Stars Aligning for Casinos in Japan
The word from Japan is that Prime Minister Shinzo Abe’s government may include casino development in a new national economic growth plan to be drawn up in June 2013.
English-language daily The Japan Times, citing unnamed but “informed” individuals, reports that Abe may propose special zones for investment in privately operated resort complexes featuring hotels, casinos and other attractions. He told the Budget Committee of the National Diet’s House of Representatives in March that lifting the country’s longstanding prohibition on casinos is an idea with “merit”.
Advocates have been pushing gaming’s potential economic benefits for the better part of a decade with little by way of political traction to show for their efforts. However, this time round they appear to have the requisite consensus and have secured an influential former chief cabinet secretary, as their leader, Hiroyuki Hosoda, a veteran of the ruling Liberal Democratic Party and said to be a confidante of Abe’s.
The news that Trade Minister Toshimitsu Motegi and Education Minister Hakubun Shimomura have been appointed to advise the pro-casino caucus in the House would also indicate that legislative momentum is building toward introduction of an authorizing bill, but not before elections in July to the House of Councillors, the Diet’s upper chamber, which is still controlled by the opposition Democratic Party of Japan and where a coalition led by the LDP hopes to seize a majority.
“You need both sides of the equation before things really get moving. We want to make that happen this year,” said the caucus’s deputy leader, Takeshi Iwaya, another prominent LDP lawmaker who served in Abe’s first government in 2006.
Given Japan’s sizable urban population and high propensity to gamble, the viability of casinos in the world’s third-largest economy has never been in doubt, and global names of the likes of Las Vegas Sands, MGM Resorts International, Genting Group and Caesars Entertainment have expressed interest in investing a lot of money. The country has long hosted thriving racing and lottery industries, and a machine gaming sector centered on the pinball-like game pachinko.
In a conference call for investors hosted by Nomura Securities last month, Takashi Kiso, who heads the International Casino Institute, a Japanese advocacy group, said the market could evolve into as many as 10 resorts nationwide with initial investments at around US$4 billion each and a gaming tax rate between 20 and 30 percent.
That said, a multiplicity of divergent political interests together with a history of governmental instability have been major obstacles, especially when combined with the country’s inherent social conservatism. Advocates hope to finally overcome these with the backing of Abe, who was returned to power in December 2012 and has been winning popular points with his aggressive approach to tackling the country’s chronic economic malaise.
Pachinko manufacturing giant Sega Sammy Holdings has seen its share price rise more than 50 percent this year despite a big drop in profit for the 12 months ended 31st March and a subsequent lowering of its earnings forecast. Mizuho Securities, for one, told Reuters it likes Sega Sammy’s prospects along with those of Fuji Media Holdings, a broadcaster located in a section of Tokyo considered prime territory for casino development.
Sega Sammy, which owns a stake in a casino in South Korea, stated a desire as far back as 2007 to invest in casinos in Japan should the opportunity arise and last February purchased a resort in Miyazaki Prefecture. Two months after that acquisition was announced, company President Hajime Satomi reasserted the company’s intentions, saying, “Of course, [a casino] is what we have in mind