Since the enactment of a law in July 2018 legalizing casino gambling in Japan, large resort operators from the United States have been boosting public relations efforts as they plan bids to enter the budding market.
With the law set to allow up to three coveted gaming licenses for the development of casino resorts around the country, a potential market that some project will hit ¥2 trillion a year ($18 billion), gambling giants like Wynn Resorts Ltd. and MGM Resorts International are staking their chips on what they hope will be a big payout.
Although expectations are high for substantial economic gains, including job creation, there is widespread public concern that gambling addiction and negative social impacts will rise.
At a news conference for the Japanese media in a Boston suburb on July 24, Wynn Resorts Development Japan President Chris Gordon spoke at length of the company’s desire to build the “world’s largest” integrated resort in a city such as Tokyo, Osaka or Yokohama.
The term integrated resort refers to a comprehensive entertainment complex that, alongside casinos, attaches shopping malls, theaters, hotels and theme parks. The sites for the three IRs are expected to be chosen by next year, at the earliest.
One of the biggest components of an IR envisioned by Wynn Resorts would be opening its doors to organizers of so-called MICE — meetings, incentives, conferences and exhibitions — events, Gordon said.
To address public concerns linked to gambling when it opened its latest U.S. resort — the $2.6 billion Encore Boston Harbor in Everett, Massachusetts, on June 23 — Wynn Resorts hired 20 additional local police officers, Gordon said.
It also spent some $65 million (¥6.8 billion) on road improvements for the area around the 133-acre (13.2-hectare) property, which provided public access to the waterfront for the first time in over a century.
Gordon was also keen to note that the casino project got the nod from a major academic district just 6.5 km (4 miles) away that includes Harvard University.
In June, the IR promotion bureau in Osaka Prefecture and the city of Osaka announced that seven casinos were vying against each other after sending in early request-for-concept documents to win the Osaka gaming license and start operating in the mid-2020s.
Among the casino giants that have made pitches in Osaka were Wynn Resorts, Las Vegas Sands Corp. and MGM Resorts International, which has teamed up with the financial conglomerate Orix Corp.
Of the non-U.S. entrants, Hong-Kong based Melco Resorts and Entertainment Ltd. and Genting Singapore Ltd. are also said to be in the running, while two other companies have not made their bids or concepts public.
Las Vegas Sands recently dropped out of the Osaka race, saying it will instead focus on developing a resort in the Tokyo and Yokohama areas. MGM Resorts’ Chief Executive Jim Murren has said his company “remains deeply committed” to developing a casino resort in Osaka.
Wynn Resorts’ Gordon said that if the company gets the green light, it will put all its energies into its Japanese resort — whether in Osaka or elsewhere.
“The whole company, president, vice president, all the staff, will be focused on how to do that right. I think one of our real differentiators is how we really focus on the quality of every part,” Gordon told reporters after the seminar at Encore Boston Harbor.
Although the government has not announced a basic policy for selecting the locations for the three casino resorts, Osaka has been the most gung-ho. It has already proposed a plan to open a venue on Yumeshima Island, an artificial island in Osaka Bay, ahead of the 2025 World Expo.
Osaka has projected ¥1.96 trillion in total economic benefits from the casino resort’s overall development and business operations, effective tax revenues of ¥250 billion per year and employment opportunities for 97,000 people, according to a 2017 prefectural report.
Gordon said Japan’s plans to boost tourism ahead of the 2020 Olympics and beyond is what makes it an attractive market for a casino resort. The government has targeted 40 million tourists by next year and a long-term goal of 60 million by 2030, establishing tourism as a key growth sector.
“As you know, the government has set goals for the next 20 years to raise tourism to a very high level. We like that. It’s also a society that has had an interest in gaming — they certainly have gaming now with pachinko, horses and motorboats.”
Japan’s MICE market is “very strong,” Gordon said, adding that “Japan is a country with a famous history of quality, famous history of customer service. That’s a good fit for our brand.”
Although Gordon said “Osaka is the most active” city in pursuit of a resort, he has not ruled out the others. The capital, he said, “is being a little bit quiet as they work on the Olympics.”
Yokohama recently threw its hat into the race and said that with the cooperation of 12 casinos, including Wynn Resorts, it estimates it could generate annual economic benefits of up to ¥1.6 trillion. It is also considering building a resort at 47-hectare Yamashita Wharf, adjacent to Yamashita Park, a major tourist site in the port city.
