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MGM increases Osaka IR equity investment to US$3 billion but bullish on expected returns

Ben Blaschke by Ben Blaschke
Thu 1 May 2025 at 10:33
MGM Resorts unveils Osaka IR concept

An artist’s impression of Orix and MGM’s Osaka IR.

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MGM Resorts International revealed Thursday that it has increased its projected investment into its Japan integrated resort project in Osaka to around US$3 billion – up from US$2.5 billion – after finalizing major contracts with its partners.

But the company said it still remains bullish on the long-term prospects for MGM Osaka, with MGM Resorts CEO and President Bill Hornbuckle telling investors on Thursday that he anticipates the near US$9 billion integrated resort will generate more than US$2 billion in annual EBITDA, likely from day one. Return on investment is also tipped to be in the “high teens” percentage-wise, he added.

The comments were made during MGM’s 1Q25 earnings call and come after the company last week broke ground on the Yumeshima Island site upon which MGM Osaka is projected to open in 2030.

Chief Financial Officer Jonathan Halkyard explained that MGM’s equity commitment for MGM Osaka has now increased to JPY428 billion (US$3 billion) of which around JPY392 billion (US$2.75 billion) is yet to be paid for the company’s 42.5% ownership stake. Local partner ORIX Corp will pay a similar amount for another 42.5% stake, with the remaining 15% split between smaller conglomerate partners comprising the likes of Panasonic, Kansai Electric, and West Japan Railway.

The increased contribution is due to “updated spend estimates” during the finalization of negotiations with contractors, Halkyard said, adding “we still have a high conviction in a high-teens percentage return on this project and remain on time to open in 2030.”

Hornbuckle explained that there could still be some variability in “overall input costs” moving forward but insisted MGM had done a “good job of building in contingency into our budget for that potential.

“On the other hand, unlike other parts of the world, really before we even commence on a project like this in the coming quarters, the project will be fully designed. So, in terms of scope, we don’t expect that to be a factor at all in any changes in the cost of the project.

“Together with our partners, we’re going to be looking as we go forward for opportunities to be as cost-efficient as possible in the construction.

“[As] for our equity commitment, we’ve already hedged over half of our commitment in the forward yen markets to lock in some of these favorable exchange rates against with the dollar and the yen. So, we’re all fully hedged through the middle of 2027 in terms of our equity contributions.”

Hornbuckle also reiterated his confidence in the outlook for MGM Osaka, which he said should compare favorably with the performance of Las Vegas Sands’ Singapore icon Marina Bay Sands.

“If we use Singapore as a proxy, there are a couple of interesting stats,” he said. “[We will have] five times more population if you just think of the Kansai Basin, never mind all of Japan. We will have the same number of table games and twice the number of slots.

“Singapore just did over US$600 million (in EBITDA) in the first quarter. To think [MGM Osaka] can’t five years from now – and five years from now is 2030 – do over US$2 billion in EBITDA return, that’s why we’re excited by what the opportunity could ultimately be there.”

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Ben Blaschke

Ben Blaschke

A former sports journalist in Sydney, Australia, Ben has been Managing Editor of Inside Asian Gaming since early 2016. He played a leading role in developing and launching IAG Breakfast Briefing in April 2017 and oversees as well as being a key contributor to all of IAG’s editorial pursuits.

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