of MGM’s Japanese venture.
MGM Resorts has indicated its intention to participate in the Thailand casino bidding process through its MGM China unit, potentially providing the company with an alternative foothold in the rapidly growing Asian gaming market.
Conclusion
As MGM Osaka faces the possibility of a significant delay and increased costs due to the BIE’s request for a construction pause, the project’s future hangs in the balance. The potential impact on MGM’s strategic plans in Asia underscores the importance of navigating these challenges carefully, with the company likely to explore alternative opportunities, such as Thailand, to mitigate risks and capitalize on emerging markets.
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