Japan needs dual-track regulatory process to speed casino progress

    Japan looks increasingly unlikely to pass a bill legalizing casinos by the end of the current parliamentary session on June 22, with experts saying the country may need to consider a dual-track regulatory system if a casino is to open by the 2020 Tokyo Olympics.

    At a panel discussion on the progress of casino legalization in Japan, speakers noted that there is now a less than 50/50 chance that the bill will be passed in the current session, though they remained optimistic of passage in an extraordinary parliamentary session in October.

    Both the Upper and Lower House of parliament needs to approve the bill, before implementing legislation can be drawn up. Only once that process has been completed can the process proceed to choosing eventual locations and considering bids from operators.

    The timetable has cast the prospects of having a resort opened by the Olympics in doubt.

    “The construction code is very, very strict in Japan as it’s an earthquake zone, so if you want to build a large-scale development it takes time,” said Takashi Kiso, CEO of the International Casino Institute. “Can you do it by 2020? That is the argument.”

    Operators were hoping to capitalize on the influx of tourists coming in for the games to promote the country as a tourism and ultimately gambling destination.

    The Japanese government, which is spending heavily on infrastructure to promote the games, is keen to ensure that it retains tourists following the event, which has been one of the main driving forces behind the push to open up the market.

    “If you get an IR in Tokyo by the Olympics, that would be good,” said MGM Resorts senior vice president of global gaming development Edward Bowers. “But, it may be even better to get it in Osaka as you get to show those who come to the Olympics a different part of Japan,” he said.

    The government is hoping to double tourist numbers to 20 million visiting the country by 2020, which Bowers said he thought was “aggressive.”

    Bowers suggested one way of moving the regulatory process forward would be to dual-track. As the government moves forward with the implementation bill, it makes sense for the competing prefectures to be given the latitude to talk to operators at an early stage to narrow down the field, he said. It would also allow the prefectures to present a better application to the central government.

    International casino companies are jockeying for position in Japan in a bid to steal a march on rivals in what could be the world’s second-biggest casino market. Estimates vary, with some at the top end saying that if the market was opened without restrictions, revenue could reach $40 billion. However, the consensus view is closer to half of that amount, at least initially.

    Both MGM and Las Vegas Sands have said they may be prepared to spend at least $10 billion to gain a foothold in the market. Genting Bhd, Melco Crown, Boyd Gaming, Bloomberry Resorts, Wynn Resorts and others are all interested in the market.

    However, Bowers cautioned at G2E Asia that an unfavorable tax regime in the country would probably force the company to cut the amount it spends.

    He said a tax regime on a par with that in Singapore would be considered competitive, while levels above that would not.