As North Korean leader Kim Jong Un stepped over the border of the demilitarized zone in Panmunjom for a historic summit with South Korean President Moon Jae-in on April 27, a group of local politicians and international business leaders meeting in Osaka hailed another milestone moment reached that same day: Cabinet approval of a bill outlining how integrated resorts with casinos are to be operated.
The mood at the first ever Kansai integrated resort showcase was one of relief and hope as hundreds of attendees, including international casino operators, the Osaka governor and mayor, and senior business leaders in industries ranging from construction and advertising to consumer electronics, discussed when the first casino, or casinos, might come to the Kansai region and who might operate them.
“If all goes well, a casino in Osaka could open by 2023 or 2024 at the latest,” Osaka Gov. Ichiro Matsui told reporters just before the opening ceremony.
The main points the government agreed on for Japanese casinos include an entrance fee of ¥6,000 to the casino floor (foreign tourists will be allowed in free of charge but not foreign residents); a limit of three times per week and 10 times a month on casino visits (no limits on foreign tourists); and a requirement that residents show My Number cards as proof of identification (foreign tourists will need to show their passports).
In addition, there’s a total levy of 30 percent on casino operators. To monitor casinos and ensure they comply with the law, an expert committee will be appointed by the government. Various restrictions to deal with problem gamblers and treatment for gambling addiction are also included.
For local governments pursuing dreams of a payout, the committee’s decision to initially approve only three integrated resorts sparked the most concern. More rural localities are worried that they’ll be ignored if they propose smaller-scale integrated resorts, and some have accelerated efforts to ensure that they’ll be in a good position to win one of the initial licenses when the bill becomes law.
That could be a long way off, however. With the Diet bogged down in various scandals related to Prime Minister Shinzo Abe and his administration, and with concerns within the ruling parties and among the general public about the social ills such as gambling addiction and increased crime, passage of the casino bill by the end of the current Diet session on June 20 is not a done deal.
Even at the Kansai showcase, where the general feeling was that Osaka had a lock on winning one of the initial three integrated resorts, Matsui’s goal of opening it by 2024 was greeted with caution.
International casino operators and Japanese businesses at the event all agreed 2024 was a tight deadline and that the political process would have to proceed unusually smoothly and quickly in order to open a casino resort by then.
However, Diet politicians and most local governments that have indicated an interest in hosting a casino resort must also convince a skeptical public worried about possible increases in gambling addiction and crime.
A Kyodo News poll in March showed 65 percent of respondents were opposed to the casino bill. A joint statement issued April 27 from three support groups involved with problem gamblers nationwide warned that the bill does not reflect the voices of either problem gamblers or their families, and that a ¥6,000 entrance fee and a limit of 10 times a month was insufficient for tackling addiction.
Nevertheless, some cash-strapped local governments aren’t waiting. They’re seeing a rise in the number of elderly residents requiring increased social welfare services amid a drop in taxpaying younger residents, and thus they’re coming up with their own proposals for local integrated casino resorts.
A few, including Osaka, have developed detailed plans and are considered front-runners. Others offer nothing but vague concepts. All, however, see integrated casino resorts as a new engine for local economic growth. Here, then, are the main localities around Japan that have developed, or are talking about developing, integrated casino resorts.
The port of Tomakomai, on Hokkaido’s southern coast, is also close to Shin Chitose Airport. The popularity of Hokkaido as a destination for tourists from Asia has exploded over the past decade, and the airport now offers numerous direct flights to South Korea, mainland China, Taiwan, Hong Kong, Singapore and Thailand.
Tomakomai, however, expects its population to drop from about 170,000 people at present to around 157,000 by 2030. The number of 15- to 64-year-olds will decrease by 15,000 between now and then, while the number of those over the age of 65 is expected to increase by 7,000. To keep younger people from fleeing to Sapporo, about an hour away, and to attract tourists passing through Shin Chitose, Tomakomai has proposed opening a casino resort.
