This commercial city has long been second to Tokyo. Now, with Japan weighing whether to approve casino projects that could cost some $10 billion to build, Osaka is wagering it can be No. 1 in gambling and entertainment.
The city’s hopes center on Yumeshima, or “dream island,” a man-made patch in Osaka Bay where it says about 170 acres lie waiting for a casino-centered resort.
“Osaka is geographically advantageous because it’s only one hour away from popular tourism destinations like Nara and Kyoto,” said Osaka Gov. Ichiro Matsui in an interview. “We also have a lot of unused land. We plan to make Yumeshima into Osaka’s base for entertainment.”
Japan’s turn to casinos, many years in the making, has become less of a sure bet in an era when gambling meccas have multiplied around the world. In the U.S., states once saw casinos as a path to riches, but with the market getting more crowded, some traditional casino states such as New Jersey have taken a big hit.
East Asia, while not nearly as crowded, already has two major gambling destinations—the Chinese territory of Macau and Singapore—putting pressure on new entrants like Japan to differentiate themselves.
The casino business raises heated opposition in Japan, in part fed by concerns about gambling addiction. About 60% of Osaka’s citizens don’t want a casino, according to a recent survey by the Asahi newspaper and Asahi Broadcasting Corp.
Still, the government of Prime Minister Shinzo Abe is pushing ahead. Parliament last December passed a law opening a path to the legalization of casinos, and further legislation, expected by this year or early 2018, will give the final go sign if passed.
Global casino chiefs say they are ready to spend $10 billion or more to set up shop in Japan. Some operators, including Melco Crown Entertainment Ltd. and MGM Resorts International , have released conceptual drawings of the resorts they want to build on Osaka’s “dream island.”
Advocates of legalization avoid the term casino in favor of “integrated resort.” While Japanese may envision a “smoky” place “from the 1950s with a lot of crime,” in the words of Wynn Resorts Ltd. executive Ian Coughlan, he and others say the integrated resorts would also feature hotels, restaurants, shopping and theaters.
Analysts expect Japan to start with two to three casinos—perhaps modeled after Singapore, which has one casino-centered resort focusing on business conventions and a second one aimed at family vacations. Mr. Matsui says he thinks the first casino in Osaka can open by 2023.
Osaka is the only big city in Japan with real estate set aside for a casino. The island created by landfill is set to grow to about 960 acres, and eventually could hold multiple resorts, said Global Market Advisors, a Las Vegas-based gaming industry consultant, in a report.
It added that Osaka could generate more than $10 billion a year in gambling revenue someday, compared with $5 billion by Singapore’s two casinos.
If so, visitors from South Korea, Taiwan, Southeast Asia and above all mainland China will be the ones to make it happen. Already, Osaka is teeming with Asian visitors. Nearby Kansai International Airport has become the nation’s biggest hub for budget carriers, and about 90% of foreign visitors passing through it are from Asia.
Industry executives say any casino in Japan would likely have an international operator, with American companies such as Wynn Resorts and Las Vegas Sands Corp. top contenders.
Osaka has been a trading hub for more than 1,000 years, and for much of that time outshone the region around what is now called Tokyo. Today, most major corporations are based in Tokyo, and Osaka is reorienting itself.
Development is speeding up in the center of the city as well. The north side of Osaka Station—the city’s biggest transit center—is getting a multibillion-dollar makeover, and a nearly 1,000-foot skyscraper, Japan’s tallest building excluding broadcast towers, opened in 2014.
The city already has one big entertainment attraction, the Universal Studios Japan theme park that opened in 2001. Now owned by Comcast Corp. , it brought in 15 million visitors in the year ended in March, and it is just a 10-minute car ride from Yumeshima, the proposed casino island.
“As an [integrated resort] operator that focuses on entertainment, attractions, culture and arts, I think there’s no better region for us than Osaka,” said Melco Crown’s chief executive, Lawrence Ho, in February.
Tokyo and nearby Yokohama have expressed interest in casinos but say they are waiting on more details before formally pursuing the idea.
