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Japan’s Long and Arduous Journey from Restricted to Regulated Casino Market

Japan came under the spotlight some time ago, creating a big buzz around its latest package of legislations, aiming to regulate the casino market on its territory, opening a good perspective for the development of the casino industry as being one the most densely populated and technologically advanced country.

In fact, gambling in Japan has been outlawed for many years, before the legislators considered the latest changes in the legal code of the country. To be even more accurate, it is better to say that gambling is strictly regulated in Japan, but some forms of it are allowed. The allowed games even serve as an integral part of the overall image of the country, including betting on public sports, lottery, and pachinko.

In a nutshell, motorcycle, motorboat, and horse racing were classified in the allowed public sports betting category, yet being regulated by the local governments. The other allowed betting form was the lottery, which was subdivided into the following three groups: unique number lotteries, selected number lotteries and scratch cards. Here, the law required that the total prize pool should be no higher than 50% of the total amount, collected by the sold out tickets.

Pachinko, though, takes a very central place in Japan, as the only allowed game, which combines gambling with non-gambling features. The reasons why that was the only game, which was included within the confines of the previous legal framework of the country is rooted in the history of Japan. However, the game itself resembles pinball slot machines, which are even said to have laid the foundations of the changes, which Japan is currently facing. It is reported that pachinko contributes to more than 4% of the country’s GDP on an annual basis.

Unfortunately, the country of the rising sun saw pachinko on the wane, as the tax revenues, which the government reaped from the game started to drop down significantly. Due to the financial difficulties, which the country witnessed in recent years, the authorities were not in a favorable position to allow such decline, facing even a potential threat of bumping into big financial troubles.

Hence, Japan appeared to be “sandwiched” between the hammer and the anvil – either go deeper into debts or find a quick and efficient solution, which might also hide some other threats, but this time for the Japanese nation. This raises the question about the potential opening of the Japanese market for the casino operators.

The first talks started as far back as 2002, but the country faced a political instability, changing 7 different governments for a period of 10 years. This was a great setback for the development of the country. The last elected government is led by Prime Minister Shinzō Abe, who is still the Japanese leader.

Soon after Mr. Abe assumed the office, he introduced the so-called Abenomics, which includes certain ideas to help the country find its feet and bridge the gaps in its budget. Among all other measures, the opening of the Japanese market for the casino industry was taking a central place.

It was 2013, when Prime Minister Abe explained that the establishment of gaming venues will improve the economy and set up the country as a lucrative tourist destination. His idea was supported by the Liberal Democratic Party, which promised the Diet (the Japanese parliament) to introduce a bill, which aims to legalize casinos throughout the country.

Furthermore, what seemed to be the perfect time to launch the casino industry in the country was 2020, as Tokyo’s streets will be flocked with people, eager to see the Summer Olympic Games.

The long-awaited bill, which would serve as a lifeboat for the country, was introduced in the late months of 2013, and more precisely in November. Even though the proposed bill was supported by the majority, it also met the disapproval of the Komeito coalition, which appeared to have a strong influence in the political life of the country. There were fears that the legalization of casino venues in the country hides potential threats for the society, also increasing the rate of illicit deeds within the country.

The opposition also highlighted the possibility for more people to be affected by the addictive nature of gambling. As a matter of fact, Japan is the country with one of the highest rate of compulsory gamblers. Thus, the opposition used that fact as a pillar to step on and support its argumentation.

The casino saga continued in 2014 with the start of the extraordinary Diet session. A so-called Promotional Bill was supposed to be voted in as a first step. This was supposed to give green light for the actual bill – Implementation Integrated Resorts Bill.

However, the Diet could not react to the proposal that fast and it was delayed for an unknown time period. According to different resources, the main setback of the bill appeared to be namely Prime Minister Abe’s administration, which was involved in many scandals and even claimed to seek personal benefits from the legalization of casino venues.

Nevertheless, the proposed package of legislations was placed once again on the table of discussion at the end of April 2015. After being postponed more than once, the bill finally managed to finish its long journey and be adopted as a law in December 2016.

That was only the first step of the long and clumsy process, as the government needed to start work on the second part of the casino legislation project. Its aim was to establish a particular legal framework, which would set precise rules for the “building” of the casino market. Thus, it appeared that the path to the regulated casino market in Japan is double. Currently, the government is crafting the second package of legislations, that has to establish the rules, under which the market is supposed to operate.

The integrated resorts are said to be combined facilities, which will have casino parts, but also recreational ones. Currently the officials are dealing with so many questions such as the location of these integrated resorts, outlining Tokyo and Osaka as the favorites.

What emerged on the surface is that the government is considering to introduce severe measures, aiming to curb gambling problems. It was revealed that one of the measures to be taken is to control the maximum number of casino visits and the number of times in which the players can wager. The number is still not clear, but it is expected that more details will be released in August.

To tighten the belt even more, the Diet is even considering to prohibit the installation of ATMs in the casino resorts. In that way, the players cannot run into significant debts, as they will not be able to get more cash, when they run out of money. This measure is a part of the more extensive plan to restrict the so-called junket casino operators to enter the Japanese market.

These are companies, which promote their casinos by offering free travel to the particular casino to high rollers. It may sound lucrative, but that practice hides threat to deteriorate the gambling problem, as these junket operators collect and grant credits to gamblers. Thus, it seems that responsible gambling is the major priority of the government.

The Japanese market appears to be a big deal, but not a done one yet. With so many things to be considered, it was explained that the possibility for the first casino to open its doors by 2020 is almost a mission impossible. However, there are many reputable casino operators, that are lining up in front of Japan’s doors, waiting impatiently to enter the market.

One of the most vivid names among all the casino operators, willing to invest in a Japanese casino resort are Las Vegas Sands Corp. and MGM Resorts International. Now, all is in the hands of the legislator to decide who will be the lucky ones to settle down a casino facility in the country.

Furthermore, the unemployment rate is expected to drop down significantly, as many new job opportunities will be created. Being an attractive tourist destination, Japan will establish even a better reputation among the tourists by enriching its entertainment opportunities.

It is worth to be mentioned that even though the casino market was strictly restricted years-long, it does not mean that the gambling practices did not exist in the mean time – quite the contrary. Unfortunately, in the case of a restricted casino market, the flow of money is entering criminal organizations, supporting illicit activities. Regulating the market means that this practice will stop and the money will enter into the country’s treasury.

Last, but not at least, is the fact that the regulated market will improve the gaming environment, ensuring that the players’ rights are protected and keeping the fairness of the games intact.

The only problem, which Japan may face is the gambling addiction. However, the government is now focusing on troubleshooting the imminent threat of social ills by imposing strict measures, which are expected to curb the problem.

Japan is marching steadily towards a regulated casino market, which will operate within the confines of the law. Being outlawed for years, the gambling industry has a great potential of development in the country of the rising sun. This act will most surely contribute to the economic stability of the country.

 Author: Hannah Wallace

Hannah Wallace has been part of our team since the website was launched. She has a master’s degree in IT.