Shinzo Abe’s Cabinet Approves Japanese Casino Regulations
The government of Japanese Prime Minister Shinzo Abe’s ratified the Integrated Resort Implementation Bill this week, the final hurdle to Japan developing three commercial casinos for the first time. The Fourth Abe Cabinet, a 24-member group, ratified the casino bill.
It is a big step forward and one which took a certain amount of political capital. Casino gambling remains unpopular with the Japanese people as a whole — about 60% oppose land-based casinos in most polls — but Prime Minister Abe made a casino gambling a part of his economic advancement policy in his re-election campaign in 2014.
The main goal of the IR Implementation Bill is to increase tourism to Japanese cities. Osaka Prefecture, Wakayama Prefecture, and Nagasaki Prefecture are the three regions which have applied for casinos, so tourism to the Osaka-Wakayama region should see a significant boost.
With only 3 of Japan’s 47 prefectures applying for a casino, it would appear that Nagasaki’s tourism should increase, as well. It is possible that Osaka could receive two of the licenses, but that does not appear to be the plan at the moment.
Projected Revenue for Japan’s Casinos
Gaming analysts predict that yearly casino revenues could go as high as $16.9 billion, though numbers have fluctuated between $10 billion and $25 billion throughout the legislative process, depending on how restrictive gaming laws involving Japanese residents would be.
By way of comparison, Las Vegas casinos generated $11.9 billion in 2018, though Las Vegas non-gaming revenues now generate roughly 60% of the revenues on the Las Vegas Strip. Macau gaming revenues were $37.8 billion last year — by far the most of any city in the world. Between commercial and tribal casinos, the US is still ahead on a national basis.
Osaka Casino License
Entry into the Japanese casino industry will be the holy grail for global gaming companies this year and next. Already, three of the giants of casino gambling — Las Vegas Sands, Melco Resorts, and MGM Resorts — are gearing up for a run at an Osaka casino license. Jim Murren, CEO of MGM Resorts, said recently, “We’ve made a decision to focus all of our energy on Osaka. We believe Osaka is going to be the first integrated resort location. The government is very excited about it.”
Four other casino companies appear to be focusuing on the Wakayama casino license. Civic leaders in Wakayama hosted an event last month at which four casino companies were represented: Galaxy Entertainment Group (Macau), Solaire (Philippines), Groupe Barriere (France), and Mohegan Gaming & Entertainment (USA: Connecticut).
Casino Advertising Restrictions
Operators who do win a license will face certain restrictions they won’t find elsewhere. Advertising is restricted to airport terminals and casino cruise terminals. Japanese casinos will not be able to advertise on billboards in the cities and roadways, they way one might in many countries.
It is less restrictive than in some countries. China, for example, does not allow casino advertisements; casino companies must advertise for the city their resort is in, and no more.
Japanese Integrated Resorts’ Hotel Space
As one would expect, Japan’s casino industry is going to be like no other. Though it was touch-and-go for over a year, Shinzo Abe’s ruling coalition eventually agree to allow Japanese residents to gamble in the land-based casinos. The Komeito Party, a Buddhist-influenced political movement and a part of Abe’s coalition, resisted having Japanese casino gamblers, but eventually relented after getting several concessions.
More emphasis will be placed on the hotel accommodations than the gaming space in Japanese casinos. The gaming floor will be restricted to 15,000 square feet. Meanwhile, the hotels at integrated resorts must be at least 1.1 million square feet (100,000 square meters).
That would stipulate hotels with thousands of rooms, it would seem. The American Hotel & Lodging Association estimates that the average hotel room in the United States is 325 square feet. If Japanese hotel rooms were the equivalent of an average American hotel room, then the integrated resorts’ hotels would have 3000 rooms.
Japanese Casinos’ Gaming Floors
American gaming spaces are much larger, but the United States is full of wide-open spaces. Las Vegas is located in a desert, so space is generally not a problem. Tribal casinos and most commercials casinos outside Las Vegas are in the country’s massive interior, so gaming space is no issue.
The technical law states that Japanese casino gaming space can be no more than 3% of the entire space in the complex, so if casino developers created truly huge resorts, they might be able to exceed expectations on their gaming floors.
Japan’s casinos’ gaming space is modeled on Singapore’s casino industry, which restrict Singaporean access and have much smaller gaming floors. Singapore is a good model to have, since Marina Bay Sands was named the most lucrative casino in the world last year. Though Singapore has only two casinos, Marina Bay Sands and Resorts World Sentosa make Singapore the casino city which generates the third-most revenues each year (behind only Macau and Las Vegas).
Exhibition and Convention Spaces
The size of the exhibition space and convention halls in the integrated resorts will be calculated together. If the convention center is larger, it means the exhibition center must be smaller.
Komeito Party Casino Stipulations
Japanese residents will be restricted to three casino visits in a 7-day period and ten overall visits in a 30-day period. To enter the casino, Japanese residents will need to pay a $55 fee (depending on the exchange rate). Non-residents have no restrictions and face no entry fees.
The idea of the fee is to keep out problem gamblers and penny players, on the assumption neither group of players would pay the entry fee. Japanese customers should skew towards the more affluent residents, if not high rollers. At the very least, those believing they can beat the casino will know they have an added cost to factor into the equation.
High Roller Reporting Laws
Japanese casino operators will be required to report large transactions. If a customer makes a transaction for at least one million yen ($9,080) in a single 24-hour period, the casino must report the transaction to the Japanese government.
That is much in line with high roller reporting in other parts of the world. For instance, in the United States, if a customer wins $10,000 or more in a single casino session, the casino must report it to the FinCEN department of the US Treasury.