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Panel drafting Japan's casino rules seeks to woo foreign visitors while limiting social ills

Kyodo, Reuters

A government panel formulating rules to introduce casino gambling submitted a report to Prime Minister Shinzo Abe on Tuesday, aiming to make casinos attractive to foreign tourists while trying to mitigate potential social harm.

The government hopes to increase the number of foreign tourists to 40 million by 2020 and 60 million by 2030. The number of foreign visitors nearly tripled to a record 24.04 million in 2016 from 8.61 million in 2010.

The government hopes casinos will help sustain tourist numbers after the 2020 Tokyo Games and benefit regional economies.

A law that came into force last year ended a ban on casinos as long as they are part of “integrated resorts” that also include entertainment and event facilities. Further legislation is required to dictate how such resorts will be allowed to operate.

The panel’s recommendations, released on Monday, will likely be reflected in a bill the government and ruling parties aim to submit to the Diet during an extraordinary session to be convened in the fall.

Last year’s law did not pass without controversy, amid existing concern over the social harm stemming from the huge slot machine and pachinko industries that offer de facto gambling, as well as the limited forms of betting that are already legal.

The panel report said casino floor space should have an “upper limit.” While the report did not give details, bureaucrats have looked at a 15,000-sq.-meter limit, casino and government sources said

The panel also recommended allowing easy access to casinos for foreign tourists, while placing restrictions on local residents to discourage problem gambling.

The panel called for residents of Japan to be charged admission fees and be subject to weekly and monthly limits on the number of times they can visit casinos, using the government-issued My Number identity cards to keep track.

But it didn’t suggest an entry limit or fee, leaving the details for the forthcoming debate by the ruling parties.

The report proposes the Ministry of Land, Infrastructure, Transport and Tourism vet applications for zones where the resorts would be allowed, in a process unlikely to be completed before 2020. It is presumed that two to three zones will be certified.

Casino operators would be required to hold specific licenses issued by a new casino control board, which would screen applicants for organized crime links and be able to withdraw licenses from operators found to have facilitated money-laundering.

Foreign casino operators, meanwhile, are unhappy with the move to put a cap on floor space — an early sign of friction for projects expected to generate billions of dollars for the country and the global gambling industry.

Casino executives said the 15,000-sq.-meter limit could hit foreign investment and neutralize the economic impact of resorts.

“The current plans risk missing the mark on achieving public policy objectives,” one casino executive said they had told bureaucrats. “It’s serious enough to halve the maximum investment we’re willing to make.”

At stake, executives and industry representatives said, is the potential revenue from casinos and the potential size of their boost to the economy.

Analysts think two resorts in big cities could generate revenue of around $10 billion a year, while the government has touted their potential for boosting the nation’s tourism industry and creating jobs.

A senior source with direct knowledge of the government’s position said bureaucrats are considering stricter rules to placate public opposition.

“There’s a need to balance the promotion of integrated resorts with caution” while listening to the public’s views, the source said.

Las Vegas Sands Corp. and MGM Resorts International are among foreign operators vying to win licenses to run a casino resort in Japan. The U.S. pair have previously said they would plow up to $10 billion respectively into a project.

But investment of that size could be cut if the limit on floor space is pushed through, said Seth Sulkin, chair of a task force at the American Chamber of Commerce Japan working on casino resorts.

“Gaming companies are very rational. They’ll calculate how much revenue they can generate with a 15,000-sq.-meter casino floor, and they will only invest as appropriate for that, which certainly won’t be $10 billion,” Sulkin said.