More obstructions: as MGM Resorts International prepares to start construction of the MGM in Osaka, it could experience some delays as well as more expensive construction costs, and it's attributed to the opening of the World Fair or Expo 2025.

MGM Resorts International, one of the global leaders in the casino and hospitality industry, is grappling with two significant challenges that could derail its plans for a casino hotel in Osaka, Japan's third-largest city. The company could be facing both a delayed launching date and increased construction expenses for its highly anticipated integrated resort on Yumeshima Island.

The impact of Expo 2025 on MGM's Osaka project

The crux of the issue lies in Yumeshima Island, the man-made site in Osaka Bay where MGM is building Japan's very first regulated casino and hotel. But the island is also slated to host Expo 2025, a World Fair event expected to draw millions of visitors from around the globe. This dual-purpose use of the island is proving to be a double-edged sword for MGM.

According to recent reports in Japanese media, the BIE, or the Bureau International des Expositions, the organization overseeing Expo 2025, has requested that construction on the MGM Osaka casino resort be stopped for six months. The BIE’s concerns are primarily aesthetic, fearing that ongoing construction could detract from the visual appeal of the Expo. This request poses a serious threat to the timeline of the project, which already has an estimated overall cost of $9.1 billion.

A dream deferred: MGM's journey in Japan

MGM's pursuit of a gaming license in Japan has been a long and arduous journey, marked by hopes and setbacks. Initially, there was optimism that the Osaka casino resort could be completed in time to capitalize on the influx of visitors to Expo 2025. This would have provided MGM with a significant opportunity to showcase its new venue to an international audience. However, bureaucratic complications and delays within Japan's regulatory framework shattered that dream.

MGM's Chief Executive Officer, Bill Hornbuckle, highlighted the progress of the Osaka project during the company's earnings call. "I just recently returned from Japan, and it's moving along nicely," Hornbuckle stated. He also mentioned that the company aims to start installing pylons by May or June of the following year, with a target opening date still set for mid-2030.

However, the timing of the BIE's request for a construction pause casts doubt on this timeline. If MGM Osaka is forced to halt construction for six months, the opening of the casino could be pushed back to 2031. This delay could have significant financial implications for MGM, as construction costs are likely to rise during the pause.

Potential consequences: delays and rising costs

The potential six-month halt in construction not only threatens to delay the opening of MGM Osaka but could also lead to substantial cost overruns. The exact financial impact of such a delay remains uncertain, but given the already hefty price tag of $9.1 billion, any increase in costs would be a significant burden for the company.

Moreover, a delayed opening could diminish MGM's ability to capitalize on the Expo 2025 event. The original vision of opening the resort ahead of the Expo would have allowed MGM to benefit from the event's high foot traffic and global attention. A delay to 2031 would mean missing out on this once-in-a-lifetime marketing opportunity.

A silver lining for Thailand?

While MGM struggles with potential setbacks in its Osaka project, the delay could inadvertently profit Thailand, a country rapidly advancing its own casino gaming aspirations. Thailand is working on developing its gaming regulations with the goal of having a minimum of one integrated resort operational before MGM Osaka opens its doors. If the Osaka project is delayed until 2031, Thailand's plans could gain a significant advantage, potentially diverting international attention and investment away from Japan.

Interestingly, MGM has expressed interest in participating in the bidding process for Thailand's casino projects through its MGM China unit. This move could help MGM hedge against the risks posed by the Osaka delays. If MGM can establish a presence in Thailand before its Osaka project is completed, it could potentially mitigate some of the financial and competitive impacts of the delay.