Japan casino licensing update

Japan closer to legalizing casinos

According to the latest news reports, Japan is slowly moving closer to legalizing casinos, attached is a report by Takashi Mochizuki from the Wall Street Journal describing progress made to date and expert opinions.

TOKYO—Japan is set to take a long-awaited step toward legalizing casino gambling, kicking off a multiyear process to establish integrated resorts that proponents say will provide a strong boost to the government's growth plans.

Lawmakers are expected within days to submit a bill requiring that the government craft legislation and set the stage for approving casino-resorts. The bipartisan bill, which is backed by the ruling Liberal Democratic Party, is likely to pass parliament next year.

Proponents hope Japan will start licensing casinos in 2016. Analysts say the schedule should allow Japan to have at least one casino in operation before Tokyo's 2020 Summer Olympic Games.

Lawmakers say there likely will be a few resorts at first, with further approvals coming gradually. They say the model will be closer to Singapore's than to that of Las Vegas.

Gambling already is popular in Japan. People spend large sums to bet on horse races, bicycle races, motorboat races, lotteries and pachinko, a game that is similar to pinball. Such games account for ¥19 trillion ($185 billion) in wagers annually, roughly 30% of leisure spending in Japan last year, according to the Japan Productivity Center consulting firm.

The idea to bring casinos to Japan was first floated in 2002, with global casino operators and domestic conglomerates mounting lobbying campaigns. But with most governments lasting for no more than a year, the issue never got to the front of the legislative agenda.

With current Prime Minister Shinzo Abe likely to remain in power for years because of his strong approval ratings, advocates are betting that now is the best chance to push through the legislation.

Prospects for passage appear good. The bipartisan group backing the legislation totals 171 in the two houses of parliament, more than one-fifth of all 722 Diet members. The group includes political heavyweights, including Mr. Abe, Finance Minister Taro Aso and Education Minister Hakubun Shimomura. Opposition-party figures, including members of the Democratic Party of Japan and Your Party, also have expressed support.

"We've finally drawn the attention of top-level politicians," said Osaka University of Commerce Professor Toru Mihara, who was involved in drafting the legislation. "Casinos, if successful, will be a true flagship feature of Abenomics."

Analysts who favor casinos say they will stimulate economic growth. The government aims to increase the number of annual foreign tourists in Japan to 30 million in 2030 from 8.4 million last year and to raise foreign direct investments to ¥35 trillion by 2020 from ¥17.8 trillion last year.

"We estimate that Japan could generate gross gaming revenue of $13.4 billion to $15 billion, which would make it the second-largest gaming jurisdiction in Asia, after Macau,"Citigroup analyst Anil Daswani said in a September report.

Casino operators are ready. Wynn Resorts Ltd. is considering plans that could cost it more than $4 billion.

George Tanasijevich, chief executive of Las Vegas Sands Corp.'s Marina Bay Sands resort in Singapore, has mock-ups on what a possible resort in Tokyo might look like. "We're very excited. We believe this is the biggest opportunity in our industry right now," Mr. Tanasijevich said Friday.

A challenge for the industry is to build public support. Mizuho Bank said the government should take an evenhanded approach, discussing the potential negative aspects of allowing gambling as well as the positives.

Prof. Mihara said the government must explain clearly how it will cope with the potential problems of casinos, such as corruption, gambling addiction and organized crime.

Some analysts said the governments and operators shouldn't focus just on casinos when planning integrated resorts, in part because casino-resorts will have to compete with rivals in Singapore, South Korea and Macau.

Governments from metropolises such as Tokyo as well as rural areas such as Okinawa hope to use casinos as one element of a broader strategy to increase tourism visitors, international meetings and conventions.

"We want to have a complex of casinos, hotels and convention centers that all sorts of visitors can use as a base when traveling around nearby areas such as Kyoto, Nara and Kobe," said Kazuhiro Nose, Osaka's tourism chief.

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Jake Waller
Director at New World Gaming
New World Gaming