Members of Japan’s ruling coalition last week pushed through the Integrated Resorts Bill, bringing the country one step closer to launching a legal casino industry.
Prime Minister Shinzo Abe’s Liberal Democratic Party and its junior partner, the Komeito, passed the contentious bill, which lays out rules and regulations for integrated resorts to be developed in up to three locations.
The June 15 vote at the Lower House level means the bill could be enacted before the end of the current Diet session, which is scheduled to end June 22. According to the Japan Times, as the measure went to a vote, a large group of opposition lawmakers rushed to gather around committee chairman Daishiro Yamagiwa to protest the legislation, which they say was rushed through without due consideration.
The bill will go to the Upper House this week, said Wataru Takeshita, general council chairman of the party, at a news conference following the vote. If it’s not passed by Friday, the ruling coalition may extend the parliamentary period by a few weeks to guarantee the law’s enactment.
The opposition includes the Constitutional Democratic Party of Japan, the Democratic Party for the People and the Japanese Communist Party. They contend that the specifics of the bill and the possible social consequences of casino resorts have not been weighed to their satisfaction. Critics of the IR bill have been vocal about their concerns that legal casinos may spawn generations of gambling addicts. The IR bill includes safeguards related to gambling addiction, including an entry fee for locals and a limit on the number of times Japanese gamblers may enter a casino in a given month.
CDP representative Kiyomi Tsujimoto told reporters that an economic growth strategy based on gambling is “wrong and outdated.”
Hours before its passage at the Lower House panel, the opposition parties submitted a no-confidence motion against Minister for Land, Infrastructure, Transport and Tourism Keiichi Ishii in hopes of delaying the vote, but the ruling bloc voted it down.
Critics of the bill cite a 2017 survey that indicates Japanese gamblers will likely be the casinos’ target demographic, not international tourists.
“It’s obvious that there is little inbound demand for casinos. There is no escaping the possibility their main source of revenues will be from Japanese tourists,” said Kazuma Nakatani, a Lower House member of the CDP.
Meanwhile, global gaming operators have reaffirmed their interest in the emerging jurisdiction. Among them is Melco Resorts Chairman and CEO Lawrence Ho, who has committed to invest more than US$10 billion in a Japan integrated resort if he wins one of the three casino licenses.
“We have invested more than US$10 billion in Macau already,” Ho said at the opening of his Morpheus hotel tower in Macau. “In order to build beyond Macau, beyond Las Vegas, it would be more than that.”
Despite restrictions including the 6,000 yen (US$54) entry fee and casino floor space being capped at 3 percent of the total IR space, Ho said Japan is “still a priceless opportunity.”
But Rep. Tetsuya Shiokawa says the bill has been crafted to enrich U.S. billionaires like Sheldon Adelson of the Las Vegas Sands Corp., who also has indicated he may earmark $10 billion to build a Japan IR.
According to CDC Gaming Reports, Shiokawa noted Adelson’s August 2017 visit to Osaka in which the businessman publicly said the casino floor size restrictions wouldn’t allow “the realization of the kind of IR we desire” in Japan. Shiokawa contends that U.S. President Donald Trump may have wielded influence in the matter to help Adelson, whom he characterized as Trump’s “No. 1 supporter.”
As to the fluctuating valuations of a casino industry in Japan, Morgan Stanley estimates Japan GGR of US$15 billion by 2025 and EBITDA per city in the range of US$1 billion to US$2 billion assuming an IR investment of no more than US$10 billion. In the past, the market has been assessed at up to $40 billion per year as the industry matures and expands.
Morgan Stanley analysts says Tokyo would provide the greatest return should it be awarded one of Japan’s IR licenses, including 50 percent of foreign spend and 40 percent of the total.
“Based on foreign visitation numbers in each city, we estimate roughly 50 percent of US$3.9 billion foreign GGR goes to Tokyo, 30 percent to Osaka and 10 percent to the third city,” it said. However, Melco’s Ho has stated he thinks Tokyo is the wrong choice for an IR development, in part because it doesn’t need the investment.
Besides, the Morgan Stanley team pointed out, while Osaka “seems to have all its stars aligned, there is no certainty around other locations. Tokyo seems to be busy with the 2020 Olympics, leaving Yokohama as one of the candidates. Tomakomai, a resort city in Hokkaido, Wakayama and Nagasaki are other interested locations.”
In addition to Melco and the Sands Corp., the long list of potential bidders includes Hard Rock International, MGM Resorts International, Genting, Galaxy Entertainment Group, Caesars Entertainment, Mohegan Gaming and Entertainment, Foxwoods, SegaSammy, Suncity, and Wynn Resorts. Chris Gordon, president of Wynn Resorts Development, recently told Asia Gaming Brief that Wynn will hit the ground running once the IR bill is passed.
“We wanted to see where the legislation was going. We didn’t want to be presumptuous and just sort of jump in and be ahead of what the government wanted,” he says. “We’re already increasing the engagement we’ve got there and that, of course, will pick up significantly.”
He acknowledged the importance of getting the development right in terms of Japanese culture. “It would be crazy of us to not adopt the local culture as far as language and communications, so we’re working mostly with our advisors on that to make sure we’re properly communicating.”
In an interview with CalvinAyre.com, Caesars Entertainment Senior Vice President William Shen said the market “has enormous opportunity” and will bring jobs, new tourism, tax benefits and investment.
“I think that story needs to get out there more,” Shen said. “These are the types of things that as we go through this processes I think, people would come to better understand with some more effort of course on the part of the industry but also on the part of the public leadership as well.”
Demonstrating the level of local interest in IRs, a total of 49 companies attended a recent Request for Information event in Wakayama, which also may lobby for an IR development.
All of this is taking place against the backdrop of scandal for the bill’s supporter-in-chief, Prime Minister Abe, embroiled in a scandal surrounding a shady land sale that also involves his wife, Akie. The latest protest included members of more than 20 citizen groups who demanded his resignation.
“Prime Minister Abe appears to lie without hesitation,” said former nurse Atsuko Mori of Osaka.” I have come here to raise questions about the scandal in front of the Diet.”
