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Japan considers a flutter on casinos

Las Vegas-style gambling could ease economic woe

by Mari Yamaguchi

It was a rare taste of Las Vegas in Tokyo, and for two days the casino crowds — hosted by Tokyo Gov. Shintaro Ishihara — pumped the handles of slot machines and betted feverishly on the roulette wheel.

Though better known for his hawkish advocacy of building a stronger, more assertive Japan, Tokyo’s often controversial leader has found a new cause celebre: legalized casino-style gambling.

On this one, he’s got a lot of support.

“The real thing is far better than this,” Ishihara told appreciative guests at the recent City Hall event where, instead of money, players had to settle for a handful of free plastic chips from the dealers.

Ishihara’s argument is easy enough to follow.

Japan’s capital is badly in need of money. Tokyo has been in the red for four years in a row and marked a 0 billion yen ($80.65 million) deficit in fiscal 2001. With its tax revenue expected to plunge in 2002, Tokyo’s fiscal conditions are expected to remain severe.

But in a report published in October, the Tokyo government estimated that building casinos could generate 91 billion yen ($734 million) in casino revenues, 22 billion yen ($177 million) in tax revenue and create 13,800 jobs.

“We need to create jobs, stay culturally active and maintain sources of revenue,” Ishihara said. “I think casinos can be very appropriate.”

With Japan’s overall economy still in the dumps — unemployment is at record highs, banks are teetering under bad loans and stock prices are at 19-year lows — Ishihara isn’t alone in courting casinos.

More than a dozen mayors and governors from across the country have voiced their support for laws to expand the scope of legal gambling.

The central government is following suit. Prime Minister Junichiro Koizumi’s tax panel has begun studying the feasibility of casinos, and about 40 lawmakers from Koizumi’s ruling Liberal Democratic Party have set up a team to promote their legalization.

Tokyo, however, is by far the important and potentially lucrative test market.

Metropolitan government official Yoko Murano says it is a money machine that Tokyo has long ignored.

“We can expect casinos to be a great benefit to employment and the local economy,” Murano said. “Even though people are somewhat affected by the economic slump, most Japanese can still afford to spend a little to have fun.”

Officials point out that many are doing so already, but not in Japan. According to the Tokyo government report, two-thirds of the visitors to South Korean casinos are Japanese.

For smaller towns, the matter is more urgent.

“The number of visitors here has been falling every year, and we need to revive the town’s economy badly,” said Yuichiro Itakura, an official in charge of tourism at the city of Atami, one of Japan’s largest hot spring resorts. “We have high hopes that casinos can boost our economy.”

Though located just a short train ride west of Tokyo, the number of visitors to Atami, where hotels are designed largely for company and group parties, has fallen to 3.1 million in 2001, half of what it was 30 years ago.

Japan is no stranger to gambling.

Although the law here prohibits gaming and betting, public-run gambling enterprises are common. Gamblers can legally bet on race horses, on bicycle and auto races and play the lottery.

Privately operated “pachinko” pinball is also considered gambling because a legal loophole allows winning prizes to be exchanged for money. The annual payout amounts to some 30 trillion yen ($242 billion), about three times as much as Las Vegas’ annual earnings.

Tetsuro Murobushi, chairman of the pro-gaming Japan Casino Society, said casinos can create a market worth 30 trillion yen ($242 billion) and generate about 3 trillion yen ($24.2 billion) in tax income for the nation.

But not everyone is buying into the rosy predictions of how casinos will save Japan.

“Gambling causes moral decay. We surely need to promote employment, but there are many other ways to do so,” Mako Aramaki said recently in the Japanese-language Yomiuri Shimbun.

Ishihara’s critics have raised a host of practical issues — the possibility of organized crime involvement, corruption, tax evasion. Lives could be ruined by overindulgence.

And while legal gambling continues to thrive, it’s not as profitable as it used to be.

Sales from legal gambling — not counting the lotteries — dropped to about 6.4 trillion yen ($51.6 billion) in 2001 from 9 trillion yen ($72.6 billion) a decade ago, largely because of the economic slump and declining interest.

Instead of creating a completely new market, the introduction of casinos, some experts say, would just take a cut out of the kinds of gambling that now exist.

“Casinos are largely seen as an easy, quick remedy, but running them is not so easy,” said Shiro Komatsu of the Mitsubishi Research Institute. “They should only be used like a trump card, a last resort.”