Japan’s Final Integrated Resort Bill Has 3 Casino Licenses
Japan’s parliament passed the long-awaited IR Implementation Bill on Friday, opening the door for legal land-based casinos in the Japanese islands for the first time. The Japanese Diet passed the original Integrated Resort (IR) Bill in December 2016, but needed Friday’s bill to set the policies and regulations for legal casinos.
The IR Implementation Bill approves 3 casinos licenses in the first wave of licensing. The tax rate on gambling revenue will be 30%, while the percentage cap on casino floor space will be 3% of the total resort size.
The bill sets limits on participation by Japanese residents, but allows gaming operators to tap the Japanese economy. Residents cannot enter a casino more than 3 times in a 7-day period. They also cannot enter the casinos more than 7 times over a 28-day period. If the gambler enters, they can come-and-go for the next 24 hours after entrance.
To enter the casino, Japanese residents will use their “My Number Card” to track entries into a casino. Each resident has to pay a fee to enter, which is expected to be in the $55 to $56 range, depending on the day’s exchange rate. Foreign tourists will have no restrictions.
Japan Inc. Interested in Casino Industry
Reuters reported that the passage of the IR Implementation Bill opens the door for Japanese corporations to get involved in the process. During the runup to passage, it was reported that many parts of “Japan Inc.” were wary of a potential casino industry. The Japanese public associates gambling with “addiction and crime”, according to Reuters.
When Japanese citizens think of gambling, they tend to think of the colorful pachinko parlors which dot Japanese cityscapes. Pachinko is a game of chance which looks like a cross between a pinball machine and an arcade machine.
Winners collect pachinko balls. These can be taken to a nearby vendor, who exchanges them for cash — a method to circumvent Japanese gambling laws. For decades, pachinko parlors have been rumored to be owned by Japanese organized crime.
Japanese Integrated Resorts
The passage of the casino law provides Japanese corporations with a more palatable way to cash in on gambling. Lawmakers envision a Las Vegas-style set of integrated casino-resorts. Integrated resorts have a casino, but surround it with lavish hotels and spa services, retail chains for shoppers, convention centers for business people, concert venues for those who like shows, exhibitions and amusements for family groups, nightclubs for younger visitors, and fancy restaurants for all involved.
A modern integrated casino-resort therefore is a centerpiece to a city. Not only does it generate revenues from gambling, but it works to draw in citywide visitors as well as tourists. Integrated resorts are considered family-friendly, because the bettor in the family can enjoy the gaming floor, while the rest of the family unit entertain themselves with other attractions.
The new casino industry is estimated to be worth $10 billion to $25 billion a year to the Japanese economy, based on restrictions. Prime Minister Shinzo Abe has pushed for the casino bill for years, hoping to increase Japanese tourism.
Japanese Corporate Interest
Japan Inc. can be expected to get involved in various levels in the casino industry. Decades of “deflation and weak demand” have left the Japanese economy all-but-stalled, as other Asian Tigers underwent a boom period.
As the Reuters article noted, “Various Japanese firms spanning sectors from finance, real state to construction and tourism will target equity stakes in consortia with casino operators.”
Who Will Win Japanese Casino Licenses?
A wide variety of Chinese and American casino companies are expected to apply for the three casino licenses. Jim Murren of MGM Resorts and Sheldon Adelson of Las Vegas Sands Corp both said they would invest as much as $10 billion in a Japanese casino. Lawrence Ho of the Hong Kong-exchanged Melco Resorts & Entertainment said he would pay “whatever it takes” to secure a license — and move his corporate headquarters to Japan.
Caesars Entertainment, now that it has emerged from a years-long debt crisis, is expected to be a major competitor in the licensing process. Galaxy Entertainment Group, another large Macau-based company, is expected to apply for a casino license.
The cities at the top of the list for casino licenses are the usual suspects: Tokyo, Osaka, and Yokohama. Chiba has expressed interest, while a number of outlying islands wanted a casino license. Because a second wave of casino licensing is expected in a few years, the outlying areas might be in line for those licenses.