The prospect of casinos being permitted in Japan seems to be closer than ever. But the subject of casinos in Japan always comes with a cautionary note because it has been under discussion for much of the last decade without a final decision being taken.

Casinos are currently prohibited under Japan’s Penal Code. One reason for the delay in taking a final decision has been the instability at the top of Japanese politics in the last decade. With the resignations of Yukio Hatoyama and Naoto Kan, Japan has had seven different prime ministers since 2006.
In September 2006 Shinzo Abe replaced Junichiro Koizumi as the LDP’s Prime Minister. But Abe’s ruling Liberal Democratic Party (LDP) lost control of the country’s upper house in an election on 29 July 2007 and he resigned two months later. He was replaced by Yasuo Fukada who lasted only a year in the role before being replaced by Taro Aso in September 2008.
Aso was forced to call a snap general election in August 2009 after the LDP lost local elections. 

The LDP lost the election in a landslide defeat to the Democratic Party of Japan (DPJ) and ended 50 years of nearly continuous rule by the LDP.
Yukio Hatoyama was installed as the new DPJ Prime Minister in September 2009 but resigned in June 2010 to be replaced by Naoto Kan. Kan resigned in 2011. Such a ministerial merry-go-round is not conducive to the creation of good, practical gaming regulation.
The previous Liberal Democratic Party (LDP) government established a casino research group and major Las Vegas operators have been regular visitors to Japan, meeting with politicians to advise what casinos could bring to Japan’s economy. 
In June 2006 the LDP’s casino panel recommended a basic policy of developing two or three casinos to attract foreign visitors to Japan and revitalise regional economies. The new casinos would be established by municipalities and run by private firms.
In January 2007, the LDP set up a subcommittee to study a legal structure and policy for casino style entertainment. At the time it was seen as possible that the government would issue up to three licences for resort style casinos. More than 25 local government leaders lent their support to the casino policy. One of the highest profile supporters was the governor of Tokyo, Shintaro Ishihara, who stated that casinos would make Tokyo ‘better for everyone’, bringing 10,000 new jobs and regenerating the Odaiba waterfront. 
During January 2008 it was announced that the LDP planned to propose legislation to legalise casinos under strict supervision. At the time a Bill was initiated calling for the establishment of an independent watchdog with strong investigative authority in order to prevent criminal activity. This watchdog’s operational costs were to be funded from the revenues of the casino operators, not tax revenues.
The issue of casinos was raised again in 2010 under the new DPJ government. 
In August 2010 a proposed draft of a Casino Act was published by the Casino Diet (Parliament) Member Association. Shozo Azuma, a pro-casino member of the DPJ, has said casinos in Japan offer the only means of stimulating the economy that will not use taxpayers’ money.
The likelihood is that there would be two initial casino sites within designated economic zones. This number then could be increased to a maximum of 10, depending on the performance and impact of the first two. The selection and licensing process would be a combination of national and local government responsibility. The operator of the casino will be chosen by the local government, whilst the Casino Administration Organisation, under the Cabinet Office, will issue the operator’s gaming licence. 
In June 2011 the Integrated Resort and Casino Diet (Parliament) Members Association met and the idea of creating a special zone to allow a casino in Sendai/Tohoku was raised. Sendai was devastated by the Tsunami and the casino could be part of an economic regeneration scheme.
Casino operators have been assessing the potential for casinos in Japan and have indicated that Tokyo would be the preferred location with possible projects being planned for the city’s harbour area. Proposals are focused on developing huge entertainment complexes that include shopping, restaurants, and theatres, rather than just casinos, similar to Singapore’s two new integrated resorts. Sands China, for example, has said it is looking closely at Japan as a potential new market in the region. 
The Chief Executive of Caesars Entertainment, Gary Loveman, made a presentation to the association on the topic of integrated resorts at its meeting in October 2011. Loveman covered topics such as the rate of return on investment, the size of investment required, attracting Chinese and international players, payout ratios, and social responsibility in his presentation.
Any developments would almost certainly see partnerships between local entertainment companies such as Sega Sammy, Konami or Aruze and the gaming industry international giants such as MGM Mirage, Caesars Entertainment, Wynn Resorts and Las Vegas Sands. The previous Liberal Democratic Party government was believed to be against 100% foreign ownership.
The LDP (now in opposition) reportedly intends to give its support to the Casino Act in the first quarter of 2012. As discussed above, when in government, the LDP set up research groups to look into the prospect of casinos in Japan. 
In March 2012 the ruling DPJ was given a special briefing on plans to permit casinos in Japan. The DPJ lawmakers were given updates about the proposed casino bill and on the cross-party discussions held by the Diet Member Alliance for Promotion of Integrated Resorts.
Speculation that integrated resorts will be permitted has intensified with Sega’s comments in April 2012 that “when the law to legalise casinos is passed we would consider it carefully”. Sega Sammy Holdings has bought the Phoenix Sea Gaia resort in Miyazaki from RHJ International. The resort is home to a large water park as well as hotels, spas, and gold courses.
It would be very bold to predict that casinos will certainly be permitted in Japan, given the recent political and regulatory complications. But it is true that, in recent years, a number of economic difficulties and natural disasters have combined to give greater cause for the economic stimulus that casinos would provide than at any point in recent history. A simple desire for Japan to keep pace with its neighbours should not be underestimated either. 

Lorien Pilling, Research Director, Global Betting and Gaming Consultants