Prime Minister Shinzo Abe said his ruling party will seek to pass a law in the next Diet session to legalize casinos as part of a plan to boost tourism before the Tokyo Olympics in 2020.
“Integrated resorts are expected to provide a great contribution to tourism, regional economies and industry, I think, and can be one of the key elements of Japan’s growth strategy,” Abe said in an interview Tuesday at his official residence.
Now 18 months into his term in office, Abe has fired two of what he calls the three arrows of “Abenomics” — fiscal stimulus and unprecedented monetary easing — in a bid to banish deflation.
The early euphoria that saw stocks surge 51 percent as the yen plummeted last year has been tempered by the consumption tax hike in April that is forecast to result in an economic contraction this quarter.
Allowing casinos to operate in Japan within integrated resorts is a key part of Abe’s updated growth strategy, the third arrow, which was approved Tuesday by the Cabinet. The plan includes starting to cut the corporate tax rate next fiscal year.
Las Vegas Sands Corp. and MGM Resorts International are among those considering investing billions of dollars in what could become Asia’s second-largest casino market after Macau.
Tokyo’s selection to host the Olympic Games has boosted expectations that gambling resorts, under discussion for a decade, will be allowed. The Diet started debate last week on a bill to legalize casinos, paving the way for its passage before the end of the year.
“The likelihood of passing the bill in the next session is extremely high,” said Eiji Kinouchi, a senior strategist at Daiwa Securities Co.
Casinos “will have a great impact on tourism and Japan’s economy as a whole,” he said.
Debate will resume in the next legislative session in the fall on the bill that was submitted last December by a cross- party group of lawmakers that included members of the ruling Liberal Democratic Party.
“I hope in my capacity as leader of the LDP that we can aim to pass it in the next extraordinary session of the Diet,” Abe said in the interview.
The casino initiative is designed to bolster momentum for a tourism industry that is already an increasing source of growth for Japan. The nation is poised for a record number of foreign visitors in 2014, attracted by a weaker yen and the easing of visa rules. Spending by incoming tourists exceeded outlays by Japanese going abroad in April for the first time in 44 years.
While the casino measure may aid tourism receipts, economists have refrained from boosting growth estimates on that basis alone. The International Monetary Fund projects less than 1 percent GDP gains each year from 2015 through 2017, with an estimate of 1.125 percent for 2019 — an expansion less than the pace it recorded in the half-decade before the 2008 global credit meltdown.
Casino-related stocks such as Sega Sammy Holdings Inc., Konami Corp., and Japan Cash Machine Co. stand to benefit from the potential legalization. Sega Sammy and Konami have expressed interest in operating casinos in Japan while Japan Cash Machine manufactures coin-counting terminals used in casinos and arcades.
Abe’s coalition partner New Komeito is divided on the issue. Minister for economic and fiscal policy Akira Amari said last week that allaying concerns about the potential effects of casinos on society would be an important part of the debate.
Abe visited Singapore’s gambling venues last month, where he saw that gaming has achieved great success, he said. Japan would have to consider policies to prevent crime and gambling dependency, as Singapore has done, he said.
Lotteries and pachinko are legal in Japan, as is betting on horse, boat and bicycle races.
Japan’s gambling resort market could be worth as much as $40 billion a year as early as 2025, making it Asia’s largest after Macau, according to estimates from CLSA Ltd, a Hong Kong-based brokerage.
International casino operators including MGM Resorts and Wynn Resorts Ltd. have said they would spend billions of dollars to build casinos in Japan.