Entry fees, fixed tax rate, and three casinos to start
After much debate, members of Japan’s Liberal Democratic Party and its junior coalition partner, the Komeito, have agreed on certain aspects of legislation that will bring integrated resorts to the country.
One of the regulations now in place is a controversial 6,000 yen (US$56) entrance fee for locals. According to news reports, the LDP initially proposed a 2,000 yen fee, but the Buddhist-allied Komeito wanted 8,000 yen at least, on par with what Singapore charges at its casinos. The LDP came back with a compromise of 5,000 yen, and the parties eventually agreed on 6,000.
That figure is seen as low enough to be occasionally affordable, but high enough to keep potential problem gamblers from visiting casinos too frequently. The fee would apply to Japanese citizens and foreigners living in Japan, but not to outside visitors.
Other measures designed to keep residents from playing compulsively is a cap on casino visits. Japanese patrons may only visit the gaming halls three times a week, with a maximum of 10 visits per month. Visits would be tracked using My Number identification cards.
Lawmakers also have limited the industry to three large integrated resorts to start, a figure that could be revised seven years after the first wave of casinos opens. In addition, any prefecture or municipality that applies to build a resort must have the approval of its assembly and the agreement of the city, town or village where the resort would be located.
The panel also agreed on a fixed tax rate of 30 percent.
The bill is expected to be submitted to the Diet later this month, with the government hoping to see the law enacted by the end of the current parliamentary session on June 20. If parliament passes the bill in that timeframe, the first casinos could open around mid-2020.
Supporters of the plan believe casinos—or more pointedly, casino resorts that include non-gaming amenities including retail, dining, entertainment and conference facilities as well as hotels—will bring in more overseas visitors and boost the economy. But a majority of the Japanese people have never supported sweeping casino legislation, mostly due to concerns around problem gambling. Perhaps for that reason, some industry observers say Japan is being too cautious in its approach, establishing limits that will hamper profitability.
“Opening integrated resorts in only three locations can provide only limited opportunities for rural economies. IRs should open in more locations,” said Kazuaki Sasaki, associate professor at Tokyo University. Sasaki added that the 6,000-yen entrance fee is “too high considering income levels in rural areas. It could hamper the casino business by discouraging people from visiting.”
But that’s precisely what it’s supposed to do, and possibly for good reason. A government survey released last September estimated that about 3.2 million Japanese adults may have fallen prey to gambling addiction in their lifetimes.
A note from Japanese brokerage Nomura said four jurisdictions are likely contenders for one of the first three resort licenses: the cities of Osaka, Yokohama and Nagasaki and the northern island of Hokkaido. But the Nomura analysts think the bill could be tabled into “second-half 2018, first-half 2019.”
The team added that the proposed fixed tax rate of 30 percent on GGR “compares favorably” with Macau’s 39 percent effective gaming tax, but is far above Singapore’s “12- to 22-percent effective rate.”
Nomura says U.S.-based Las Vegas Sands Corp. and MGM Resorts International “seem to be best positioned to win” a license in Osaka; MGM Resorts is “well positioned” for a permit in Yokohama; and Malaysia’s Genting group “appears to have the edge” in Nagasaki.
On Hokkaido, Nomura suggested U.S.-based Hard Rock International “has an edge over other operators” including Macau operator Galaxy Entertainment Group Ltd.; Macau and Philippines operator Melco Resorts and Entertainment Ltd.; and U.S.-based Caesars Entertainment Corp.
