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OSAKA — It’s way past dinner time in the back streets of Osaka’s Shinsaibashi district. But one establishment advertising itself as an all-you-can-eat Italian restaurant is doing a booming business.

What’s attracting customers to the tables, though, is not the pasta, a small tray of which sits untouched on a corner table, but games of chance. For this establishment is an underground casino, where Japanese dealers and African bouncers greet a steady stream of hostesses, salaried workers and others out for a night of gambling.

“Most of our customers are not serious gamblers, but those who just want to have a good time,” said the Ghanaian bouncer, who went by the name of Kenny.

Underground casinos have long been a part of Japan’s major cities. But over the past year, the nationwide movement to legalize casino gambling might mean the day is not too far off when Kenny, and his customers, engage in a form of entertainment that has the blessing of the national and local governments.

Major obstacles remain, however. In the case of Osaka, government and business officials appear divided on the merits of casinos, while neighboring Hyogo Prefecture has announced its opposition.

Local efforts to open a casino suffered a setback Tuesday when the national government formally rejected a proposal by Osaka Gov. Fusae Ohta for a casino zone in Rinku Town, opposite Kansai International Airport. The proposal had the support of many in the Kansai Economic Federation as well.

While Ohta voiced her disappointment, saying that the national government made the decision without having adequate discussions with the prefecture, others expressed a more cautious view.

“Where to put casinos, or even if they are needed, is a tough question. It’s likely that there will be associated social problems, like a rise in the number of those addicted to gambling. Just setting up a casino zone is not the way to go,” said Wa Tashiro, head of the Osaka Chamber of Commerce and Industry.

Although many in the Osaka business community remain unconvinced of the merits of casinos, two studies, one released late last month and another due out in mid-March, press the case for local, and national, casinos even further.

The first study is an economic analysis by the Osaka office of Daiwa Research Institute of how much business an Osaka casino would do.

“Assuming a Las Vegas-style casino resort is built in the Rinku Town area, we estimated the annual economic impact will be 28.2 billion yen,” said the report’s author, Tadayuki Minagawa of the institute’s Kansai economy research section.

Now that Rinku Town has been disqualified, though, Minagawa said calculations will probably have to be reconsidered.

Experts warn there are many variables in operating a successful casino and estimating potential income is a tricky business.

Ichiro Tanioka, president of Osaka University of Commerce, is one of the nation’s leading experts on the international casino industry and a strong advocate of casinos in Japan.

“A successful casino is a mix of different kinds of games, including card games, table games (roulette and dice) and slot machines. Without the right mix, and without the proper management, casinos will fail,” he said.

In March, Tanioka, who advises Diet members interested in passing a law to legalize casino gambling, and other professors at Osaka University of Commerce will publish a report on how Japan can establish and operate casinos. The report will be partially based on Tanioka’s 2002 book, “When Casinos Come to Japan,” in which he details what needs to be done.

The first step? Let local governments grant casino licenses and keep the profits, but bring in overseas experts to run the casino operations.

“Japan does not have the expertise to run a Las Vegas-style casino. It will be absolutely necessary to bring in experienced American and European operators to run the casino. Pay them a management fee and then have the local government keep the profits,” he said.

In the Kansai region, the cities of Kyoto and Sakai, Osaka Prefecture, have expressed interest in establishing special zones for casinos. But Hyogo Gov. Toshizo Ido has voiced opposition.

“Is it right for public money to support an industry that takes advantage of people who are addicted to gambling and further destroying their families? I can’t approve casinos as a way to improve the local economy,” Ido said in mid-December.

Casino proponents retort that Japan already has different forms of gambling, including horse and boat racing, so why should casinos be singled out as a problem?

“In America and Europe, casino customers take individual responsibility for their actions. If Japanese casino customers do the same, these kinds of problems will be minimal,” Tanioka said.

As for location, Tanioka thought from the beginning that a casino in out-of-the way Rinku Town was a bad idea.

“Far better locations are the port of Sakai or the Nanko district in the city of Osaka,” he said. “The area surrounding the Universal Studios Japan theme park would also be a good site.”

Although Osaka has not yet formally proposed these areas as special casino sites, Mayor Takafumi Isomura is pushing to turn his city into an international tourist zone with entertainment facilities, including, possibly, casinos. The idea of Nanko or USJ-adjacent casinos also received more support in the Osaka business community than Rinku Town.

“The area around USJ or the Nanko district would be an excellent site for a casino,” said Shunji Kawamura, managing director of the Osaka Chamber of Commerce and Industry.

Once a location is decided, the next step would be the license application process. Tanioka favors a system in which casinos are publicly owned and privately managed, with local governments building the premises, issuing licenses and collecting profits, but leaving the operation and administration to private, experienced staff.

“The licensing process is particularly important. You have to keep the yakuza out of casino operations. This means an independent licensing commission with the power to investigate license applicants, conduct searches of casinos, and, if necessary, make arrests, has to be set up,” he said.

That could prove especially troublesome in the Osaka region, home to large numbers of underworld groups that would be sure to demand a piece of the action. Hyogo Gov. Ido, voicing the concerns of those opposed to casinos, said he does not believe the mob can be kept out.

Police, in turn, are concerned about not only mob involvement but also a rise in thefts and related crimes.

“Osaka already has one of the highest purse-snatching rates. Casinos will very likely mean a rise in petty theft on the streets and bank robberies, as people who lose become desperate for cash,” an Osaka police official said on condition of anonymity.

Despite such concerns, discussions to legalize casino gambling appear to be moving forward at the Diet level as well. Last year, Tanioka and his university colleagues presented their ideas to an informal Diet group that studied public ownership of casinos. The group was headed by former posts and telecommunications minister Seiko Noda.

In December, that group became the Diet Federation to Consider Casinos as an International Tourist Industry. Nearly 90 politicians, including former Prime Minister Yoshiro Mori, Liberal Democratic Party heavyweights Hiromu Tanaka and Makoto Koga, and Yukio Hatoyama from the Democratic Party of Japan, are members.

“The ultimate purpose of the group is to legalize casino gambling,” said a spokesman for Noda, who still serves as chairman.

While Noda’s spokesman declined comment, Tanioka believes Japanese could be heading into casinos in another four years.

“I would expect a bill to change the law to allow casino gambling will be introduced in spring 2004, and will be passed into law during the first half of 2005. Local governments could start building casinos in designated zones by as early as 2007,” Tanioka said.

Others, however, consider Tanioka too optimistic.

“There are still a lot of issues to be worked out, and there are still a lot of Japanese who remain unconvinced that casinos are a good idea. A consensus has yet to be formed,” Tashiro of the Osaka Chamber of Commerce and Industry said.

If casinos are legalized, that could mean an end to the underground casinos, although Kenny, the African bouncer in Shinsaibashi, said he doesn’t think that will happen.

“Unless you build casinos in the heart of downtown Osaka, there will still be people who prefer the convenience, and club atmosphere, of a privately owned casino. Legalizing casinos in one zone only is not going to put us out of business, although it might force us to offer more food,” he said.

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