In March, the city council reported that an integrated resort — which would include a casino floor, surrounding hotels, theaters, convention halls, galleries, restaurants and shopping centers — required an investment of between ¥200 billion and ¥300 billion. If realized, it could generate between ¥120 billion and ¥150 billion annually. A 2015 survey by the Hokkaido Prefectural Government estimated that a Tomakomai integrated resort would provide direct and indirect employment for up to 44,000 people and draw between 2.2 million and 3.7 million visitors each year, although Tomakomai said in March the total number of visitors would be at least 6 million each year.
There is political support in Tomakomai for an integrated resort with casino gambling, with the mayor, the city council and the local business community all in favor. While other cities on the island such as Kushiro have also expressed interest in an integrated resort, Tomakomai appears to be the favored Hokkaido candidate after the prefectural government indicated it stood the best chance of winning a license.
The biggest challenge Tomakomai could face is that it’s not a major city and that the end result of Diet debate might be a law that tilts project proposals in favor of major urban areas. Hiroaki Fujita, a spokesman for Tomakomai’s promotion efforts and reflecting a common sentiment of local leaders in smaller cities seeking an integrated resort, says major cities are near their capacity for handling inbound tourists.
“The central government plans to attract 60 million foreign tourists by 2030, but airports, lodging facilities and transportation infrastructure at major cities are already near their breaking point,” Fujita told a central government hearing last year. “To achieve that number, direct inbound tourism to Japan’s regions is indispensable. For tourism and regional revitalization, there should be standards making it possible for regional integrated resort plans to be approved, not just standards that present practical difficulties to those outside the Tokyo and Kansai regions.”
Opposition to the Tomakomai integrated resort plan has come from local medical experts, who warn of an increase in problem gambling. Masahiko Shinohara, who heads a Tomakomai-based group fighting against a resort, said economic benefits such as more local jobs may not be as great as advertised.
“Employment would be limited and a lot of the jobs would be not be permanent positions,” Shinohara said at last year’s hearing.
Of all local governments interested in hosting one of the first integrated resorts, it’s an easy bet that Osaka will be a winner.
The city’s integrated resort plan calls for a facility on Yumeshima, an artificial island in Osaka Bay. Last year, the prefecture estimated that an integrated resort that opened around 2024 would initially draw 13 million visitors, including 4 million from abroad.
By 2030, the resort will be drawing 22 million visitors, the prefecture said, including 7 million foreign guests. The economic impact to the region, assuming it’s opened, would mean increased business on the order of ¥630 billion annually and 70,000 new jobs. With that kind of potential, Osaka’s leaders said they were not worried about any requirements to operate a casino.
“An entrance fee of ¥6,000 per person is not something that will impede Osaka’s thinking on its integrated resort plan,” Matsui said following the ruling party agreement.
A recent report on Japan’s integrated resort efforts by Morgan Stanley said the city was way ahead of the competition in terms of its plans.
“While Osaka seems to have all its stars aligned, there is no certainty around the other locations,” the U.S. investment bank said in a report.
So confident are casino industry players that Osaka will host an integrated resort that the Tokyo-based Japan Casino School, which trains dealers, managers and others involved in the business and has graduates working at casinos abroad, opened up an Osaka branch last month.
“In Japan, casinos have a negative image among many people. We train our students in casino history, culture and hospitality, and they can take courses in poker, blackjack, roulette and baccarat, which is especially popular among Chinese players,” says Masayoshi Oiwane, president and CEO of the school.
But there are two questions surrounding Osaka’s efforts that could create problems for its chances at getting one of the first integrated resorts. The first is financial and involves transportation infrastructure plans, including links to Yumeshima. Extending local train lines out to the island and improving road access means somebody has to cough up at least a portion of the estimated ¥20 billion it is estimated to cost. Whether that somebody should be Osaka City, Osaka Prefecture, local businesses involved with the integrated resort project, the casino operator or a combination of the above has not been settled.
The second problem could be political. Yumeshima is also where Osaka hopes to hold the 2025 World Expo, the location of which will be decided in November. Winning the 2025 Expo might create local concerns about running a casino right next to an international event with lots of children.
