Now that Japan has finally signalled its intention to permit casino gambling, the country is closely studying a number of different models that may best be applied to the wealthy country of 127 million people. One such example is likely to be provided by a Southeast Asian country located 3,257 miles away, namely the Republic of Singapore.
The Singapore model of casinos as part of integrated resorts has been closely studied by Japan, with several Japanese government officials visiting the city state in recent years,
Unlike the sprawling gambling destinations of Macau and Las Vegas, the world’s biggest gambling resorts, the more inconspicuous model adopted by Singapore is likely to be perceived as a better fit for the conservative Japanese market. In fact, the country has permitted just two integrated resorts to be built since the market was established in 2010, the Marina Bay Sands and the Resorts World Sentosa, with the proviso that a mere 3% of their total areas can be allocated to gambling activities.
Deemed more important to Singapore is promoting the country as a tourist destination, while also offering gambling facilities for mostly foreigners to visit. In its efforts to dissuade the local population from frequenting the venues, Singaporeans must wait in a separate line to enter the casinos, and must also pay a S$100 (US$70) entry fee, or a S$2000 (US$1,381) fee for a year’s pass.
To provide a further example of Singapore’s approach on the issue of casino gambling, the country’s Prime MinisterLee Hsien Loong stated in 2005 that “we are not aiming to become like Las Vegas or Macau, where gambling is the main industry. We will not allow casinos to sport garish neon displays on the facades and have jackpot machines everywhere.”
Despite its strict controls, however, Singapore still maintains a thriving casino industry which last year generated US$4.8 billion in revenues. Meanwhile, visitor arrivals reached 15.2 million in 2015, with tourist receipts totalling an impressive US$15.2 billion. All told, Singapore’s two resorts now account for around 2% of its economy, while also creating over 20,000 jobs. Given it evident success, it is no wonder that Japan has seriously been examining Singapore’s casino industry, and over the years has sent government officials to the country in order to study its intricacies.
Japan’s IR Bill passed
Recently Japan’s government has taken a crucial step forward to opening the country for the casino gaming industry. The House of Representatives in May 2018 passed a bill on gambling addiction countermeasures, preceding the IR Implementation Bill that is necessary to allow so-called integrated resorts in Japan.
Casino companies from across the world can scarcely contain their excitement about the world’s last casino frontier beyond the forbidden zone of mainland China. But Japan won’t consider a concept for creating compelling IRs worthy of the world’s third largest economy, one aiming to double visitor arrivals to 60 million and become a global top five tourist destinations.
According to Forbes news official Japan’s approach to IR legalization has been rather schizophrenic. It wants the economic and image boost of IRs, exemplified by Singapore’s iconic Marina Bay Sands, but fears increased problem gambling. Losses on pachinko, a souped-up version of pinball, and pachislot machines, exceeded US$30 billion last year. Pachinko’s association with organized crime and money transfers to North Korea – industry figures dismiss that as ancient history – adds to negative public perception of gaming overall. Surveys find two-thirds of Japanese oppose casino legalization, though antipathy softens with information about IR non-gaming features.
Japan’s IR bill includes several restrictions, including Singapore-style limits on casino size – 3% of total gross floor area – and a 6,000 yen (US$55) entry tax for residents, plus awarding just three IR licenses nationwide in three different areas. Casino companies have declared they’re prepared to spend US$10 billion on IRs in major metropolitan areas such as Tokyo and Osaka.
In effect, each licensee gets a monopoly in its area, and competition for the licenses will be fierce. But once licensed, the IR won’t face competitive pressure to excel. At last month’s Japan Gaming Congress, Morgan Stanley Managing Director in Hong Kong Praveen Choudhary said that without competition within markets, Japan won’t get the spectacular IRs it deserves. He suggested that instead of one US$10 billion IR, allowing three US$3 billion IRs in an area. “You’d get more non-gaming and more variety,” Choudhary said.
“The level of investment and tourism draw would increase significantly if multiple operators would come together on a single large site such as Yumeshima Island in Osaka to form an Osaka Strip or in the Tokyo/Yokohama area, where is it possible on a couple of sites,” Global Market Advisors Director of Government Affairs Brendan Bussmann says. “As opposed to one operator that may be willing to contribute $10 billion to a single IR, if you could bring together multiple operators while still staying within the 3% casino size, you are likely to see a number well north of the $10 billion.”
Also MGM Resorts International, a leading casino operator is now committed to bidding for one of three licenses to operate integrated resorts. MGM would give priority to finding local Japanese partners to operate a resort in the country.
It has close relationships with Japanese film studio and theater company Shochiku and electronics maker Panasonic. It has hosted Japanese kabuki spectacles at its Bellagio resort and the MGM Grand in Las Vegas. Both shows involved collaboration with Japanese companies offering projection mappings and other technologically enhanced art. In June, MGM will host a contemporary Japanese art exhibition at the Bellagio.
MGM Resorts International chief executive James Murren said potential partners in a consortium would prepare for the bidding process, which would be run by local prefectures. The Japanese government would then choose three prefectures to operate integrated resorts.
Murren, who travels to Japan every two months and has visited 23 of the country’s 47 prefectures, said he has been in contact with “hundreds of Japanese companies.” An MGM resort in Japan “will be definitely designed with Japanese architect, outfitted with Japanese interior designers and artists, and powered by Japanese technology.”
While the industry has high expectations for Japanese casino licenses, the passage of the bill remains to be seen. Murren said he will wait patiently until “Japanese leaders have believed that it is good for Japanese people.”