Following a rejection by the Wakayama Prefectural Assembly of an integrated casino resort project, only Osaka and Nagasaki are expected to submit bids to host Japan’s first casinos, undermining a major initiative by the central government to revitalize local economies.

Longstanding concerns about whether financing would come through for the proposed ¥470 billion project at Wakayama Marina City, located on an artificial island in the city of Wakayama, prompted 22 of the 40 assembly members to vote against it on Wednesday. The bid had the backing of prominent local politicians and Wakayama-based heavyweights in parliament such as former Liberal Democratic Party Secretary-General Toshihiro Nikai.

“The prefectural assembly’s decision is regrettable, as a casino resort would be a catalyst for regional development,” Gov. Yoshinobu Nisaka told reporters after the vote, saying that the prefecture should try again if the government solicits more applications for a casino.

The central government was preparing to select up to three candidates to host Japan’s first casino resorts. Bids are due by April 28.

Chief Cabinet Secretary Hirokazu Matsuno, the central government's top spokesman, said he would not comment on specific bids, but he stressed that casino resorts are an important initiative for the further development of Japan's tourism industry.

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Wakayama’s rejection came as the Nagasaki Prefectural Assembly on Wednesday formally approved a plan for an integrated casino resort at the Huis Ten Bosch theme park in Sasebo. Casinos Austria International Japan Inc. heads the project, which has the strong backing of all seven Kyushu governors. A Kyushu body of local government and economic groups formed a casino lobby group last year, and one of the bid's keenest supporters is Yutaka Aso, chairman of Aso Cement in Fukuoka Prefecture and the younger brother of LDP Vice President Taro Aso.

The Huis Ten Bosch casino resort is expected to open in the autumn of 2027 and draw about 6.73 million people annually. The casino floor will have 3,000 electronic gambling machines and 400 table games. Convention facilities that can host more than 6,000 people and four hotels with more than 2,500 rooms are also planned.

A total of ¥438.3 billion is needed to cover resort construction and other necessary costs. By fiscal 2031, revenue is projected to be ¥271.6 billion for the year.

Osaka’s casino project has long had the support of Gov. Hirofumi Yoshimura and Mayor Ichiro Matsui, as well as the prefectural and municipal government assemblies. A consortium led by U.S. giant MGM Resorts International and Orix plan to build a casino resort on the artificial island of Yumeshima in Osaka Bay by around 2029. Yumeshima is also the site of the 2025 Osaka Kansai Expo. The prefecture and city assemblies approved the casino project last month.

The proposal, unveiled in February by the two firms, the city and the prefecture, calls for an initial investment of ¥1.8 trillion, with projected annual sales of ¥520 billion, of which ¥420 billion would come from the casino. The prefecture and city would receive ¥74 billion in annual payments from the operators, and another ¥12 billion in yearly tax revenue.

Matsui said Wednesday that Wakayama’s withdrawal from the casino race would not affect Osaka’ plans.

"Osaka has the backing of large banks that have promised to finance the project. The aim of the Osaka (resort) project is different from that of Wakayama, so the rejection will not have a major impact on our project,” the mayor told local reporters.

Osaka and Nagasaki have until April 28 to submit their plans for review by a central government committee of experts, who will examine the financial feasibility of the plans and what measures each project takes to deal with gambling addiction. While the government has given no schedule for the review, approval or rejection of the Osaka and Nagasaki projects could come in the second half of the year.