But the big U.S. casinos are not the only ones looking to sink their teeth into what could become Asia’s second-largest market after Macao. Native American casino operator Mohegan Gaming and Entertainment and Florida-based Hard Rock International, which runs 11 hotel casinos worldwide, have both unveiled plans for a resort in Tomakomai, south of Sapporo.
Mohegan’s plan, for example, features three deluxe hotel towers including 2,500 luxurious guest rooms of various styles, themes and sizes. The IR would cost between $3.5 billion and $4.5 billion to develop, and employ up to 7,000 people, a public relations official for Mohegan said.
“During the winter, the region offers some of the best skiing on the planet. We believe there is an opportunity to further develop this industry. During the summer, the region is an ideal location to escape the heat in Tokyo, Seoul or Shanghai,” the official said.
Although Wynn Resorts’ Gordon said he could not divulge specifics in terms of number of business partners the company is talking with in these cities or potential investment in Japan, he did say it would be the largest resort the firm has ever been involved with. Wynn Palace in the Cotai Strip area of Macao cost $4.2 billion.
“In Osaka, it would be in between 2 (million) and 3 million sq. feet (186,000 to 280,000 sq. meters) for a MICE facility. That’s probably eight times the size of (Encore Boston Harbor).” He said he expects the resort to create as many as 16,000 jobs.
“This would be much larger than the investment in Cotai. But the reason we didn’t put an exact number on it is it’s very early, we still have a lot of design to do, a lot to learn,” he said after reportedly making estimates earlier this year of an initial investment in the $8 billion to $9 billion range with operating expenses of between $940 million and $1.4 billion.
Another reason industry insiders give for the push to enter Japan is casino saturation in Las Vegas, making expansion there difficult.
As the main customers in Las Vegas have been Chinese, according to dealers, the U.S. casinos have expanded into Macao and Singapore in recent years to more easily target the wealthy Chinese and South Asian clientele. Now, with Japan set to become more of a world tourist destination, the floodgates have been opened.
The central government will make public a draft of its basic policy — which is expected to incorporate evaluations on economic impacts and gambling addiction as well as location selection criteria and the deadline for applying for licenses — as early as this month.
Although the prefectures of Wakayama and Nagasaki have also entered the race, and Tokyo, Hokkaido and the city of Chiba are considering joining, 40 other governments have said they will not apply, citing concerns over public safety and an expected increase in financial problems caused by gambling debts.
As part of efforts to prevent addiction, residents of Japan will be charged a ¥6,000 entrance fee for casinos and be limited to 10 visits per month or three times per week.
A 2017 interim government report estimated that 3.6 percent of Japanese adults have been addicted to gambling at some point in life — higher than the 1 to 2 percent average in other developed countries — and that gamblers have a predilection for easily accessible pachinko parlors.
Nearly two-thirds of respondents to a Kyodo News survey last year opposed opening the resorts, citing concerns over gambling addiction and crime.
Dr. Bo Barnhard, an authority on gambling addiction on the faculty of the University of Nevada Las Vegas who spoke at Wynn Resorts’ seminar, explained how Singapore, after opening its first casino in 2010, dealt with gambling addiction by implementing various countermeasures and treatments.
As a result, gambling-related problems in the workplace or in personal relationships dropped off significantly “to a level below what existed prior to the legalization of gambling.” He added, “Japan can harness this kind of foreign know-how.”
But as the new resorts begin operations from the first half of the 2020s, it remains to be seen how Japan’s central and local governments will successfully establish an effective safety net to ameliorate concerns about problem gambling as well as criminal activities, such as money laundering, linked to casinos.
Brendan Bussmann of Las Vegas gaming and hospitality consultancy Global Market Advisors said Japan will likely need to implement safeguards across all forms of gambling, just as Singapore did through the creation of its National Council of Problem Gambling.
“Japan will likely have to create a similar organization that will need to use evidence-based research to establish the best practices for exclusion, awareness, research and resources across all forms of gaming, including pachinko,” Bussmann said.
“Technology can play a significant role through the training of staff, exclusionary programs, analytics, and research,” he added.
As for dealing with the organized crime that is often linked to gambling, Wynn Resorts’ Gordon said, “Without getting into specifics into what we’d do every day, we’d obviously work very closely with local law enforcement. The Japanese government are the experts as to what elements might be active in Japan. As we are in all our facilities, we would be extremely cooperative and aggressive.”
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