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Japanese Gambling Conference Paves Way to Significant Legal Changes

Published on October 25, 2014, 4:32 pm

by Jeff Grant Twitter account Jeff Grant LinkedIn account

This May, Japan will hold an international conference to educate the world on potential gambling law changes within its borders. Executives will present the latest developments in what industrialists have hinted at for years: Japanese businessmen are chomping at the bit to get their hands on a piece of the gambling industry's lucrative pie. Most people believe it's only a matter of time before Japan ascends to the ranks of Macau and Singapore in terms of gambling clout and prestige.

Japan's Gaming Future: More Than Pachinko

When people think of gambling in Japan, many think of the country's iconic pachinko parlors. Pachinko is an arcade-like game of skill that has been legal for years in the country. Prizes include everything from small trinkets to large sums of cash. Pachinko is not the moneymaker for Japan that it once was, however; revenue has spiraled downward since the government outlawed pachinko parlor advertising in 2011. The reason for the 2011 mandate: Government officials wanted to crack down on problem gambling associated with the nation's pachinko parlors.

Japan Gaming Conference (14-16 May 1014, Tokyo)
Japan Gaming Conference (14-16 May 1014, Tokyo)

Interestingly, the very government that outlawed pachinko advertising may soon be opening its doors to a host of new gambling opportunities. Members of the Japan Gaming Conference claim that this May's event signifies the start of a congenial partnership between Japanese congress and the gambling industry. Over the next year and a half, legislation will purportedly be developed that makes gambling much more accessible to residents in the Asian nation. As might be expected, several big-name casino companies are already vying for the chance to set up shop in the archipelago nation.

The Japanese Gambling Landscape: Now and Then

In addition to pachinko, Japanese gamers today can legally partake of Takarakuji, the Japanese lottery. Illegal Japanese gambling, or Yakuza, exists in secret casinos where mahjong and other forbidden games are played. Yakuza affiliates are not just gamblers; they are often tied up in drug dealing, loan sharking, and prostitution as well. In street terms, they are part of the "mafia" of Japan.

The scurry to conceal illicit gambling activities by Yakuza and others may soon end if casino tycoons like Sheldon Adelson and Steve Wynn are allowed to hang their shingles in the country. No specific business relationships have been announced yet because Japanese gambling laws have not yet changed, but rumor has it that Adelson and Wynn have their eyes seriously trained on the future gambling market in Japan.

These business tycoons are prepared to shell out billions for the chance to operate in Japan, and they know what they're doing: According to analysts, the Japanese gambling market could end up rivaling China's Macau if developers play their cards right.

Adelson's Las Vegas Sands chain and Wynn's self-titled gaming empire aren't the only big-name casino corporations interested in the Japanese gambling market. MGM and Melco Gaming are also rumored to be strongly interested in possible casino development in Japan. According to Reuters, Japan would quickly rise to the position of the third largest gaming empire in the world if gaming becomes legal in the country.

Yumeshima Island in Osaka: Possible Casino Site

Osaka governor Ichiro Matsui
Osaka governor Ichiro Matsui

A man-made island on Osaka Bay called Yumeshima could be the site for Japan's first commercial casino. Osaka governor Ichiro Matsui called the island, which now sports over 400 acres of available land, the “preferred site” for a new casino. Although rail service is currently quite limited in the area, Matsui says that Yumeshima has plenty of space for a multi-faceted resort which would sport hotels, conference centers, entertainment venues, and, of course, gambling.

Lawrence Ho, Melco Crown Entertainment CEO, is but one casino tycoon who has approached Matsui about the the possibility of operating a casino in Osaka. The governor of Osaka anticipates a multibillion dollar investment from whichever casino operator, or operators, are ultimately chosen by Japan to run a casino business in Osaka.

Tokyo: Competing With Yumeshima

A casino in Osaka is a possibility but not a sure thing. The future site of the 2020 Olympics, Tokyo, is another potential location for a casino in Japan. Because the city is already making preparations for the Olympics it will host in six years, some have expressed the belief that Tokyo should focus more on that and less on developing its gambling landscape. Still, as the capital of Japan and home to over 13 million people, Tokyo would be a profitable place for casino operators to open their businesses.

Why Japan Would Succeed in the Gambling Industry

2013 Casino revenue outlook for AsiaThere's a reason why Adelson said he would invest “whatever it takes” to get involved in the forthcoming Japanese gambling market. In 2012, the country boasted an impressive GDP of nearly $3 trillion. Japan is also the home of 51 of the world's Fortune 500 businesses. With so many wealthy people living in that country, and with Japan's close proximity to the wealthy masses from China, the industry could eventually rack up to $40 billion per year in profits, according to analysts. That's nothing to sneeze at.

The Fate of Yakuza

Some analysts believe Yakuza proponents would suffer as a result of gaming legalization. If and when the Japanese government legalizes gambling, it will place strict licensing requirements on all who wish to operate a casino in the country. Applicants might have to supply up to 10 years of banking documentation to prove that they, and their family members, are not involved in any sort of criminal activity. In this way, the Yakuza influence might dwindle through natural attrition.

Although gambling has not been legalized yet in Japan, the world is now assuming that it's only a matter of time before the floodgates open and Japanese casinos come rolling in. The initial number of casinos in Japan will probably be small, and licensing requirements will be strict. Nevertheless, the highly anticipated industry is expected to boom once officials get the ball rolling.


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