The Japanese government finalizes a task force to spearhead preparations in the event the Diet gives the thumbs up on legislation that will legalize casinos in the country.
The administration of Prime Minister Shinzo Abe hopes that the task force will not only create momentum for the Japanese economy, which saw its GDP fall 1.7 percent in the second quarter of the year, but also show foreign operators that the country is still committed to hosting these casinos.
The task force could be the Abe administration’s way to keep the enthusiasm from waning among the companies planning to spend billions to build integrated resorts in Japan.
The casino study bill, which was introduced last December, failed to come for a vote in the regular Diet session that concluded in late June despite receiving full support from the Liberal Democratic Party Coalition. Supporters resumed the debate days before the close of the session.
Morgan Stanley came out with a report estimating Japan’s annual gaming revenue could end up in the $21-$22 billion range, half of the initial consensus of $40 billion. Analysts from the US-based financial institution aren’t as bullish on Japan’s prospective casino muscle, pointing to the lack of assurances that local pachinko players would automatically flock to casinos once they’re built. Morgan Stanley estimates that only 20 percent of pachinko players will end up playing in casinos, far below initial estimates.
Even if these casinos open in time for the 2020 Olympics, there are no assurances that they’re going to be the goldmines people thought they’d be, especially with the mountainous tax bills they’re expected to pay. Casino operators are likely to see their profits cut by high taxes in the country, including local, national, and corporate income taxes. That could cause many investors to rethink their previous plans of investing as much as $10 billion to build a casino in the country, dampening the excitement and enthusiasm operators showed when word broke out of Japan’s intention to legalize casinos.