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Why Japan Is Light Years from Being the Next Gaming Hub in Asia

The Japanese government has tried to dominate the space, as it hopes to establish itself as the gaming hub - while also pulling in some of that tax revenue
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It’s no secret that the global gambling space is on a high note right now.

Growth is steady across the board, regulations are doing their bit to protect gamblers and bookmakers at the same time, and more countries are making a move to allow the industry into their borders since it’s a proven revenue generator.

But, as with most industries, the level of adoption has varied across the world. Disparities are to be expected, considering the fundamental differences in these nations.

For some countries, they have no qualms with gambling, while others are restricted from allowing it due to religious or some other socio-cultural belief.

One country that has tried to break into the gambling sector is Japan.

Becoming the next Macau?

Home to the world’s most delicious sushi, tea ceremonies, and calligraphy, Japan has made efforts to stimulate its gambling space. And for good reasons.

China has managed to control a majority stake across several Asian industries, but gambling isn’t one of them. In its absence, the Japanese government has tried to dominate the space, as it hopes to establish itself as the gaming hub- while also pulling in some of that tax revenue as well.

Currently, the crème de la crème of Asian gambling is controlled by Macau. The Chinese administrative region has been able to coast off the back of China’s aversion to gambling and soak up all that revenue.

In fact, gambling is so big in Macau that the region now makes more money than Las Vegas. In 2018, casino wins totaled around $37.68 billion in the region, compared to the $6.59 billion recorded in Vegas.

Macau

By combining favorable gambling rules with an influx of tourists from China, Macau has grown its gambling industry steadily- so much so that it has caught the attention of the American gambling behemoths.

Large US gaming operators like Wynn Resorts, Las Vegas Sands, and MGM Resorts International all have subsidiaries operating out of Macau, and are set to renew the validity of their licenses in the region between 2020 and 2022.

For the gambling space, Macau has been a success story, every Asian country has tried to emulate. Japan has tried its best to copy its model, so far, its efforts haven’t been nearly as successful as it would have hoped.

Company Interest is Commendable

Objectively, the Asian giant hasn’t fared so badly- especially from the standpoint of foreign investment. Last year, Las Vegas Sands said in its third-quarter revenue call that it would be investing up to $12 billion in Japan’s Integrated Resorts (IR) project.

The project is the crown jewel in Japan’s efforts to become a gambling powerhouse, and it will see the government build three large-scale gaming venues across the country.

Sands’ interest, however, extends beyond just the IR. The company had previously made an ill-fated attempt to partner with the country in its bid to host the 2025 World Expo.

Although it eventually withdrew from the bid, Sands explained that it was still interested in making a substantial investment in the Japanese gambling industry.

At the earnings call, Sands COO Rob Goldstein backed the move, which was first brought to investors’ attention by CEO Sheldon Adelson. He also cautioned the company to be prudent about it, while adding that they’d need to invest at least $10 billion to make the project work.

The Japanese Government Is Divided on Gambling

 

However, the enthusiasm that companies like Las Vegas Sands and co. might have about moving to Japan doesn’t seem to be shared by the government or the people

. To begin with, while the Japanese government officially legalized gambling in the country in 2016, it just recently established a regulatory body this year.

The new Casino Regulatory Commission has the power to issue licenses, impose penalties on gambling companies, and perform all of the regulatory obligations.

An industry as complex as the gambling industry would require proactive action, and many have criticized the Japanese government for being too slow to develop plans for the sector.

Not long after this regulatory body was formed, the country’s opposition party swung into action, introducing a bill that would abolish the aforementioned Integrated Resorts and ban all forms of casinos from the country.

As Gambling News reported, the bill was presented in the wake of a corruption scandal that involved several members of the ruling Liberal Democratic Party allegedly receiving bribes from 500.com- a Chinese gambling outfit that has a vested interest in the IR project.

The news medium added that the abolishment bill is set to be presented before parliament at a regular Diet session on January 20, although gambling News forecasts that it’ll fail, since the ruling party controls both houses of parliament.

People Aren’t Thrilled About Gambling Either

So far, the IR project has been Japan’s most ambitious bet in its bid to enter the gambling space. However, it’s been faced with opposition at almost every level of the country’s populace.

While lawmakers seem divided on the subject, some portions of citizens aren’t too thrilled with its impending inauguration.

In 2017, local brokerage firm Nomura had examined possible locations for the casinos that will be built as part of the IR project. Cities such as Osaka and Yokohama were placed high on the list of probable locations since they held a high influx of tourists.

However, hopes of the latter being involved were hit when GRA Asia reported in September 2018 that a staggering 94 percent of residents in Yokohama- the second-largest city in Japan- were opposed to the idea of setting up a casino there.

Citing a survey from the Yokohama City government, the news source explained that citizens were opposed to the idea of setting up a casino in their city, as they worried about its negative public impacts.

Speaking with Inside Asian gaming, Toru Mihara, the government adviser on integrated resorts, explained that Japan would never allow “Macau-type junkets,” which take risks and provide customers with elaborate credit.

“Casino activities are allowed only for licensed operators and cannot be entrusted to any third entity, including credit to patrons,” he added.

The country could look to tourists to help carry the vision, but given that Macau is still rolling heavy in Asia and the region is especially close to China, a smart bet would be on these tourists to gamble in the Chinese administrative region instead.

Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works. Contact him at Jimmy@beanstalk.io

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