Yokohama’s new mayor bails the city out of the integrated resorts project

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fter the Yokohama mayoral election on Sunday, which results will see Takeharu Yamanaka take office as mayor on August 30, the possibilities of building casino resorts in the city have decreased. 

The project involved a government-granted license which would go to up to three cities, enabling them to host integrated resorts. These combine hotels, casinos, entertainment complexes and conference centers. The city’s elected mayor, Yamanaka, who was backed by opposition parties, campaigned on an anti-casino platform. 

On Monday, Yamanaka told news outlets that he intends to make a declaration “at an early stage” that the city of Yokohama, next to Tokyo, will not apply to join the bidding process to host a casino, as reported by Asia Nikkei. 

As part of its bid, Yokohama solicited business proposals from industry players. Two consortiums, one led by Genting Singapore and the other reportedly by Hong Kong-based Melco Resorts & Entertainment, have submitted plans to the city. Although authorities were planning to select a candidate for the project, Yamanaka announced the suspension of the process. 

With Yokohama’s withdrawal, there are three interested cities which are bidding for the same number of licenses. Osaka, the country’s third most populous city after Tokyo and Yokohama, is now the only large city that remains a contender. Wakayama and Nagasaki are the other two candidates.  

As reported by Nikkei Asia, Genting assured that they will “carefully monitor the situation,” and added that it has not received any official announcement from the city.

Takashi Kiso, CEO of the International Casino Institute consultancy, said the remaining cities still going for the license are “likely to be approved if they go beyond the minimum level of requirements. Some might now be happy to see Yokohama drop out, but fundamentally there should be competition to make the development sound”, reported Asia Nikkei.

Local authorities are required to select an operator and submit the name to the central government by April 2022; taking this step allows them to join the bidding process.

Kiso also spoke about the possibility that Japan could open three gambling resorts in one area of the country. “This might not benefit the government,” he said, “which was keen to make use of such resorts as main drivers of international tourism.”

Brendan Bussman, partner at Global Market Advisors, spoke about the situation in the city and said: “It seems almost impossible for Yokohama to move forward with the election of Yamanaka-san. The anti-[integrated resort] movement is fully planted into the immediate future of Yokohama, as seen with the mayor-elect’s firm stance on the issue”. 

Other analysts believe it is unlikely the government will stack three casinos next to one another. Vitaly Umansky, a Bernstein analyst, said: “With Osaka likely to get the nod from the national government, neighboring Wakayama may be a long shot, even with Yokohama potentially dropping out” Vitaly Umansky.

When Japan legalized casinos in 2018, many industry insiders felt the country had a chance of becoming the world’s second-biggest casino destination after Macao, with some parties announcing they would spend $10 billion developing an integrated resort. But the COVID-19 outbreak tarnished the outlook for facilities designed to lure huge numbers of guests.

U.S.-based casino operator Las Vegas Sands had been seeking opportunities in Yokohama but said in May 2020 it would withdraw from Japan’s bidding process. Wynn Resorts, another American player, closed its office in Yokohama several months later, while Hong Kong-based Galaxy Entertainment announced its pullout from the city three months ago.

Delays by the central government in unveiling guidelines on site selection as well as a bribery scandal involving a former pro-casino lawmaker have aggravated the situation.

MGM Resorts International, which has partnered with Japan’s Orix, is the only contender for a planned resort in Osaka. Last month the company pitched an idea to local authorities for a $9 billion casino resort, which is now scheduled to partially open in the second half of 2020s, following pandemic-related delays.

Wakayama Prefecture in June announced that the consortium of Toronto-based Clairvest Group is officially its priority candidate for the prefecture’s bid. Nagasaki Prefecture said earlier this month that it selected Austrian casino-operator Casinos Austria International Japan for a resort.

Despite the setbacks, Bussmann said: “We have seen tremendous progress over the last several years as cities like Osaka, Wakayama and Nagasaki continue to push forward with their development plans. The pandemic has not helped matters, but this still remains a strong opportunity for investment and economic growth.”