Early Thursday, in an extended session of the Diet, Japan‘s parliament passed a bill making casinos legal in the country. The bill originated in the lower house and was passed there on December 6. It was then approved by the upper house with changes. Those changes were approved, clearing the path for billions in investments and setting the stage for one of the most lucrative gambling markets in the world, perhaps to only be surpassed by reining king, Macau.
Against heavy opposition and delay tactics, the integrated resort bill has been passed but will most likely not see supporting legislation hammered out in time to open major casinos before the 2020 Summer Olympic Games which will be held in Tokyo, one of the cities on a perceived shortlist to receive casino bids.
Grant Govertsen, analyst at Union Gaming,said in a research note published online by various media outlets, “This is a landmark occasion and should be a shot in the arm as it relates to investor sentiment in all gaming names that could be players in Japan,” referring to international operators who have already spent about a decade planning for the momentous landmark legislation.
Las Vegas Sands, Wynn Resorts Ltd, and MGM Resorts International have expressed intense interest in cracking open the market there with MGM saying in late October that they are prepared to invest as much as $10 million in their venture. Malaysian giant Genting, Hard Rock International, and Caesars Entertainment of the U.S., and Manila’s Bloomberry have also indicated they would join the race. Japanese pachinko billionaire, Kazuo Okada of Universal Entertainment, and Sega Sammy Holdings Inc, chair and president Hajime Satomi, expressed interest in operating casinos as early as 2012, with Satomi looking to Seagaia water park and resort for his project then. Others will undoubtedly emerge now that casinos are finally legal in Japan.
Some estimates have placed annual revenues from casinos in the country as high as $40 billion, but as low as $10 billion per year if the integrated resorts are only opened in two major cities. Osaka, Yokohama, Tokyo, and Sapporo have been mentioned as possible sites with Osaka and Yokohama considered the most likely to open first, due to groundwork already being laid. Had the bill’s passage come sooner, it is widely believed the first instance would occur in Tokyo to capture trade from a massive influx of visitors to the coming Summer Games. At present, Tokyo Governor Yuriko Koike has not spoken publicly in support of a gaming venue there.
The casino bill will allow high stakes gambling in Japan for the first time. Currently, public sporting events such as horseracing are legal to bet on and the country’s pachinko parlors provide low-cost gaming on the vertical pinball type machines as well as pachislo or ‘pachislots’ that operate under strict regulations issued by the Security Electronics and Communication Technology Association, an affiliate of the National Police Agency.
Supporting legislation is expected to be passed within the year that will determine full-scale casino regulation, tax rates, and societal and law enforcement issues like gambling addiction and organized crime prevention.
Site selection must be performed, infrastructure planned, and casino licenses offered for bid or award before ground can be broken and construction can commence. There are no analysts currently expecting any integrated resorts to open in time for the Summer Olympics in 2020, with several expressing confidence that the first integrated resort could open as soon as 2023. Japan expects to see up to 2o million visitors per year by then, with many coming from China.