Japan’s unique IR bidding process

On August 1, the Experts’ Committee formally handed over its report to the government. This 130-page Japanese-language document is expected to form the basis of the forthcoming IR Implementation Bill. Among other things, it outlines a bidding process which some industry sources have described as being unique in their experience.

As it is envisioned in the report, it will be IR operators and local governments which will take the first steps together. Through their own processes, local governments will select an operator to work with, and together they will submit their combined proposals to the central government. It seems likely that only two or three proposals will be given the green light.

It is now envisioned that the Ministry of Land, Infrastructure, Transport and Tourism will have the primary jurisdiction over Japan’s IRs, selecting the local areas that will be granted licenses and regulating the IRs once they are up and running.

The Casino Management Board (the formal English-language name is pending) will have the key role in licensing and regulating the casino element. This organization has been envisioned as an independent agency under the umbrella of the Cabinet Office.

Some international IR operators have already made complaints about this “two-stage” bidding process in which they must first win approval from a local government and then hope that their local partnership is accepted by the national government agencies. It does not appear, however, that the Japanese authorities are planning to change this aspect of the process.

It also seems doubtful that the Japanese authorities will respond proactively to the operators’ suggestion that each local bid should be considered according to a staggered schedule, allowing everyone to know the outcome of each local government’s bid before moving on to the next one. Present evidence suggests that it will be something of a free-for-all at the first stage, with local governments and IR operators making their own arrangements in their own unique ways, and then coming to the national government, more-or-less simultaneously, in hopes of being licensed.

However, the current proposed bidding model will go through a process of public and parliamentary scrutiny before it is enacted, and so significant changes are still possible.