Japan’s exceedingly high development and operational costs, ongoing concerns over the feasibility of potential IR sites in Hokkaido and Aichi and questions over whether respected international operators can be lured back loom as serious threats to the country’s plans to run a second round of IR bidding in 2027.
However, a lack of regional development alternatives and the opportunity to observe how the local market responds to MGM’s first-mover Osaka IR could be enough to encourage a reasonable level of participation, according to an analysis by Convergence Strategy Group Co-Founder, Scott Fisher.
In a deep dive insight into Japan’s second round of IR bidding, scheduled to take place between May and November 2027, Fisher said that while evaluations suggest revenue potential is strong enough for mid- and large-scale operators to at least contemplate a bid, “development and operating costs in Japan are probably as high as they would be anywhere in Asia, which could dampen optimism that the country will actually attract two strong bids in this next round.”
The big question, Fisher added, is therefore how many companies will be willing to pursue a bid and how many applications will ultimately be submitted to the central government once the nationwide selection process gets underway.
As reported by Inside Asian Gaming, only two prefectures have publicly confirmed interest in bidding at this stage – Hokkaido and Aichi – and both have lingering questions over the exact location of any potential IR development. Both are currently conducting feasibility studies to determine as much.
On Hokkaido, where Hard Rock International looms as a likely contender to partner with the prefectural government on any bid, Fisher noted that although it remains a popular winter tourist destination, it is also well separated from any other major urban center in Japan. This, he said, limits competitive threats but also means relying on a relatively small prefectural population and dealing with seasonality in tourist visitation.
More concerning is the Tomakomai site identified for potential development prior to the first round of bidding, of which Hokkaido ultimately opted not to take part in.
“The factor that derailed things at the time was ultimately not the concept, but the location,” Fisher said. “The Tomakomai site raised environmental concerns related to protected wildlife, and there was not enough time to complete a full environmental impact assessment before applications were due.
The Hokkaido government is now conducting feasibility analyses for the upcoming application window, opening up bidding possibilities to towns throughout the prefecture. In addition to ongoing interest in Tomakomai, there is interest from the city of Kushiro for a site on Lake Akan, though that too may face environmental challenges.”
Aichi, which is evaluating the feasibility of IR development at a site adjacent to Chubu Centrair Airport in the city of Tokoname, could face feasibility concerns around transport links.
As Fisher notes, Aichi’s decision to wait during the first application window may have been prudent because the planned completion of maglev (magnetic levitation) train connectivity to Tokyo and Osaka has been delayed from an initial estimate of 2027, with operations now not expected until at least 2035 to Tokyo and 2037 to Osaka.
Although this will eventually reduce travel times to Tokyo to 40 minutes and 67 minutes to Osaka, there are various downsides.
“The airport is approximately 40 minutes south of Nagoya, which is not much of a tourist attraction in its own right, and there are no major tourist draws near the airport or obvious reasons for a tourist to want to stay proximate to it,” Fisher said.
“Additionally, the site identified for development, assuming it is the same parcel previously considered, is somewhat restrictive in shape and scale from a design standpoint, especially given likely height restrictions at an airport-adjacent site.
“Assuming the results of the feasibility study are supportive and given that much of the infrastructure is already in place, an IR could potentially be developed relatively quickly here and ultimately serve a sizable domestic and international patron base. The major downside is that the maglev is likely a key driver of feasibility, and it may not be operational for the first several years of the project’s life. A better candidate for the third application window?”
There are some positive drivers however, according to Fisher, even with MGM Osaka set to enjoy a period of monopoly operator status upon opening around 2030.
“Second movers will also have an opportunity to benefit from being able to observe Japanese gaming propensity, behavior and preferences, as demonstrated at the MGM IR, along with the implications of the nuances of Japanese gaming regulations,” he said. “That could lead to savings that might otherwise be lost to trial and error on game mix and floor layout decisions. As such, it is possible that gaming companies that did not bid in the first round may now decide to participate.
“For gaming companies looking to enter the Asian gaming market, or expand their presence in it, there is also the obvious question of what the alternatives are. Thailand appears off the table again for the foreseeable future. The Philippines is getting well saturated. Major operators have thus far stayed away from Vietnam. Foreigner-only casinos in Korea have not yielded great results yet, and there likely will not be any new opportunities in Macau anytime soon. So that leaves Japan: a potentially sizable gaming market for an operator of any scale, and certainly a place worth kicking a few tires.
“The questions now are how many applications, if any, will make it to the final nationwide selection process in 2027, and where. Another important question is which companies are going to pursue these bids, but so far that has remained relatively quiet.”
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