Japan Passes IR Casino Bill

After 15 years of political arguments, Japan’s Parliament finally for the first time approved the Integrated Resort (IR) Implementation Bill including casinos into law with support from the House of Councillors on Friday, July 20.

In the casino industry, Macau, known as the ‘Vegas of China’, is now the Gambling Capital of the World over Las Vegas. It annually generated the gross gaming revenues (GGR) $33 billion (MOP265.74 billion) in 2017, which is 3 times more than Las Vegas of $11.1 billion in the same year. As few as casino operators could generate nearly $10 billion in annual net profit, Japan will be equivalent to 0.2% of Japan’s gross domestic product.

Masaru Sugiyama, vice president at Goldman Sachs Japan, says that a Japanese casino market could potentially generate GGR of up to $15 billion in 2025 and become second largest gaming market after Macau in Asia.

Who will run the casino industry in Japan?

The first Japanese casino will likely open in 2022-23 at the earliest. Under the new law, it will permit the opening of casinos in up to three locations nationwide such as conference halls, hotels and shopping facilities. The possibility of additional resort locations will be considered seven years after the initial three are approved.

Many foreign casino operators have shown interest in the first chance to open in Japan. U.S.-based Las Vegas Sands and MGM Resorts International have pledged to spend as much as $10 billion per resort in Japan.

Other US operators such as Caesars Entertainment and Hard Rock International, and Macau casino operators Galaxy Entertainment Group and Malaysia’s Genting Group also have been excited to try their new experience in Japan.

Japanese game companies also desire to enter the market following the news. Slot machine manufacturer Sega Sammy Holdings and Konami Holdings have already announced their interest to particulate in the casino project in Japan.

Shochiku, a Japanese movie studio and production company for Kabuki, a business per toner with MGM on Kabuki performances in Las Vegas, sees the new law as “an opportunity to enlarge our customer base,” stated the head of public relations.

Taxes and Licenses

The law initially requires operators of the IR facilities to pay 30% of gross gaming revenue to the central and local governments. According to the current Diet session, the revenue from the taxes will be allocated for public interest purposes (Fukuda, 2017). Casino spaces will be limited to 3% or less of the total resort size.

Gambling operations will be allowed only within the licensed casino spaces and online gambling may not be allowed both inside and outside of the facilities. Casino licensees will be monitored under the certain obligations such as allowing onsite inspections and reporting periodical documents to the Commission.

Since the gambling license is advantageous, the licensees will be expected to have high standards of principle and ethics such as responsible gambling, the protection of minors, and anti-money laundering, and certain public goods purposes.

Who will visit the casino resorts?

According to Goldman Sachs Japan, 57% of visitors to casino resorts will be locals. This is a higher ratio than in other markets.

Residents in Japan will be limited from visiting casinos more than three times per week or 10 times per month. The cost for entering the casinos will be a set price of ¥6,000 ($54, £41, or €46) per visit while international visitors will be able to visit the casinos for free.

People under the age of 20 and gang members will be illegal to enter the casino space.

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