Japan approves country's first casino

Japan on Friday approved a plan to build the country’s first casino in the western city of Osaka, paving the way for a large resort aimed at attracting domestic and international tourist spending.

Put forth by the city and Osaka prefecture, the project aims to open a casino, conference centre and other facilities in 2029 with 1.8 trillion yen ($13.5 billion) of initial investment.

MGM Resorts International and local partner Orix Corp are spearheading the project, with each owning a 40 per cent stake in the company set up to manage the complex.

Another 20 companies including Osaka-based Panasonic, Kansai Electric Power and West Japan Railway hold the remaining 20 per cent stake, according to a local government document.

The plan has long been controversial and opponents are expected to continue their campaign to halt construction on the man-made island of Yumeshima ahead of its scheduled opening.

The 492,000-square-metre resort complex will also include a hotel, shopping centre and ferry terminal. Japan will host the World Expo on the island in Osaka Bay in 2025.
The resort is targeting 520 billion yen of revenue annually, mostly from the gaming business, and forecasts it will attract 6 million international tourists and 14 million domestic visitors, the project document showed.

Liberal Democratic Party administrations have promoted casinos as another way to draw foreign visitors to Japan, with tourism increasingly key in the government’s economic strategy.

But there has been stiff resistance from residents of many cities that considered applying for one of the three licences that were initially proposed for integrated resorts that incorporated casinos.

Opponents have declared that casinos will promote irresponsible gambling, lead to addiction and be exploited by Japan’s “yakuza” groups.

Casinos have been promoted by a series of Liberal Democratic Party administrations in Tokyo as another way of bringing in more foreign visitors to Japan. Photo: Shutterstock

Japan on Friday approved a plan to build the country’s first casino in the western city of Osaka, paving the way for a large resort aimed at attracting domestic and international tourist spending.

Put forth by the city and Osaka prefecture, the project aims to open a casino, conference centre and other facilities in 2029 with 1.8 trillion yen ($13.5 billion) of initial investment.
MGM Resorts International and local partner Orix Corp are spearheading the project, with each owning a 40 per cent stake in the company set up to manage the complex.

Another 20 companies including Osaka-based Panasonic, Kansai Electric Power and West Japan Railway hold the remaining 20 per cent stake, according to a local government document.

The spinning wheel on a roulette table is seen at a “casino school” in Tokyo in 2018. Photo: Reuters

The plan has long been controversial and opponents are expected to continue their campaign to halt construction on the man-made island of Yumeshima ahead of its scheduled opening.

The 492,000-square-metre resort complex will also include a hotel, shopping centre and ferry terminal. Japan will host the World Expo on the island in Osaka Bay in 2025.

The resort is targeting 520 billion yen of revenue annually, mostly from the gaming business, and forecasts it will attract 6 million international tourists and 14 million domestic visitors, the project document showed.

Liberal Democratic Party administrations have promoted casinos as another way to draw foreign visitors to Japan, with tourism increasingly key in the government’s economic strategy.

But there has been stiff resistance from residents of many cities that considered applying for one of the three licences that were initially proposed for integrated resorts that incorporated casinos.

Opponents have declared that casinos will promote irresponsible gambling, lead to addiction and be exploited by Japan’s “yakuza” groups.

Others claim that gambling sets a bad example to younger people because it suggests that they do not need to work hard – which is expected in Japanese society – but they only need to be lucky.

All those charges have been put forward by a number of civic groups in Osaka over the last decade and appeared to be holding sway over the public, but that has changed in the last couple of years.

“There has been quite a lot of resistance to the project, but I think the back of that campaign was broken in the recent elections for governor and mayor of Osaka,” said Michael Penn, the former executive editor of Asia Gaming Brief Nippon and a close follower of the debate.

Regional party Osaka Ishin no Kai has long been a strong supporter of the integrated resort project and emerged victorious in the elections on April 9. The casino was a key issue in the vote and exit polls showed that a majority of the public were in favour of the plan.

A poll conducted as recently as a year ago put support for the construction of a casino in Osaka at 50 per cent, but that has now risen to around 55 per cent, said Penn.
“Supporters have managed to convince the electorate that a casino and resort will be a draw to tourists and that there will be tangible economic benefits for the city,” he said.

Some projections have indicated that Chinese tourists would make up the bulk of the foreign players at the casino.

Beijing is reportedly attempting to discourage its citizens from gambling, so the operator hopes that Japanese will pick up any possible slack.

Arguably the most significant outcome of the government’s approval is that it paves the way for more cities to push ahead with similar developments, particularly if residents who have been opposed can be convinced of the benefits of a casino in their communities.

An application for a second integrated resort with a casino is under consideration in the city of Sasebo, in Nagasaki Prefecture in southern Japan, although there are concerns that any completed facility will not be as financially successful as the operators have indicated in their plans.

Two other locations that appeared likely to apply for a casino licence – the city of Yokohama and Wakayama Prefecture in central Japan – met local resistance and were defeated in local referendums.

But Joji Kokuryo, managing director of Bay City Ventures, a Yokohama-based consultancy that specialises in the casino sector, said that with attitudes changing, more local authorities were likely to see the appeal of a casino and integrated resort in their communities.

“There was huge pushback before the Toto sports lottery was introduced in 2001 over fears that it would encourage gambling, but that never happened and now we are seeing the benefits of the lottery in new football fields and sports infrastructure across the country,” he said. “The Toto logo has become a normal part of life here and I believe it will be the same with casinos.”

Kokuryo predicted that the Nagasaki project will receive approval in the next few months and that the last remaining licence could be granted soon after that.

The next set of licences will be released in 2030 – seven years after the greenlight for the Osaka project.

This extended timeline is viewed as a way to allow potential host cities to observe how operators overcome issues and how cities have benefited from hosting a casino.

“By that time, I think the positives will be clear and long term. If the Osaka and Nagasaki projects do well, I do not see any significant obstacles to more casinos opening up,” he said.

Source South China Morning Post

BDST: 1213 HRS, APRIL 14, 2023
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