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MGM Chooses Not to Use Osaka Exit Option

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MGM Resorts has reportedly given up its option to back out of its large casino project in Osaka, Japan. The original deal had a clause allowing them to withdraw under certain conditions.
MGM Chooses Not to Use Osaka Exit Option
Over a year after securing Japan's sole casino license, MGM Resorts International has committed fully to the project. The US gaming company has given up its right to back out of the ¥1.27tn (£6.72bn/€8bn/$8.89bn) integrated resort (IR) deal without facing penalties.
“We are in the ground as we speak,” said MGM president and CEO Bill Hornbuckle during a 31 July earnings call. “We hope to start piling by May or June of next year, with a target date still middle of 2030 for opening.”
MGM Osaka will be built on Yumeshima, a manmade island in Osaka Bay, Japan. It will feature the country's first casino, along with 2,500 hotel rooms, a convention center, a shopping mall, and other attractions. The resort is expected to generate ¥520bn in yearly revenue, with 80% coming from gaming.

Series of Japan delays started with Covid

The MGM Osaka project has faced several challenges, with the Covid-19 pandemic being the biggest. When Japan passed its IR development bill in 2018, the government offered three casino licenses across the country, with the potential for more after seven years. Industry experts saw Japan as a major gaming opportunity, with projected revenues of up to $40 billion a year. Big names like Wynn Resorts, Las Vegas Sands, and Caesars Entertainment all showed interest.
However, the pandemic slowed the process and dampened global interest. In the end, only two companies bid for the licenses—MGM in Osaka and Casinos Austria in Nagasaki. Only MGM, along with its partner Orix Corporation, received approval to move forward.

Exit option built into the contract

MGM’s original deal gave them the option to leave the Japan project by September 2026 if certain conditions were met. These include:

  • Tourism not bouncing back to pre-Covid levels
  • Unfavorable financing terms
  • The initial investment exceeding ¥1.27tn

The project has already met the investment benchmark of ¥1.27tn, higher than the earlier estimate of ¥1.08tn due to increased construction costs.

By giving up its right to back out, the operator Osaka IR KK is moving forward with the development in Osaka. Preparations for the integrated resort on 494,000 square meters of Yumeshima will start in September. Both MGM and Orix hold a 40% stake in Osaka IR KK.

Another potential delay?

The latest issue is the concurrent development of facilities for the 2025 World Expo, which will also be held on Yumeshima from April 13 to October 13, 2025.

Expo organizers are worried that MGM Osaka’s construction could disrupt the event with noise and other environmental impacts. They have requested MGM to halt construction during the six-month expo, but this could add over ¥10bn to MGM’s already rising costs.

Local media reports that Osaka Governor Hirofumi Yoshimura is trying to negotiate a solution. Sources say he has suggested that MGM agree to a two-month pause during the Expo.

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