Should Osaka win the 2025 Expo, it could also mean less official interest in courting a casino. Osaka knows the central government would help to finance an expo, including infrastructure costs. On the other hand, losing the expo might put casino operators in a stronger bargaining position if it comes down to the question of who pays how much in order to develop Yumeshima as an integrated resort location.
Sasebo, Nagasaki Prefecture
Since opening in 1992 as a “Dutch-themed” park, Sasebo — Nagasaki Prefecture’s Huis Ten Bosch — has had its share of ups and downs. Now, Sasebo hopes to win an integrated casino resort in an effort to offer additional incentives to visit the theme park and surrounding area.
A plan released by the Nagasaki Prefectural Government at the end of April predicts an integrated resort would draw 7.4 million people annually, employ about 22,000 people and create an economic effect of at least ¥260 billion. Like Osaka’s project, however, the transportation infrastructure would need to expand.
The Sasebo plan is backed by the Nagasaki governor and a poll by the Nagasaki Shimbun showed more people supported the idea than opposed it, and that support for a resort was particularly strong among younger people.
Tomakomai, Osaka and Sasebo have several things in common. First, they all have a high degree of local political support. Second, all three plans have support among broad sectors of the local business communities. Third, all have drawn interest from foreign casino operators from North America and Asia. However, public concern in each of these cities about problem gambling and the involvement of organized crime remain strong.
Other local governments that have, to varying degrees, expressed interest in integrated resorts range from Yokohama, Chiba and Wakayama to smaller towns such as Echizen, Fukui Prefecture, and Tokoname, Aichi Prefecture, where Chubu Airport is located.
Although many international casino operators are keen on a Yokohama casino, local media polls show that between 60-80 percent of respondents are opposed. Yokohama Mayor Fumiko Hayashi indicated in early April that there were still many problems.
“The current situation (in terms of the casino debate for Yokohama) is that it’s a blank slate,” Hayashi said. “We’ll take a look at the entire image of the kind of integrated resorts the government is aiming for and analyze the course of their discussions. However, there is no clear policy for dealing with gambling addiction.”
Chiba has also studied the possibility of hosting a casino resort and, in January 2016, listed advantages and problems of doing so. The former include its proximity to Tokyo and Narita Airport and access to the Tokyo Bay area, which, the prefecture feels, give it an advantage of attracting overseas tourists.
Echizen, a town of 8,200 in northern Fukui Prefecture between Tsuruga and the city of Fukui, has a station on the planned Hokuriku Shinkansen extension between Kanazawa and Tsuruga. In March, a Fukui business group suggested one way to develop the station area into a tourist destination was to explore building an integrated resort. Tourists heading to Kanazawa, or perhaps nuclear power workers heading to Tsuruga, might stop off in Echizen and try their luck, the thinking goes. At this point, Echizen’s proposal is only a suggestion.
The city of Tokoname, not far from Nagoya and where Chubu International Airport is located, has also begun thinking about a possible integrated resort. Redevelopment plans for the artificial island the airport is located on call for the construction of a large exhibition hall. However, the city and prefecture are worried about covering its costs, as well as future costs of maintaining Chubu airport. So funding was allocated in this year’s fiscal budget to explore the possibility of an integrated casino resort.
Wakayama Prefecture has recently expressed a strong interest in hosting an integrated resort, and there is much talk in the Kansai region about the possibility that two of the first three casinos in Japan might be located there. However, there are differences of opinion between the Wakayama mayor and the Wakayama governor over whether or not an integrated resort should target mostly overseas visitors. The smaller scale of the Wakayama tourism market compared to Osaka might also not be enticing to many operators.
Finally, there is Tokyo. The market potential is obvious. But with national and local efforts concentrated on the 2020 Olympics, and divided opinions within the Tokyo Metropolitan Assembly on the wisdom or financial need for a casino, there remains a lack of political or business consensus for an integrated resort in the capital anytime soon.
Despite the political hurdles and public worries, and questions about the economics of individual proposals, local governments from Hokkaido to Kyushu that see casinos as a way to rescue their economies are plotting strategy as the bill has now cleared the Cabinet. They are likely to spend the coming weeks and months refining their plans, as each local government works to raise the odds that its integrated resort proposal hits the casino application jackpot someday.
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