Mohegan Scrambles After Japanese IR Partner’s Unexpected Exit

Mohegan Gaming & Entertainment (MGE) has been put between a rock and a hard place as it competes to be the casino operator of an integrated resort (IR) in Nagasaki, Japan. Its local partner, Oshidori International Development, just withdrew itself from the partnership, with MGE now having to find a new one, and quickly. Oshidori is reportedly not at all pleased with how Nagasaki plans on overseeing its IR and doesn’t want to be any part of the operations.

MGE Loses Nagasaki IR Partner

At the end of this past January, MGE announced that it had partnered with Oshidori, a subsidiary of Hong Kong-listed Oshidori International Holdings, as it competed to be among the first to enter Japan’s IR market. Everything seemed to be running smoothly and, at the end of July, there were indications that everything was on track. However, everything suddenly changed at the end of last week when Oshidori announced that it was exiting the partnership.

The unexpected departure has nothing to do with MGE’s efforts; instead, it appears the company is unhappy with the way Nagasaki wants to run its IR project. According to the company’s announcement, Oshidori asserted, “Unless there are certain changes to the developmental and operational rules imposed by the Nagasaki Prefecture, and unless the RFP (request for proposal) process is conducted in an ethical manner, it is withdrawing from participating in the RFP for an IR in Nagasaki.”

Oshidori didn’t lay out what changes it wants to see or what issues it may have uncovered, but added, “The restrictive and unreasonable rules imposed by the Nagasaki Prefecture make it impossible for Oshidori to conduct business in a prudent and efficient manner. In addition, Oshidori has encountered several incidents that make it question whether there have been serious ethical irregularities in the RFP process, and it is only interested in participating in a process that has the highest integrity, and that is professional, transparent, and based on merit.”

Japan’s IR Industry Continues Uphill Battle

This isn’t the first time Japan’s IR efforts have come under fire and is most likely not the last. There are expected to be three licenses issued initially, with Nagasaki, Osaka, Yokohama and Wakayama being the most likely targets. In Nagasaki, MGE is competing against Casinos Austria International Japan and NIKI Chyau Fwu (Parkview) Group for the rights to build a multibillion-dollar casino resort, but will now have to scramble to find a local partner if it’s going to stay in the race.

Yokohama is having difficulty with its IR plans and at least one person is dead set on ensuring no large gambling resort comes to the area. Yukio Fujiki, the chairman of the Yokohama Port Harbor Resort Association (PHRA), has promised to commit suicide if an IR comes to the port area. The fate of the resort could be determined after August 22, when the Yokohama mayoral elections will be held. Currently, most candidates, except incumbent mayor Fumiko Hayashi, are against an IR.

Even though Oshidori has extricated itself from Nagasaki’s IR plans, it reportedly didn’t officially let local leaders know. According to a statement given to GGRAsia from a prefecture spokesperson, “Nagasaki prefecture has always proceeded with the public tender in a fair and equitable manner following the public tender guidelines and all relevant laws. We have already entered the final stages of the process and the results will be presented as scheduled.”