Gaming operators hoping to break into the Japan market may lose a little steam on learning about some restrictions that may be included in the IR Implementation Bill.
According to GGRAsia, the ruling coalition led by Prime Minister Shinzo Abe’s Liberal Democratic Party is considering setting an entry fee of JPY2,000 (US$18.50) for locals and foreigners living in Japan who want to enter casinos in the country.
Lawmakers also support a policy that would forbid casinos from reimbursing the fees in any way to players, reported the Kyodo News Agency. The money from the fees would be split between the central government and the local government of the host region; a portion of those funds would be used to fund problem-gambling programs.
All local residents would be required to present their My Number identification card before setting foot on a casino floor, reported the Japan Times. A task force told the LDP it thought the JPY2,000 figure was neither “dismissive” nor “outrageously high.”
Some LDP members thought the fee wouldn’t be enough to deter problem gamblers, and suggested a levy of JPY10,000 (US$94) per person per visit.
If the results of a September 2017 survey are right, JPY10,000 would deter more than problem gamblers. The poll found that 81 percent of Japanese respondents would be willing to visit a casino if the entry fee was JPY1,000; 49 percent would go if they had to pay JPY2,000; but just 37.5 percent would patronize a casino if they had to pay JPY3,000 to enter.
Japan has looked to Singapore as a model of a successfully regulated jurisdiction, the Times reported. In that market, local players pay S$100 (US$76) to gamble at Marina Bay Sands or Resorts World Sentosa.
The government has also proposed two separate tax structures: a fixed tax rate of 30 percent on gross gaming revenues; and a “progressive tax” system that would start at 30 percent on GGR of up to JPY150 billion (US$1.4 billion); 40 percent on GGR of JPY150 billion to JPY300 billion (US$2.8 billion); and 50 percent for GGR above JPY300 billion.
The tax money would be used to promote Japan’s tourism industry and again, to combat gambling addiction. And again, the revenue would be split between the central and local governments.
In a February 20 note, banking group Morgan Stanley said the proposed tax plans “could discourage potential casino operators from investing too much on capital expenditure due to lower return on invested capital.”
Other restrictive measures include a plan to limit casino visits by Japanese nationals and foreign residents to three times a week and 10 times in 28 consecutive days; and a plan that would limit the size of a casino to 3 percent of the gross floor area of the entire resort, for a maximum of 15,000 square meters (161,460 square feet).
The proposed measures were discussed in a February 14 meeting of coalition members, made up of the LDP and its junior partner, the Buddhist-influenced Komeito. They were joined by the governors of four prefectures that have expressed interest in hosting an integrated resort: Osaka, Nagasaki, Hokkaido and Wakayama.
The proposals must be approved by the coalition before going to the Japan Diet, or parliament for review. The IR Implementation Bill is expected to be submitted before the end of the June 2018 ordinary Diet session.
A story in Asia Gaming Brief quoted an unnamed international casino operator explaining why these restrictions would impact investment.
“The government is considering a rate of 30 percent applied to gross gaming revenues, which may be reasonable in jurisdictions where investment levels are low,” said the operator. “However, a tax rate this high, combined with a possible restriction on casino size, will not permit the levels of investment that government itself has suggested. Under this scenario, an investment of up to US$9 billion would simply not be possible.”
