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Japan – Nagasaki casino project grinds to a halt over financing concerns

By - 8 January 2024

The Japanese Ministry of Land Planning, Infrastructure, Transport and Tourism has rejected the development plan for the planned integrated resort planned for Sasebo City at the Huis Ten Bosch theme park in Nagasaki, citing ‘concerns about financing and track record investors.’

The ministry highlighted the insufficient level of commitment of Nagasaki Prefecture and its partner consortium, Kyushu Resorts Japan, and expressed doubts about the ability of investors to successfully operate a hospitality infrastructure at such a large scale.

A report by the central government’s examination committee stated that the consortium had failed to present sufficient evidence that it had funding of US$3.1bn needed to build and open the IR.

It said: “There have been significant changes in the investors and lenders, some of whom have not provided objective documentation supporting the certainty of funding as required. Moreover, many of the letters are addressed to parties different from those originally intended.

“It is not possible to confirm the existence of companies with experience and expertise in the installation and operation of IR among the investors other than CAI. Regarding CAI, which possesses experience and expertise in the installation and operation of casino facilities, there is insufficient confirmation of its track record in the installation and operation of Integrated Resorts. Additionally, due to the very small investment ratio and the inadequate commitment level in the letters, it is difficult to assert the substantial involvement of CAI in the Integrated Resorts business.”

It concluded: “The committee’s opinion is that, in light of non-compliance with the requirements, it is suitable not to certify the plan in accordance with the basic policy.”

Nagasaki Prefecture and Kyushu Resorts Japan submitted their development plan for the area to the Japanese government in April 2022.

The project was to have a square footage of 320,000 sq. m., with the floor area of the entire IR to cover around 550,000 sq. m. at a cost of US$3.08bn. It would generate around 10,000 jobs and aimed to attract 8.4m people a year with revenues of US$1.9bn by its fifth year.

The casino would have operated over three floors, covering 9,000 square meters and offering 220 gaming tables and 2,200 slot machines.

Nagasaki Governor Kengo Oishi said: “We deeply regret the results of this examination, considering the support we have received from various stakeholders over the years. The plan was meticulously crafted by the prefecture and the Integrated Resort operators, drawing on the expertise and advice of financial institutions and specialized advisors with experience in numerous Integrated Resort projects worldwide. We were confident that it met the certification criteria and had provided sufficient explanations to the review committee. Therefore, the surprising examination results are particularly disheartening.”

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