MGM Denies Profiting from LeoVegas ‘Illegal’ Japan Gambling Ops

Posted on: July 17, 2023, 07:01h. 

Last updated on: July 18, 2023, 12:24h.

Philip Conneller @casinoorgphilc Read More
Expertise: Gaming Business, Regulation, Tribal Gaming.

MGM Resorts has hit back against an accusation that it may have profited from illegal online gambling in Japan via its acquisition of LeoVegas.

MGM Resorts, Osaka, LeoVegas
A computer rendering of MGM Resorts’ planned $8.1 billion integrated resort in Osaka Bay, which a local anti-gambling group says should be halted. (Image: MGM Resorts Japan)

In April, MGM won the first Japanese casino license in partnership with the city of Osaka, and will build an $8.1 billion integrated resort in Yumeshima, an artificial island in Osaka Bay.

A local anti-casino group, “Society for Considering Gambling Addiction Problems” (SCGA), is demanding that the U.S. operator’s license be revoked and the development project suspended. That’s because MGM has “likely” benefited from “the criminal proceeds illegally obtained by LeoVegas” in Japan, the group claimed. SCGA accused LeoVegas of being an illegal online casino that formerly targeted Japanese players.

SGCA claims that if this is the case, MGM would have violated articles 11 and 18 of Japan’s Act on Punishment of Organized Crime. This, in turn, would make it ineligible to be approved as a major shareholder in a Japanese integrated resort, according to the country’s casino regulations.

‘Completely Unacceptable’

In a statement on its website, MGM Resorts Japan emphasized that the allegations made by the group are “groundless and may lead to misunderstandings,” and are “completely unacceptable to MGM.”

MGM acquired LeoVegas, then a publicly traded Swedish company, in the fall of 2022 for $600 million.

It’s certainly true that LeoVegas targeted the Japanese market with a Japanese-language website offering bonuses in Japanese yen. Its sister brand, Royal Panda, was also localized for the Japanese market.

In late August 2022, both sites announced they would be quitting Japan at the end of the month. At the time, a LeoVegas spokesperson told iGB that the exit was unrelated to the MGM deal. That’s even though the deal had cleared all regulatory hurdles just days earlier and was a month away from completion.

“LeoVegas had already been pursuing the strategy of focusing on regulated and regulating markets since before any bid arose,” the spokesperson claimed.

That isn’t strictly true, at least according to MGM Resorts Japan’s statement this week. It claims the U.S. casino giant expressly asked LeoVegas to block Japanese customers to grease the skids on the deal.

Thus, “MGM evaluated the acquisition of LeoVegas based on the company’s business and operating conditions, excluding the Japanese market,” read this week’s statement.

Always Controversial

The establishment of casinos in Japan remains controversial. A day before 2018’s Integrated Resorts Implementation Act (IRIA) was passed, officially legalizing casino gaming, a literal fight broke out on the floor of the Lower House.

Japanese citizens largely share the skepticism of opposition parties. Polls have consistently shown the public is opposed to the establishment of integrated resorts by a 2 to 1 margin, with many citizens citing concerns about increased problem gambling.