As the current session of parliament draws to a close, Japanese lawmakers continue to concentrate on the country’s controversial Integrated Resorts Implementation Bill, and the bill passed as expected with two days to spare.
A source told Inside Asian Gaming that passage of the bill was “a done deal” and a sure bet to be approved before the current Diet session ends on July 22. It actually passed on July 20. The session was extended from June 20 to give the Upper House time to review and approve the legislation, which will open the door to legal casino resorts in Japan. The Lower House passed the bill on June 19.
Opponents have criticized lawmakers for continuing to consider the bill in light of the deadly flooding and landslides that ravaged southern Japan earlier this month. The disaster killed more than 200 people. Dozens are still missing, and an oppressive heat wave is compounding survivors’ misery.
The measure is also not popular with the Japanese public with surveys still showing almost 70 percent of voters opposed to the introduction of integrated resort casinos.
The legislation, which has been shaped and reshaped over the past year, calls for three IR licenses to be issued in the first round, with the option to add more resorts seven years after the first one is sited. It fixes the tax on gross gaming revenues at 30 percent; limits casino space to 3 percent of the total floor area; and mandates a 6,000 yen (US$53) entrance fee for Japanese nationals and residents, a move designed to curb problem gambling. Locals also may not visit casinos more than 10 times per month, which will be tracked by using Japan’s “My Number” card.
Analysts have estimated that a Japan casino industry could be worth up to $25 billion per year; some optimists have put the ultimate value at $40 billion-plus, though that early estimate is not often floated now.
There has also been some question as to the proclivity to gamble by Japanese. The operators of many Asian casinos say that Japan is far down the list of markets that enjoy their products, and that Japanese are more likely to play pachinko than gamble at slot machines.
The potential value of the market has global gaming operators champing at the bit to nab one of the three initial licenses. U.S. operators like MGM Resorts International and the Las Vegas Sands Corp. have pledged to spend as much as $10 billion, and so has Asian operator Melco Resorts & Entertainment. The list of suitors is also likely to include Wynn Resorts, the Genting Group, Hard Rock International, Mohegan Gaming, Galaxy Entertainment and Caesars Entertainment.
Those behemoths may have to take a back seat to local partners, says David Bonnet, managing partner at Delta State Holdings. “How the consortium looks to me is that it’s primarily a Japanese-led enterprise,” he said at a recent press conference in Tokyo. “We know the Japanese government has a preference for public-private partnerships, or working with established Japanese companies.”
Due to widespread public concerns about gambling addiction, Bonnet added, “The winner will be the group that promises to build the biggest integrated resort with the smallest casino.”
Nonetheless, the American Gaming Association issued a statement praising the bill’s passage.
“Today, Japan took a giant step toward strengthening its economy, attracting international travelers and implementing stringent gaming regulation that protects consumers and eliminates criminal activity,” said AGA President and CEO Geoff Freeman. “In the years ahead, Japanese communities will realize the many integrated resorts-related benefits that have enhanced dozens of major destinations around the globe.
“The gaming industry is excited to help Japan achieve its economic goals and eager to partner with the governments and people of Japan to build a world class gaming market and regulatory system.”
The accolades kept coming from the major operators interested in obtaining a license in Japan.
“Today’s passage allows us to advance our relationships with key stakeholders and together create a coalition of Japanese business partners who will collectively define a vision for a uniquely Japanese, world-class integrated resort,” MGM Chairman and CEO Jim Murren said in a statement.
Las Vegas Sands Managing Director of Global Development George Tanasijevich, was equally bullish.
“These offerings will attract more visitors from overseas, offer many opportunities for the local people, and lead to sustainable development of the Japanese economy, culture and society,” Tanasijevich said. “Given the opportunity to participate, Las Vegas Sands is confident that we can make a significant contribution together with the Japanese people.”
Caesars Entertainment and Wynn Resorts also issued statements praising the bill’s passage.
The first licenses may not be issued until 2020, with the first integrated resort opening in 2023 at the earliest.
“There are many, many steps that need to be taken before construction takes place,” CSLA analyst Jay Defibaugh told Bloomberg News. “One of the first ones would be for the casino control commission to be established, funded and have a public comment process on it.”
The original casino bill passed in December 2016. Analysts believe there are likely to be two IRs in large metro areas and one in a regional location. The list of possible locations usually includes Osaka, Tokyo, and Yokohama. According to Asia Gaming Brief, however, the Yokohama Harbor Transport Association sees the city’s Yamashita Pier development, which could become Japan’s largest MICE facility, as viable without a casino.
“Although our national government claims that MICE facilities are not profitable without a casino, even from the perspective of regional economic development, there is absolutely no need for a casino in Yokohama,” said YHTA Chairman Yukio Fujiki at a July 18 presentation. But the Yokohama Chamber of Commerce & Industry and the Keikyu Corp. continue to lobby strongly for one of the first three IR licenses.
Cities that have expressed an interest in hosting an IR include Tomakomai and Kushiro in Hokkaido; Sendai and Ibaraki in the northeast; Nagoya, Tokoname and Wakayama in central Japan; and Sasebo in Nagasaki in the southwest.
“Integrated resorts will create new employment and culture, bolstering Japan’s international competitive power,” Prime Minister Shinzo Abe said earlier this month.
Meanwhile, news magazine Shukan Bunshun has published an article accusing Vegas-based Caesars Entertainment of currying favor among Japanese politicians by buying tickets to political fundraisers. Jan Jones Blackhurst, executive vice president of public policy and corporate responsibility for Caesars, dismissed the assertion, saying, “We believe that the purchases of such tickets by our consultant over many years were made in accordance with the laws of Japan and other jurisdictions, as well as in accordance with our own robust compliance policies and procedures.”