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Casinos in Tokyo: An Olympic-Sized Cash Cow?

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Asia Life

Casinos in Tokyo: An Olympic-Sized Cash Cow?

With the 2020 Olympics bid clinched, the case for legalizing casinos in Japan has received a boost.

Walk through any entertainment district in a Japanese city and chances are you’ll pass a pachinko parlor – or a rash of them – assaulting the senses with the clatter of ball bearings, bells, blinking lights and cigarette smoke emerging from the doors as patrons walk in and out. Betting on horse races, bicycle races, motorboat showdowns and taking chances on massive lotteries also have their place on the archipelago.

As the Wall Street Journal notes, the Japan Productivity Center has estimated that these legal vices bring in 19 trillion yen ($192 billion) in wagers a year – that’s roughly 30 percent of the nation’s entire leisure spending in 2012. Yet, casinos remain illegal.

“Japan may be the only developed country without casinos,” said Takeshi Iwaya, a Liberal Democratic Party member of the Lower House who supports the bill. “But we are sprinting to the finish line.” Indeed, The Economist notes that Japanese business magazine Toyo Keizai suggests that “Japan is being left behind” in the casino rush. Based on a bill that will be discussed in the next Diet session, however, this could be about to change.

Thanks to the recent victory of the 2020 Olympics bid and the support of Prime Minister Shinzo Abe, the bill is back on the legislative table and will be considered, along with 100 other proposed bills, during the next Diet session, which starts in October. If casino champions have their way, the first resort could open in Japan in 2019 – just before the Games begin. All of those visitors flying in to watch the 2020 Summer Games have to stay and play somewhere, after all.

The debate surrounding the legalization of casinos in Japan began in earnest when former Tokyo governor Ishihara Shintaro first pitched the idea of building resorts along Tokyo’s Odaiba waterfront in 1999. However, from the National Police Agency (NPA) to guardians of the nation’s fūzoku (immorality) laws, opponents have vigorously fought the casino bid, which directly threatens the profits gleaned from the pachinko trade, which are known to legally flow into NPA coffers through various channels. Concerns of involvement by organized crime (yakuza) syndicates – who already run illegally outsourced “tele-casinos” – have also been voiced, as have fears that corruption and money laundering could be aided by legalizing casinos.

All of these concerns remain, but the benefits outweigh the risk. Estimates suggest that by legalizing casinos, Japan could reap rewards to the tune of $10 billion annually. And that’s just from opening two resorts in Tokyo and one in Osaka. There is also the lure of a new source of tax revenue to boot.

“This is the best chance we have ever had for casinos in Japan, and I want to make sure this law passes,” Iwaya added. Appropriately, the senior lawmaker made the comment during a speech in Las Vegas last week.

Toru Mihara, a professor at Osaka University of Commerce, agreed, but added wryly that, “the odds may be around 40 percent to 50 percent. Come to think of it, that's not bad in the gaming industry.”

If the bill passes, it remains to be seen if the casinos will be open to the Japanese public or only to visitors from abroad. The Japan Times notes that gambling has an awkward reputation in Asia, where it is at once wildly popular, yet also regarded as a “social ill” by many. Governments in Vietnam, Singapore and South Korea, to name a few, simultaneously clamor for casino revenue, but also restrict their own citizens’ access to domestic casinos. This results in Vietnamese jumping over the border to Cambodia where the roulette wheel spins freely for all. In Singapore, it means heavy admissions fees for local gamblers, while South Koreans are only granted access to one homegrown gambling den.

Whether potential Japanese casinos would be geared only towards high rollers from elsewhere in Asia or open also to betting Japanese remains to be seen. But the potential benefit, whichever way it turns out, is reportedly huge. Armed with high technology and hence the ability to implement tighter security – in theory at least – as well as a wealthy population who could potentially boost the industry, some suggest Japan is poised to become a bastion of gambling. Brokerage firm CLSA said, “Japan could become one of the largest gaming jurisdictions in the world, surpassed perhaps only by Macau.” Bear in mind the former Portuguese colony already trumps Las Vegas.

Already, casino moguls Lawrence Ho of Macau and James Packer of Australia, as well as Wynn Resorts, Las Vegas Sands and MGM Resorts are rubbing their hands in glee at the prospect of building integrated resorts – combining casinos, luxury hotels, shopping centers and cultural attractions – across the nation.

Gamal Aziz of Wynn Resorts said, “We've been watching Japan for 20 years. We think Japan could be Wynn's biggest opportunity. But you have to be patient in Japan.”