Sega Sammy Wants Japanese Integrated Casino Resort License

Friday, November 3rd, 2017 | Written by April Bergman
Sega Sammy Wants Japanese Integrated Casino Resort License

Sega Sammy Holdings Incorporated, the Japanese pachinko corporation, reiterated its plans to build an integrated casino resort in Japan. News that Sega’s interested in a multi-billion casino is a sign that Chinese and American casino giants are not the only players in the new market.

Hajime Satomi, the Chairman and CEO of Sega Sammy, said his firm plans to wait until the enabling legislation before announcing “concrete plans” for an integrated casino resort. Satomi’s statement was published in its recently published Intergrated Report 2017.

The report noted that Sega Sammy’s plans for a billion dollar integrated casino resort are still at the “prior investment stage”.

Hijemi Satoshi said he hoped that any such casino would be a “driver of long-term growth”. In the report, Sega Sammy’s chief executive stated, “We expect integrated resorts in Japan to become a mainstay of this business segment.”

Japanese IR Bill 2016

Casino gambling was illegal in Japan until December 2016, when the Japanese Diet passed the Integrated Resort Bill. That was only half of the equation from a legislative perspective, though.

The IR Bill was only the precursor to a subsequent 2017 casino bill which is called the “enabling law“, which sets the regulations, policies, and scope of the Japanese casino industry. While the original casino bill was a landmark in Japanese gaming history, this year’s legislation is, in many ways, the key to the kingdom.

If the policies for Japanese gamblers are too restrictive, or casino credit is disallowed, or junket operators from the mainland are banned, or the gaming space is too limited, then it would limit the amount of investment in Japan’s casino industry. Some international operators might not submit bids at all.

Satomi on Intergrated Casino Resorts

Hajime Satomi wrote, “If an Integrated Resort Implementation Bill is enacted, the government will advance to the stage of area and operator selection [and] we will then be able to prepare concrete plans.”

It appears the Sega Sammy will seek a license, whatever the new policies are. For a pachinko parlor operator, that would make good sense. Pachinko parlors are lucrative, but they are small compared to an integrated casino-resort. Thus, limited casinos would still be far larger operations than the largest pachinko establishment.

Japanese Pachinko Parlors

At the same time, Japanese land-based casinos represent a threat to the traditional pachinko industry of Japan. One of the reasons Japan has not had a casino industry these past decades, despite spending more money than any nation on gaming machines (pachinko), has been to protect the pachinko industry.

If a casino industry exists, Sega Sammy Holdings needs to have a hand in the industry, to protect itself and grow the business.

In his report, Satomi alluded to as much, saying, “I view advancement of the integrated resort business as an important personal mission and will work tirelessly to achieve it.”

Sega Sammy’s Korean Casino

Sega Sammy is building its casino portfolio already. In July, Sega Sammy Holdings partnered with Seoul-based Paradise City Integrated to open the $1.7 billion Paradise City, a massive integrated casino-resort near Incheon, South Korea. Owning and operating a land-based casino should help Sega’s resume, when it comes time for the Japanese casino licenses to be evaluated.

At present, Sega Sammy owns 45% of the Paradise City Casino. Satomi said his company is building up its knowledge and expertise in the casino industry with the investment, as he reportedly wrote, “The group is accumulating expertise in the development and administration of integrated resorts through Phoenix Seagaia Resort and a joint venture in South Korea with Paradise [Company Limited].”

About SEGA Corporation

Martin Bromley, Irving Bromberg, and Richard Stewart formed Standard Games in 1940 in Honolulu, Hawaii to provide coin-operated amusement games to U.S. military bases. When the US government outlawed gambling in its territories in 1953, Standard Games changed its names to “Service Games” and began operations in Japan. The name Service Games often was shortened to SEGA. In 1954, US Air Force officer David Rosen began a two-minute photo booth business — a business eventually branded Rosen Enterprises.

Meanwhile, in 1957, SEGA began exporting coin-operated games to Japan. Service Games Japan was closed in 1960 and two successor companies, Nihon Goraku Bussan and Nihon Kikai Seiz, were founded. In the same years, Rosen Enterprises had transitioned to an arcade business with 200 venues. In 1965, Rosen Enterprises merged with Nihon Goraku Bussan to form SEGA Corporation, which derived its name from Service Games. Rosen sold the company in 1969, but remained CEO of SEGA, which continued in the arcade business.

From 1978 to 1983, Sega Corporation experienced a boom period, due to the American arcade and video game boom. It became known for arcade games like Zaxxon and Dragon’s Lair, but also released video games for ColecoVision, Commodore 64, Atari 8-bit computers, and the Atari 2600. The company launced Sega Genesis in 1989 and had major success with games like Sonic the Hedgehog (1991). It eventually launched Sega Dreamcast in 1998, while introducing the world’s first MMORPG (Phantasy Star Online). From 1999 to 2003, the company experienced 5 years of losses, though, SEGA needed a buyout. After talks with with Namco, Bandai, Electronic Arts, and Microsoft, it was Sammy Corporation which bought out SEGA.

About Sammy Corporation and Sega Sammy

Hajime Satomi left college in 1975 to found the Sammy Corporation. Over the next several decades, Sammy Corporation became a massive pachinko and pachislot (pachislo) supplier. By 2003, it was capable of purchasing 22% of the Sega Corporation. The next year, Hajime Satomi bought a controlling interest in Sega and merged the two companies. His son, Haruki Satomi, joined the corporation in 2001 and is now the president and chief operating officer of Sega Sammy.