Can Casinos In Japan Draw Chinese Gamblers?

chinese-gamblersFinally. After years of infighting amongst Japanese legislators, Japan’s parliament passed a casino gambling bill in the very early hours of Dec. 15, 2016. The bill legalizes brick and mortar casinos in Japan and paves the way for potential investments that could soar into the billions of dollars.

Already, mega international gaming organizations such as Caesars, MGM Resorts and Wynn Resorts are expressing interest in running businesses in Japan. With the still on-going corruption crackdown in China, operators with large scale investments in the down market of Macau are starting to look elsewhere, as is evidenced by new interest in India and now Japan.

Optimism and enthusiasm are running high for the potential to attract huge numbers of Chinese gamblers to Japan, which would stimulate Japan’s stagnant economy. This is what Japan Prime Minister Shinzo Abe pushed as his platform in attracting support for the legalization of casino gambling. But others in Japan say not so fast.

Gao Hong is a deputy director with the Institute of Japanese Studies at the Chinese Academy of Social Sciences. He has expressed doubt that new casinos would attract very many Chinese mainland tourists. According to Director Hong, Chinese gamblers will prefer Macau because of its proximity and ease of entry as compared to Japan. Also, a language barrier could be an issue.

Those taking an optimistic outlook disagree with Hong. The head of Hong Kong’s Travel Industry Council, Joseph Tung Yao-chung, said that Japan’s casinos will attract plenty of Hong Kong players because of a greater variety of choices compared to Macau. Tung noted that “Japan is the Hong Kong people’s primary choice for overseas travel.”

Even though the bill that allows a change to Japan’s constitution for legalizing casinos has been passed, casinos are still illegal in Japan. They will remain so until a follow-up bill that spells out all of the details of regulation, such as tax rates, dealing with gambling addiction and organized crime, has been crafted. The Liberal Democratic Party (LDP), who sponsored the bill, has one year to get the final bill done, although it’s a certainty that Prime Minister Abe will push to get the new legislation completed as fast as possible. In the meantime, Japanese players will have to content themselves with what is legal in Japan. That would be betting on horse, boat and bicycle racing. Pachinko, which is a Japanese gambling machine with similarities to pinball, slot machines, and pool, is also legal.

The Daiwa Research Institute recently suggested that the potential for casino gambling in Japan is so large that as little as three casinos could generate annual profits of $10 billion. But to do so, Japan would have to be able to differentiate itself from other Asian casinos in Macau, Singapore, South Korea and the Philippines that already capture the majority of casino tourism. New casinos in Japan won’t be operational until at least 2022.

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