The race for casino resort licenses in Japan is down to two candidates after Wakayama Prefecture withdrew from the bidding process yesterday. Wakayama’s prefectural parliament rejected the development plans for the integrated casino resort (IR) in the Kansai region. The project was rejected by 22 assembly members as opposed to 18 who voted in its favor.
This led to the suspension of the development plans since Japanese IR legislation requires approval from the majority of local assembly members. The prefectural parliament had to approve the development plan by April 28 before sending it to the Japanese government for further consideration.
Yoshinobu Nisaka, Governor of Wakayama Prefecture, expressed his disappointment over the rejection. Gov. Nisaka called it a “bitter blow” to the plans for jumpstarting Wakayama’s economy. The IR was supposed to be built on an artificial island in the capital Wakayama. According to estimates, the project was expected to attract over 6.5 million tourists, with a projected economic impact of approximately ¥350 billion (US$2.7 billion) in the fiscal 2030.
The Liberal Democratic Party (LDP) was pushing for the IRs as part of the efforts to boost regional economies. Despite this, even LDP assembly members rejected the Wakayama project, referring to the fund-raising plan as “sloppy”. Wakayama Prefecture ran into issues with attracting the ¥470 billion (US$3.6 billion) required as an initial investment for the project.
The plans were for investors to supply 30% of this amount, while the remaining 70% were supposed to come from loans. The global investment and financial services company Credit Suisse Group was to take care of the loans.
The Toronto-based Clairvest Group was to supply 55% of the funds in the capacity of the resort’s main operator. The Las Vegas-based Caesars Entertainment was to provide 5%. The remainder had to come from around ten other investors but Wakayama Prefecture named only the Japanese firm Nishimatsu Construction.
Fund-Raising Plans Are Vague and Sloppy, Assembly Members Say
This Tuesday, a special committee session took place to shed some clarity on the investment progress and the measures against problem gambling, among other issues. A representative of Wakayama’s development and IR operating partner Clairvest Neem Ventures joined the discussion over the internet and attempted to explain the current investment situation.
Some members of the committee raised concerns over the fact Clairvest had not yet received a written promise from Credit Suisse on granting the loans for the planned resort. The committee members also insisted on learning the name of the specific Japanese bank that was supposed to be among the loan lenders. Committee members frowned at the lack of transparency and vagueness of the fund-raising plan. Some were skeptical that the central government would approve the project in this form.
Wakayama’s withdrawal is the latest stumbling block in Japan’s plan to boost its economy through casino gaming. The country passed legislation to allow IRs in 2018 in an effort to increase the flow of tourists and inject additional funds into prefectural economies. Yokohama Prefecture pulled out of the bid last year due to concerns about compulsive gambling and a decline in public safety.
The race is now down to two projects, in Osaka and Nagasaki. As CasinoGamesPro reported earlier this week, the Sasebo City Council in Nagasaki Prefecture already gave the thumbs up to the final draft of its IR development plan. The draft will now head to the central government for consideration.
