National / Media | MEDIA MIX

Push for casinos runs into headwinds

by Philip Brasor

Special To The Japan Times

Until a few months ago, it seemed a sure thing that casinos would be open in Tokyo by the time the Olympics rolled around in 2020. For years now, a group of lawmakers have been working to legalize gambling resorts in Japan, and Tokyo was considered the ideal place for them thanks to the capital’s ease of access to foreign tourists and the relative affluence of its residents. It was former Tokyo Gov. Shintaro Ishihara who first proposed it back in 1999 when he invited Diet members to a special promotional event he had set up in the Tokyo Metropolitan Government Building, complete with slot machines. His successor, Naoki Inose, was also quick to jump on the casino bandwagon.

But not Inose’s successor, Yoichi Masuzoe, who assumed the post in February. Asahi Shimbun has characterized Masuzoe’s approach as “cautious,” but he seems pretty determined to keep casinos out of the capital. Earlier this year, the Tokyo Metropolitan Government leased a large tract of public land on the waterfront to BMW for a test-drive course and showroom, land that had previously been set aside for an integrated resort that included a casino. When the metropolitan government was reorganized in July, the division that was nominally in charge of the casino plan was practically made irrelevant.

However, Masuzoe’s most blatant show of opposition was an Aug. 17 appearance on a Fuji TV talk show, in which he talked about not wanting casinos in Tokyo. Members of the press duly noted the choice of medium, since Fuji TV, in collaboration with Mitsui Real Estate and Kashima Construction, had submitted a casino resort plan last September to the Diet committee in charge of special economic zones, one of the pillars of Prime Minister Shinzo Abe’s economic recovery plan.

A number of other municipalities want casinos. Osaka is eager to build some integrated resorts, and Hokkaido, Okinawa and Nagasaki have expressed keen interest in casino gambling in order to revitalize their economies. However, Tokyo is the preferred choice for overseas investors. In an article that appeared on Aug. 27 — after Masuzoe’s TV appearance — in the online version of business magazine Toyo Keizai, Takayoshi Koike of Capital & Innovation, which is working with foreign investors and Japanese companies toward integrated resort development, stressed how “uniquely” suited Tokyo is for casinos.

Koike obviously has an agenda, and predicts that Japanese casinos could rake in between ¥1.2 trillion and ¥2.2 trillion a year, based on existing “markets” (pachinko, racing, lotteries), Japan’s GDP and the amount of assets held by individuals. “Conservatively speaking,” he writes, combined profits in the Kanto and Kansai areas should be about ¥300 billion a year, while Hokkaido could generate ¥50 billion in profit and Okinawa ¥20 billion. As long as the government regulates the casino industry so as to not over-saturate individual markets, operators will be assured of high, permanent returns.

However, Tokyo is more assured than others because it is a major world capital whose residents are better off on average than the rest of the country. Koike claims that if Tokyo takes advantage of its special qualities, it could out-perform even Macau and Singapore, two of the biggest casino markets in the world. Both still rely on foreigners, mainly high-rollers from the Chinese mainland, but Tokyo doesn’t even need foreigners, he implies, even though attracting tourists is one of the central government’s main purposes for building integrated resorts. Tokyo casinos can make twice as much as Macau does just by catering to locals.

Financial media such as Toyo Keizai have generally been in favor of casinos, but the mainstream press is leaning toward the “caution” that Masuzoe has demonstrated. Asahi Shimbun ran a long article several months ago explicating the social deterioriation that has accompanied the adoption of casino gambling in Singapore and other Asian cities, and Tokyo Shimbun says that there are too many uncertainties surrounding casinos to legalize them so quickly. The newspaper points out that the government has yet to figure out how it will tax gambling revenues.

As it stands, there’s a different tax structure for each existing gambling activity: Lottery winnings aren’t taxed, only the price of tickets, and except for JRA horse tracks, racing sports, which are administered by local governments, place levies only on winnings. Then there’s pachinko, which isn’t taxed at all because, technically speaking, it isn’t gambling. When a group of pro-casino legislators asked the National Police Agency for figures regarding pachinko winnings, a representative for the agency replied with a straight face that there are no winnings, because pachinko isn’t gambling. These lawmakers want to place a 1 percent tax on pachinko winnings because casino investors will cry foul if they’re taxed and pachinko isn’t.

It’s an important point, because despite declining patronage pachinko still brings in ¥20 trillion a year, or 10 times what Koike predicts casinos would make. The National Police Agency is also against casinos, ostensibly for the same reasons Masuzoe is — negative influence on youth and the inevitable involvement of organized crime — but in reality the police have a stake in pachinko, since they indirectly administer the off-site shops where players can trade the prizes they win for cash. It’s why the agency refuses to acknowledge pachinko for what it is, thus mirroring the cynicism that informs the push for casinos, whose appeal to the central government is strictly financial. By emphasizing how casinos can be profitable only through local patronage Koike probably provokes anti-casino groups even more.

A recent Asahi article explained that the Ministry of Health, Labor and Welfare estimates that already 5.36 million Japanese suffer from gambling addictions, and when the casino legalization bill is debated in the Diet this fall, the ministry wants it to include a provision that prohibits Japanese from entering gaming venues, the same way South Korean casinos exclude South Korean nationals. In other words, only non-Japanese tourists can patronize casinos.

Considering how much money is at stake, it’s difficult to believe the government would go for that.