Japan Moves Closer To Casinos, But Tantalizing Concept Not In The Cards
Legislators in Japan’s lower house passed an integrated resort (IR) implementation bill on Tuesday, then extended the legislative session to July 22 to enable upper house consideration of this final step toward casino legalization. Casino companies from across the world can scarcely contain their excitement about the world’s last casino frontier beyond the forbidden zone of mainland China. But Japan won’t consider a concept for creating compelling IRs worthy of the world’s third largest economy, one aiming to double visitor arrivals to 60 million and become a global top five tourist destinations.
Official Japan’s approach to IR legalization has been rather schizophrenic. It wants the economic and image boost of IRs, exemplified by Singapore’s iconic Marina Bay Sands, but fears increased problem gambling. Losses on pachinko, a souped-up version of pinball, and pachislot machines, exceeded US$30 billion last year. Pachinko’s association with organized crime and money transfers to North Korea – industry figures dismiss that as ancient history – adds to negative public perception of gaming overall. Surveys find two-thirds of Japanese oppose casino legalization, though antipathy softens with information about IR non-gaming features.
Japan’s IR bill includes several restrictions, including Singapore-style limits on casino size – 3% of total gross floor area – and a 6,000 yen (US$55) entry tax for residents, plus awarding just three IR licenses nationwide in three different areas. Casino companies have declared they’re prepared to spend US$10 billion on IRs in major metropolitan areas such as Tokyo and Osaka.
In effect, each licensee gets a monopoly in its area, and competition for the licenses will be fierce. But once licensed, the IR won’t face competitive pressure to excel. At last month’s Japan Gaming Congress, Morgan Stanley Managing Director in Hong Kong Praveen Choudhary said that without competition within markets, Japan won’t get the spectacular IRs it deserves. He suggested that instead of one US$10 billion IR, allowing three US$3 billion IRs in an area. “You’d get more non-gaming and more variety,” Choudhary said.
“The level of investment and tourism draw would increase significantly if multiple operators would come together on a single large site such as Yumeshima Island in Osaka to form an Osaka Strip or in the Tokyo/Yokohama area, where is it possible on a couple of sites,” Global Market Advisors Director of Government Affairs Brendan Bussmann says. “As opposed to one operator that may be willing to contribute $10 billion to a single IR, if you could bring together multiple operators while still staying within the 3% casino size, you are likely to see a number well north of the $10 billion.”
By Muhammad Cohen
GENTING NEW SHAREHOLDERS WILL BEGIN CONSTRUCTION OF THEIR NEW CASINO IN JAPAN SOON.