A draft plan for legalizing casinos in Japan calls for the establishment of a strong, independent regulatory authority modeled on Nevada and Singapore.
As political momentum builds to bring baccarat, roulette and blackjack to the world’s third-largest economy, keeping out organized crime—the country’s infamous yakuza—is a big concern for the Diet’s pro-casino caucus, which is reported to have the backing of popular Prime Minister Shinzo Abe.
As a policy paper leaked to select media outlets states,“The hurdles to enter the business should be set high. It should not be easy for anyone to get a licence and participate in the industry. With proper regulation and enforcement of the law, there is absolutely no reason for casinos to become hotbeds of criminal activity.”
The paper recommends stringent checks on the “suitability” of the people and businesses involved, with directors and senior executives of licensees required to provide bank account, credit card and tax records for themselves and their families going back 10 years.
As a safeguard against corruption, the regulatory body would be attached to the Cabinet and not part of any ministry—a provision designed to head off a longstanding custom known as amakudari under which ministry officials retire to comfortable sinecures in the industries they once regulated.
Given Japan’s worldwide appeal as a tourist destination and a large and relatively affluent population with a proven propensity to gamble—the pinball-like machine games pachinko and pachislot alone account for an estimated 10 trillion yen ($192 billion) in wagers a year, equal to 30 percent of the country’s annual leisure spend— analysts estimate a market consisting of two resort-scale casinos, one each in Tokyo and Osaka, could generate US$10 billion – US$15 billion in gaming revenue out of the gate, which likely would catapult the market to the second-largest in the world after Macau.
That’s about five to six years away, according to the best estimates.
Sources close to the legislative process expect the tax on gaming revenues to approximate a blended 20 percent, which compares very favorably to Macau’s 39 percent and the Philippines’ 15 and 27 percent on VIP and mass-market play, respectively, and not unfavorably with Singapore’s 12 percent on VIP play and 22 percent on mass.
Not surprisingly, an A-list of global heavyweights have begun scouting development sites and negotiating with prospective Japanese partners—Mitsui, Mitsubishi, Itochu and machine gaming giants Sega Sammy and Konami reported to be among them.