Japan formally reassures investors that locals will be allowed in casinos

japan-casino-freakoutJapan’s lawmakers have formally agreed to place some restrictions on local residents entering casinos but say a foreigners-only model will not be imposed. On Thursday, local media was shown a draft of Japan’s casino study bill that stipulated the government “will take necessary measures regarding admittance and capacity” of local residents “for the purpose of preventing the negative effects of casino facilities.”

While short on specifics, said measures are expected to include financial background checks and a Singapore-style casino entry levy. Reuters quoted Hiroyuki Hosoda, chairman of the legislature’s pro-casino working group, saying the revision would ensure a smoother passage for the bill in Japan’s parliament.

Komeito, the ruling Liberal Democratic Party’s upper house coalition partner, has Buddhist roots and is less gung-ho about casinos than Prime Minister Shinzo Abe’s party, which views the issue in terms of economic development. The LDP has the votes to pass the bill on its own, but getting minority parties on board will lessen the likelihood of procedural delays. Japan hopes to pass the bill during the current legislative session, which ends Nov. 30. A second bill would be introduced in next year’s session to address specifics of regulation, licensing and taxation.

Takeshi Iwaya, the pro-casino group’s chief secretary, told GGRAsia the foreigners-only concept had been discussed but was ultimately dismissed over concerns that a ban on locals might be “constitutionally suspect.” However vague, the government’s confirmation of local access will come as a relief to international casino operators, who endured a week of claims and counterclaims on the local access issue.

The confusion prompted Las Vegas Sands chairman Sheldon Adelson to devote part of Wednesday’s Q3 earnings call to reiterate Sands’ utter disinterest in any foreigners-only casino market. Japan’s government appears eager to reassure Adelson, who has vowed to spend up to $10b in developing a Japanese casino, as well as his fellow big spenders at Wynn Resorts, MGM Resorts, Genting et al, that Japan is truly open for business.

Even assuming all goes well on the legislative front, a shortage of local construction labor has made many observers pessimistic about the possibility of Japan’s first casino opening its doors in time for the 2020 Olympic Games in Tokyo. In the meantime, there’s always pachinko, which has been in the local news for all the wrong reasons this week.

On Thursday, public broadcaster NHK reported that Tokyo Metropolitan Police had arrested two men who’d been running an illegal pachinko parlor in the Kabukicho district. Police said the operation, which featured 37 illegal pachisuro (pachinko slot) machines that offer high returns to players, had generated revenue of ¥40m (US $375k) in the past year. The manager of the shop was only 21 years old and police are still trying to track down the real boss.

A few days earlier, police arrested an 18-year-old manager of another pachisuro parlor in the Shimbashi district. The Mainichi Broadcasting System said the shop operated 36 machines and had generated ¥150m ($1.4m) in the past year. The teenage tyccon admitted that it was a fair cop but said he’d only gone into the illegal gambling business to earn money to open his own restaurant. Lucky for him, the theme of this week’s episode of Iron Chef is … bread and water!