Japanese IR’s 2025 target may get complicated

Regulations and restrictions may complicate Japanese IR’s opening in Osaka before 2025, as the government target.

Japan.- The Osaka government announced it wants to open a casino resort before 2025. However, the Japanese IR plan may get complicated as regulations and restrictions, especially related to financing, may delay the process.

As Japan continues to discuss the segment’s regulation, several concerns continue to surge and delay the process. The venues’ size, casino floor spaces’ limits, and the number of hotel rooms continue to trouble the authorities.

Furthermore, the tax rate of 30% to Japanese IRs may eat into the venue’s bottom line. That way, securing financing from banks or financial institutions may not be possible.

“Due to the huge disconnect between what the Japanese government will write into legislation and what the Japan megabanks are saying they require in order to underwrite a project financing loan, there will be difficulty in obtaining traditional integrated resort mortgage loan financing from local lenders,” Delta State Holdings Managing Partner David Bonnet said. “It creates a huge opportunity for global investment banks to raise senior bonds on a global level. There are significant opportunities for a number of investment groups. However, the structure needs to be different from what we are discussing today.”

“Osaka will not open its Japanese IR before the World Expo. It is impossible to open before 2025,” Praveen Choudhary of Morgan Stanley forecasted. “The reason is not that Osaka isn’t doing everything it can. There are several regulatory processes that need to be signed before they can even start. Therefore, time is very much against them.”