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Asia

Japan prepares to take a gamble on casinos

Faced with declining tax revenues and a growing national debt, the Japanese government is considering relaxing its laws banning gambling at casinos.

Politicians from three of Japan's major political parties in December submitted a bill to parliament proposing that the outright ban on casinos here be lifted. While there have been similar moves in the past, none have ever got this far and none have ever had such a broad groundswell of support.

Arguably, the new-found backing for legalized gambling is a result of the severe financial problems that Japan finds itself in today - most notably the eye-watering figure of public debt running at 214.3 percent of GDP, the highest in the world.

And economists say the long-term outlook for Japan is not particularly bright either, particularly with a rapidly aging population and fewer younger workers coming through and providing taxes to pay for pensions and healthcare costs.

Makao - Dealers undergo training at the 'MGM Grand Macau' casino, in Macau, China, 13 December 2007. When the casino opens its doors to the public on 18 December 2007 it will be the latest casino to open in the ex-Portuguese enclave that has seen explosive growth in its gaming sector since it was liberalized in 2002. It will also mark the third American gaming operator to enter he increasingly crowded casino industry in Macau, (after the Las Vegas Sands Corporation and Wynn Resorts). The 'MGM Grand Macau' is a joint venture between MGM Mirage and Macau local partner Pansy Ho, daughter of Macau casino kingpin Stanley Ho, and the total project cost 1.25 billion US dollars to build. (Photo: EPA/ALEX HOFFORD +++(c) dpa - Report+++)

Makau is a very popular destination for gambling in Asia

Prime Minister Shinzo Abe has introduced some dramatic stimulus measures in an effort to get the economy running on all cylinders once again, and plans for casinos fit neatly into that larger project.

Watching Singapore

"Japan has been looking at the example of Singapore very closely, where the experiment of casinos seems to have been positive to date, and these plans dovetail very neatly with the measures the ruling Liberal Democratic Party has already implemented for growth here," said Andy Hurfurt, head of Investment Consulting for property firm CBRE in Tokyo.

"This would be additional stimulus without large amounts of spending and would also mesh with the aim of increasing inbound tourist numbers," he said.

Japan has set a target of 20 million visitors a year by 2020 - and Abe has even gone on record with the ambitious objective of 30 million a year by 2030. Having casinos would be yet another attraction for visitors.

And, taking into account other nations' experiences with introducing casinos, the results could be spectacularly positive.

Kasinos in Singapur

Singapore opened its first casino in 2010

The Union Gaming Group, the Las Vegas-based analysts of the industry, have estimated that a fully fledged casino industry in Japan could rake in 10.60 billion euros, or Y1.5 trillion, a year. Bank of America Merrill Lynch are even more upbeat and put the potential windfall at 14.09 billion euros annually, which would make Japan the second most lucrative gaming market in the world, after Macau.

Licensing and supervising

The proposal that has been submitted to the Diet is a basic outline of a system for licensing and supervising casinos and suggests the creation of a number of special zones where casinos could operate, as long as local authorities were in favor.

The politicians have suggested two types of licenses for operators. One would be aimed at large international companies with huge gaming floors, while the other type would be for smaller venues in coastal towns looking to attract additional domestic travelers.

Two locations have been rumored as the initial sites for new gambling facilities; the Odaiba waterfront district in Tokyo and the Mishima district in Osaka. Secondary locations that have also been mentioned include the Shinagawa district of Tokyo, where a large railway marshalling yard is to be redeveloped in the next few years, and Okinawa, which has the added benefit of being a resort destination with sun and beaches.

"A number of companies have emerged as potential developers of casinos and it looks very much as if they are again looking at the Singapore model as the best fit for this market, with resorts that include casinos as well as hotels and other attractions making up the package," said Hurfurt.

The company behind the Las Vegas Sands casino has even gone as far as to make a mock-up of how they envisage their planned property on Tokyo Bay will look when it is completed.

Not everyone is delighted at the idea of unfettered access to roulette wheels, slot machines and card tables, however.

Impact on society

"Yes, it will be a source of revenue for the government, but we also have to look at the negative aspects of gambling on Japanese society," Go Ito, a professor of international relations at Tokyo's Meiji University, told DW.

"Japanese people, up until now, have not really been exposed to this sort of gambling and there is a fear that they will not understand the potential risk," he said.

"A lot of people are going to lose a lot of money."

Other concerns revolve around young people gaining access to gambling venues, the inevitable impact on the national lottery - the operators of which are lobbying hard against the proposed legal changes - and fears that the vast sums of money being won and lost will prove too tempting a target for Japan's underground groups, the "yakuza," to ignore.

Las Vegas at night

Tourism has thrived in Las Vegas since casinos started opening in the 1930s

The proposed changes to the legislation put forward so far are the basics of any reforms and the politicians behind the bill have been careful to try to assuage any public concern by including calls for the creation of an administrative commission under the Cabinet Office to supervise operations.

And this time around, the appetite appears to be there, says Hurfurt.

"This sort of legislation has been addressed in the Diet before but it has always failed to proceed," he said. "This time, I get the impression that they are pushing it through far more forcefully. It will take a while for the legislation to go through and then to get the casinos built, but I think Japan could have its first operating casinos in the next five years or so."