Will casinos fuel addiction to gambling?

The Abe administration has begun exploring concrete rules to regulate the operation of casinos to follow up on a law enacted last year to legalize casinos. Prime Minister Shinzo Abe’s Liberal Democratic Party meanwhile plans to submit legislation calling on the government to take steps to address gambling addiction, which the health ministry suspects may affect nearly 5 percent of adults. That is indeed a problem that needs to be tackled. But the effort must not end in a half-hearted measure to justify legalizing casinos despite concerns that it could fuel the gambling addiction.

The government and the LDP have pushed for introduction of integrated resorts (IR) that feature casinos as a key attraction for visitors, hoping that such facilities will help bring in more inbound tourists, generate jobs and demand in host areas and tax revenue for national and local governments. But when they hurriedly rammed the casino legislation through the Diet last December, calls for caution over the downside of such facilities, including the possible impact on gambling addiction and the risk that casinos could be used for money laundering by criminal organizations, were cast aside, with the proponents saying that those potential problems should be addressed when the government lays down the rules for casino operation.

The rules to be drafted by the government will likely include restrictions on customers’ entry into casinos, measures against money laundering, as well as specifics on the state’s use of revenue from casino operators. Based on the outcome of ongoing discussions at a panel of experts, the administration plans to propose legislation to the Diet this fall setting the standards on casino operations. A focus of the discussions will be on how tight the access to casinos should be restricted to prevent them from exacerbating gambling addictions. The mayor of the city of Wakayama, which has announced its bid to host an IR featuring casino, proposes that entry be limited to nonresidents as a solution.

Gambling is prohibited under the Criminal Code. But the exceptions to the rule through special laws provide for publicly-run forms of gambling such as horse racing and motorboat racing. The thriving pachinko industry with annual sales exceeding ¥20 trillion is legally defined as a “gaming” business — even though it is considered to be a primary cause of gambling addiction.

A summary research in 2014 by the Health, Labor and Welfare Ministry showed that an estimated 5.36 million people, or about 4.8 percent of adult population, are suspected of being addicted to gambling. Last month, the government released the outcome of an interview with nearly 1,000 adults, in which 2.7 percent of the respondents were suspected of experiencing gambling addiction in their lifetime, including 0.6 percent who were believed to have had such an experience that year. It plans to hold similar surveys with a larger group of people to get a more accurate picture of the problem. The government says it will consider measures including improved counseling and treatment for suspected addicts, restricting their access to gambling venues as well as public enlightenment efforts.

The Abe administration has viewed the opening of casinos as a key part of the prime minister’s economic growth strategy. Proponents count on the establishment of IRs comprising casinos, hotels, international convention halls and big shopping malls to boost capital investments and create jobs, generating broad economic benefits to the host areas that will see increased inbound tourism. Osaka Prefecture, which is bidding to host an IR on a local man-made island, foresees economic benefits of ¥1.33 trillion, including the creation of 97,000 jobs, 22 million annual visitors and ¥25 billion in tax revenue. Such hopes have been amplified by the government’s recent decision to bid for the rights to host the 2025 World Exposition in Osaka.

But as the benefits of casinos were played up, their potential social cost was never seriously taken up in the Diet discussions, including whether casinos would exacerbate gambling addiction and how that could be prevented. It may be a positive development that efforts are finally afoot to come to grips with the problem of gambling addiction, but the efforts should not just be an excuse to justify the legalizing of casinos but expose what lies behind people’s suspected gambling addiction and involve effective remedies to the problem. And in that process, officials and lawmakers should think once again whether it is a good economic policy to open casinos to generate demand and fuel growth.