Japan has undergone a tumultuous ride, with the most recent elections further proof of the difficulty in moving beyond the one gaming license granted to MGM, in Osaka. Expert Daniel Cheng points out how for MGM “another’s misfortune can taste like honey” but how a lack of political progress is hindering the country’s efforts to develop an IR industry that can rival Singapore or Macau.

Why would you say that Japan’s IR progress is ‘well and truly halted’?

DC: Momentum for the two unspent casino licenses has come to a stop since Nagasaki’s bid was rejected. The unstable domestic political climate has made it difficult for government leaders to advance the IR agenda given its widespread public disapproval. Former Prime Minister Fumio Kishida was not a sponsor of the IR bill, a hallmark piece of legislation for the late Shinzo Abe and his faction and showed little interest in it beyond approving the Osaka license—likely out of political necessity to gain Ishin’s support.

In general, political bodies tend to avoid contentious issues even in favorable times—an instinct heightened as the LDP’s approval ratings have steadily declined since Abe’s departure as prime minister. The constant negative media coverage on the Osaka IR project hasn’t helped either. Abe had successfully pushed the casino legislation through when the party held a supermajority in the National Diet. Now, with the LDP facing the risk of losing the government after the weekend elections, it seems unlikely that the casino topic will be revisited for a long time until the LDP can regain a level of absolute control comparable to the Abe-Koizumi eras.

Was there any doubt this would be the outcome of the elections?

DC: The ruling coalition parties widely expected to lose a significant number of seats due to the LDP party slush fund scandal, but they underestimated the scale of public dissatisfaction to the point that they might even lose their combined LDP-Komeito simple majority.

When do you expect a final result regarding the top parties and who becomes PM?

DC: A special four-day Diet session is scheduled for November 11th to elect the prime minister following the weekend’s election. Intense backroom negotiations will take place in the interim that will shape the final outcome. The ideal scenario for the incumbent government would be to attract one of the opposition parties—either the DPP or Ishin—across the aisle to reach the crucial 233 seats needed to form a majority.

However, this is unlikely, as both parties criticized the LDP coalition in their election manifestos and risk alienating their voter bases if they pivot to join them. Probably the only feasible strategy for PM Ishiba would be to continue as a minority government, potentially building issue-by-issue alliances with the DPP or Ishin but such arrangements are historically ineffective and unstable. If the opposition parties can set aside their policy differences and unite, they could form a government and displace the LDP.

Who would be the ideal candidate for PM (and leading coalition) for gaming operators and is that likely to happen?

DC: There is no permutation of an outcome that favors the Japan IR industry. The least damaging scenario would be an LDP minority government under Ishiba, formed through a soft agreement with Ishin, which could help protect the ongoing progress of Osaka’s project construction. The two remaining IR licenses are not going to see the light of day for many years.

How does this place MGM now in regards to tapping Japan’s market with, effectively, a monopoly?

DC: For the ORIX/MGM consortium, it’s not necessarily a case of 他人の不幸は蜜の味 (ta nin no fukou wa mitsu no aji) as the Japanese idiom goes meaning “another’s misfortune can taste like honey.” But you could say their luck has been remarkable: they became the default winner as the sole bidder for the Osaka IR, followed by the denial of Nagasaki’s bid, and now further political turmoil has left the remaining licenses in indefinite limbo.

A monopoly industry can stifle innovation and reduce competitiveness in the regional IR market but MGM would likely argue that the benefits far outweigh the downsides for them. However, they still run the risk in the scenario of an LDP minority government—or worse, a CDP-led coalition government which might impose stricter social safeguard measures and greater oversight on the industry.

Do you think that this changes MGM’s ramp-up, considering the lack of competition?

DC: MGM’s approach has been shaped by this lack of competition from the start. Their IR proposal would likely have looked very different if they were up against major global players like Sands, Galaxy, and other top operators. In that sense, they’ve always been on a kind of “yellow brick road”—facing fewer competitive pressures and able to design their bid without the push to outshine any rival.

Would more IRs in Japan actually be beneficial or would it just cause cannibalization?

DC: Of course, it cannot fulfill its full potential with just one integrated resort, which cannot deliver anything close to a double-digit billion-dollar market. A healthy, competitive Japan IR industry with multiple properties could outshine Singapore and perhaps even rival Macau in turnover.

Wynn’s UAE project is now slated to open in early 2027, while Thailand is pushing for 2029. How is Japan positioned and what are its best selling points to get punters?

DC: The UAE is geographically distant from Asia and lacks a clearly defined market demographic. Thailand is still in the early stages of developing its gaming legislation. Given Japan’s current monopoly situation, these developments may be irrelevant as the operator can milk the market to its heart content as there’s only so much one resort can swallow.