Tuesday, August 09, 2022

Japan’s casino debate goes local

The passage of Japan’s Casino Bill into law in the early morning hours of December 15, 2016, was achieved only after a bruising political struggle. The administration of Shinzo Abe had waited too long into the Extraordinary Diet Session to begin the deliberations on the bill and thus was forced to steamroll over the opposition parties in a clumsy, ad hoc fashion.

Even the ruling coalition Komeito Party was embarrassed by the process, unable to unify internal opinion among its lawmakers. Meanwhile, all of Japan’s major newspapers editorialized against the Casino Bill and polls showed that the general public was opposed to it by a roughly 2-to-1 margin. The legislation was enacted, but the political groundwork had been poorly laid.

In the weeks since the enactment, all major parties were ready to back away and to lick their respective wounds. The issue largely disappeared from the headlines. Concerns over diplomatic relations with South Korea and the formation of the Donald Trump administration soon directed public attention elsewhere.

Nevertheless, three pending matters continue to absorb concern.

First, all parties agree that legislation for combating gambling addiction needs to be passed in the current Ordinary Diet Session, scheduled to end this June. There is scope for cooperation and perhaps even consensus on the terms of this legislation, which is also expected to address issues related to pachinko and horse racing in addition to future casinos within integrated resorts.

Second, the passage of the Casino Law in December still requires the passage of a detailed set of laws providing for the specifics of how the basic authorization will be implemented and enforced. This must include such matters as the maximum number of casinos to be licensed, the establishment of organs for regulation, and much more. The Abe administration is believed to have already drawn up most of these plans, but they must still be submitted to the Diet for passage within a year. This is likely to be controversial, and may pit the government against the opposition parties at the national level once again.

Third comes the most difficult aspects, which are likely drag on for a decade or more—the questions of where Japan’s integrated resorts will be located and which organizations will become operators.

On the one hand, interest from international investors and operators is undeniably keen. There are predictions that Japanese casino revenues could rise in excess of US$20 billion annually, far beyond what the Las Vegas Strip takes in. Las Vegas Sands, MGM Resorts, Wynn Resorts, and even Hard Rock Cafe International—rumors are circulating that almost every major player in the industry has its eye on participating in integrated resorts in Japan.

Many local government leaders also have their eyes on potential revenues, none more enthusiastically than those of Osaka, who are very eager to open the first Japanese integrated resort at Yumeshima, an artificial island in Osaka Bay. The Governor of Osaka Prefecture, Ichiro Matsui, is also the co-leader of the national Nippon Ishin political party that teamed up with Prime Minister Abe to pass the Casino Law, so it stands to reason that Yumeshima will indeed have the political clout to be at or near the head of the line when it comes to determining locations for integrated resorts.

But a key aspect of the story is that the majority of the Japanese public remains opposed to the establishment of casinos due to their concerns that they will spread gambling addiction, organized crime, and contribute to youth delinquency.

For this reason, many local Japanese political leaders, asked about it by local reporters, have rejected hosting casinos near their communities. Typical of these responses, for example, was that of Sakae Saito, the mayor of Atami city, Shizuoka Prefecture, who stated on December 26, “Atami is blessed with hot springs, natural beauty, scenery, and fine food culture. I want to refine and enhance these treasures, and for that we have no need to rely on casinos.”

Moreover, those local political leaders who do wish to build integrated resorts in their regions are almost certain to face protests from some residents, and perhaps even lawsuits and electoral challenges. This scenario is already emerging in the city of Yokohama, whose mayor, Fumiko Hayashi, had expressed interest in hosting a casino within her municipality, but who faces reelection in August and now seems to be more cautious.

Hayashi, who faces a tough re-election campaign against a candidate opposed to casinos, said recently that it would be very difficult to formulate detailed IR plans.

“A policy to deal with gambling addiction problems is extremely important. This is what the city needs to first discuss. Hosting an IR facility is just one way to promote local economic growth,” she said.

On January 11, Kazuyoshi Nagashima, a former House of Representatives lawmaker, announced that he would become an independent candidate to challenge Mayor Hayashi, and that opposition to hosting a casino in Yokohama would become his leading campaign issue: “I want to hear from the people whether they say ‘Yes’ or ‘No’ to having a casino here,” he declared.

With Japanese public fears about the social ills of gambling remaining strong, the proponents of integrated resorts may find that even with the Abe administration willing to spend some of its political capital to ram the enabling legislation through the Diet at the national level, they will still be facing fierce opposition in almost every local area within Japan where the establishment of an casino is contemplated.

Asia Gaming Brief is a news and intelligence service providing up to date market information for worldwide executives on relevant gaming issues in Asia.

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