The parliament of Japan has now cleared the way for global casinos to operate in the country after the approval of ‘integrated resorts' law, despite the mixed feelings and warnings from the Japanese public over the involvement of organized crime and gambling addiction.
In the early hours of Thursday last week (December 15), Japan's parliament approved the legislation permitting the construction of ‘integrated resorts' which will include casinos alongside hotels and entertainment-related facilities. Shinzo Abe, Japan's prime minister, has long advocated the move to lift the casino ban, emphasizing that it will significantly boost the economy with the arrival of wealthy tourists from mainland China (where gambling is banned) as well as other neighboring countries in Asia.
The Japanese parliament passed the bill despite the warnings from mental health experts and opposition politicians that casino operation could likely lead to a rise in gambling addiction and become a more fertile ground for money laundering activities by the yakuza, the organized crime syndicates in Japan.
Osaka, Yokohama and Tokyo are a few of the cities pushing to be chosen as casino areas, while international operators have spent years lobbying Japanese authorities to give them access to a market that could produce huge profits.
According to the Japan Productivity Center, despite its ban on casinos before, Japan is a nation of keen gamblers: speedboat, horse, and keirin bicycle racing collectively bring in the equivalent of tens of billions of dollars each year. A pinball-like game called Pachinko makes up a legal gray area and has actually been in decline in recent years but still garnered over US$200 billion in revenue last year.
Chairman of Las Vegas-based MGM Resorts International James Murren said, "The reason why everyone's spending the time on this is that the potential is absolutely enormous. Japan would dwarf the Singapore market in size and could be extraordinarily lucrative for all the investors, real estate and operators alike."
A study in 2014 by the Japan health ministry found that almost 5 million Japanese were addicted to gambling, compared with just 1% in many other countries. This high rate of addiction is mainly because of pachinko, in which players get around gaming laws by means of exchanging their prizes for cash off the premises of the pachinko parlors.
Shinzo Abe dismissed concerns that casinos might become magnets for anti-social behavior, insisting that they would form only a small part of resorts that would also include shops, conference facilities, entertainment venues and restaurants. He noted that the number of foreign tourists have doubled from 8 million in 2012 to 20 million in 2016.
He said, "It's not like entire cities will be taken over by casinos. These facilities will attract investment and do a lot to help create jobs. These integrated resorts will be able to be enjoyed by families, not just for business activities or conferences."
Analysts believe that the move could possibly make Japan the second-largest gambling market in the world, right after Macau.
According to the Daiwa Research Institute, just three casinos can potentially generate almost US$10 billion in net profit annually - equal to 0.2% of Japan's GDP. According to the investment bank CLSA, they estimate that the Japanese market could bring in US$30 billion annually in gross revenues.
Billionaire casino operators such as Steve Wynn of Wynn Resorts and Sheldon Adelson, head of Las Vegas Sands, have visited or deployed representatives to Japan to lobby for legalization.
Crown Resorts owned by James Packer, despite them withdrawing from Macau and focusing more on his casino interests in Australia, they are reported to be one of the many casino operators that foresee a huge potential in setting up a presence in Japan, regarded as the industry's ‘final frontier'.
However, James Packer and other international operators will have to first convince Japanese authorities that they are capable of promoting responsible gambling and make sure that their casinos are integrated with the resorts' hospitality business. This means if they would like to have a presence in Japan, they will have to simply play by Japanese rules.
Despite all these, the majority of the Japanese public remains opposed to the legalization of casinos. A recent survey made by public broadcaster NHK showed that 44% of citizens do not want casinos, while only 12% supported them.
A professor of economics and gambling business expert at Shizuoka University Yoichi Torihata said, "The estimated economic impact is too optimistic, while the negative impact - including gambling addiction - has been understated."