Japan legalises gambling resorts and the race is on for foreign operators keen to tap a new gaming market said to be worth up to $25 billion.
The new Japanese casino law has finally been passed after nearly 20 years of debate. The bill has been delayed by public concern over the issue of gambling addiction. However, now one of the last major untapped gambling markets in the world has been opened up.
“Japan is one of the last three attractive regions, along with Brazil and India,” said Rory Credland, event director for gaming at Clarion Events in the UK.
The law will allow what it calls ‘integrated resorts’, offering casinos alongside hotels, conference facilities and other forms of entertainment.
Key details of the new legislation:
- There will be a framework for how casino resorts will operate, allowing gambling at integrated resorts.
- Gaming areas will take up no more than three percent of the total floor space.
- Initially three casino licences will be issued. A 30 percent gaming tax will be paid to central and local government.
- International visitors will be able to enter for free, while Japanese residents will pay 6,000 yen ($50) for entrance. In addition, Japanese visitors will be limited to three visits a week, and ten per month.
Japan to become world’s second-largest gambling market
Goldman Sachs estimates that the Japanese gambling market would become the second largest gambling market in the world, after Macau.
“This business becomes a legitimate viable business after the bill passes,” said Masaru Sugiyama, an analyst at Goldman Sachs Group Inc. “Companies that weren’t willing to come public with their aspirations — we’ll see them be more active with press releases, briefings, blueprints coming out for what kind of projects they want to do and where, and who they want to partner with.”
Major international casino operators are expressing extreme interest, including Las Vegas Sands, MGM Resorts International, Caesars Entertainment and Hard Rock International Inc.
Sheldon Adelson from Las Vegas Sands and James Murren, CEO of MGM have said they’d be willing to spend up to $10 billion building an integrated resort in Japan. Murren said MGM was set to “advance our relationships with key stakeholders and together create a coalition of Japanese business partners who will collectively define a vision for a uniquely Japanese, world-class integrated resort.”
Closer to home, Sega Sammy Holdings has announced it will participate. The company, which is best known for video games, also owns 45 percent of Paradise City, Inchean, South Korea’s first integrated resort. Konami Holdings has also expressed its intentions.
A wide range of other businesses see the vast opportunity, including entertainment companies such as Shochiku; travel agency and robot hotel operator H.I.S.; construction company Obayashi Corp.; and transit companies such as Keikyu Corp. Panasonic Corp. has said it would consider consider casino opportunities in Japan. Meanwhile, banks such as Sumitomo Mitsui Financial Group Inc., Mizuho Financial Group Inc., and Mitsubishi UFJ Financial Group Inc. could all handle financing for a large consortium.
Airlines would clearly benefit with tourists coming from abroad and, in particular, China. “We expect IRs to stimulate job creation and promote tourism in areas around Japan,” said Yuko Yoshimura, a spokeswoman for All Nippon Airways Co.
Osaka, Yokohama and Tomakomai are the cities most likely to win government approval for the first three locations.
“Japan is known worldwide for a unique culture of customer-focused hospitality known as ‘omotenashi,’ ” said Matt Maddox, CEO of Wynn Resorts Ltd. “This important Japanese tradition of creating a unique guest experience makes it clear to us that Japan will develop extraordinary integrated resorts that are not found in any other country.”