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New casino legislation means big things for Japan

Published:

1 Aug 2018

Analysts have previously estimated that the Japanese gambling market could be worth as much as $40 billion a year.

However, gambling has been traditionally banned in Japan aside from special laws allowing wagering on certain sports, the lottery and pachinko, which is a pinball-like game with payouts.

There has been a keenness to change this in some quarters since 1999, with considerable progress made two years ago when a casino promotion bill was voted through.

Now, a new piece of legislation has been passed which will legalise casino gambling in Japan.

The swarming of global casino operators

Under the new law, three casinos will be built throughout Japan. The locations of these casinos remain unknown at present, although the city of Osaka is among the frontrunners to house the first.

The casinos will stand within much larger integrated resorts, which will also include event spaces, shops, restaurants, hotels and conference rooms.

With many more tourists spending time in Japan, the potential of these integrated resorts is a main reason for the legislation being passed, as the country seeks new sources of economic growth.

Work is expected to start in approximately 2022 and there will be no shortage of casino operators with aspirations of getting dealt into the action.

Las Vegas Sands and MGM Resorts have both indicated that they could spend $10 billion in Japan, while Wynn Resorts are another said to be interested in what has been described as a “thoroughly delicious” opportunity.

Malaysia-based Genting and Macau operator Galaxy Entertainment Group have also had their names mentioned, while Japanese companies Sega Sammy Holdings and Konami Holdings are possible participators too.

Whoever the operators, a healthy chunk of any profits will be given up to the government. The legislation rules that casinos will be required to pay 30% of any winnings to the government.

Taking its spot in Asia

Rory Credland, event director for gaming at Clarion Events in the UK, has said: “Japan is one of the last three attractive regions, along with Brazil and India.”

In terms of Asia, Japan is one of the last of the larger locations to get on board the casino bandwagon.

Singapore, Malaysia and the Philippines have already launched integrated resorts featuring casinos, with South Korea recently joining the club.

Estimates from Goldman Sachs have gone as far to say that Japan has the potential to be the world’s second largest gambling market, behind Macau.

Where gambling fits in within the resorts

However, limits will be put into place to prevent casinos being the main attractions within these resorts. The intention is to wipe out the possibility of them becoming gambling dens.

Whatever the square footage of the entire resort, gaming floors will be restricted to no more than 3% of this space.

Although thousands of jobs will be created through each finished integrated resort, it is tourists who are targeted the most.

In 2017, the number of foreign tourists to visit Japan is said to have been approximately 29 million.

By 2030, the lofty goal has been set to more than double this number to 60 million. Casino-centred resorts are deemed a pivotal factor in reaching this level.

Macau’s visitor numbers last year increased by approximately 10 million compared to 2016, with casino revenue in the region almost quadrupling in the same period.

This was following the opening of the Venetian Macau, which is the flagship resort stationed within Asia’s Las Vegas.

Meanwhile, the Marina Bay Sands resort in Singapore is reported to earn over 70% of its total revenue from casino gambling.

Unsurprisingly, foreign visitors will not be required to pay to enter the new Japanese casinos.

What about the locals?

Free entry will not be an option for Japanese locals hoping to settle down for a few hands of blackjack or games of baccarat.

The leading opposition to the development of Japanese casinos was concern about feeding gambling addiction.

Pachinko is considered the current favoured form of gambling in Japan and back in 2015 it made $34 billion in gross gambling revenue.

But precautions have been taken to prevent the wealthier members of Japanese society from devoting too much time to casino play.

Firstly, Japanese residents will be required to pay an entrance fee of roughly $50 before they even begin changing up their cash for chips.

If this is not a deterrent for too many repeat visits, residents will also be limited to only 10 visits every four weeks.