LAS VEGAS — The Japanese have been kicking around the idea of building American-style casinos in Japan for four years now. The Parliament Committee on Casinos with 100 Diet members has been gathering information on casinos, and Tokyo Gov. Shintaro Ishihara has been a major proponent of the idea. In fact, 22 prefectures have already signed up to build Las Vegas-style casinos given the chance.
It makes sense for Japan to get into the casino business. It is already the world’s largest producer of slot machines, and having casinos would bring more foreign tourists to Japan and improve prefectural finances.
With the legalization of gambling in the United States, Macao, Singapore and elsewhere, governments have been able to eliminate criminal elements and corruption from the industry and capture the revenue for the public good while turning gambling into a safe and profitable form of public entertainment.
Believe it or not, the Japanese are the largest gamblers in the world. In Japan, the pachinko industry accounts for nearly $300 billion of this global gambling revenue. Of course, pachinko is not recognized as legalized gambling in Japan, and this has allowed the underworld to hold a share of the industry leading to all forms of corruption and illegal behavior.
Self-deception on issues like this is a national sport in Japan. The administrative fiction that pachinko is not gambling in Japan is based in the Japanese government and its antiquated regulatory structure. This is what Japanese refer to as gyousei shido (administrative guidance). For the pachinko industry this problem is compounded by the vague application of the Penal Code of 1907.
Pachinko, like the construction industry, has thrived for years as a protected industry under these ambiguous laws, but now this “administrative guidance” has become the major barrier to the future development of the industry.
In the future, pachinko can only become a competitive global entertainment industry by creating an appropriate legal framework for it to pursue its goals. And since casinos are filled with slot machines, there is no way for the Japanese government to build casinos without legalizing and regulating the pachinko business — a linkage that the members of Parliament don’t seem to understand.
Believe it or not, the pachinko business in Japan is five times larger than the gambling industry in the entire United States and 10 times larger than Las Vegas gambling revenue. There are some 17,000 pachinko parlors in Japan and 5 million pachinko or slot machines operating.
Casinos in America, which are safe and pleasant, attract a broad category of patrons. One reason the Japanese pachinko industry is suffering a decline is that pachinko has a bad image. The majority of the 20 million pachinko parlor gamblers in Japan are males around 40 years old. They smoke and drink more than the average Japanese and display less trust toward their fellow citizens than does the average Japanese.
Japan’s experience with pachinko corruption is typical of gambling elsewhere. In the mid-20th century, most gambling was illegal in the U.S., but it nonetheless existed with the knowledge and approval of politicians and law enforcement officials. The prohibition of gaming, as with other prohibitions (alcohol, prostitution), served as an invitation to a similar form of “structural corruption.”
But during the last 25 years, most companies involved in gambling in the U.S. are now either publicly traded corporations or — in the case of lotteries –government entities. State regulatory agencies that oversee gambling operations have proven effective. Gaming is now an important part of the legal entertainment business, contributing to local government revenues and ensuring that gambling addiction and related social problems are handled in an appropriate manner.
This pattern of moving from the “prohibition of gambling” to the “controlled legalization” of gambling is being repeated around the world. Japan must now face this challenge and take the steps necessary to bring its gaming practices in line with a new regulatory framework. The old Japanese framework of certain gambling (horse racing, motor boats, etc.) being legally regulated by certain ministries while pachinko is considered “a popular” (nonlegal) sport like prostitution is no longer meaningful.
Fortunately, people increasingly agree that gaming in Japan — everything from mah-jongg to casinos — needs a completely new regulatory framework so that it can remain profitable and competitive.
The current regulatory environment for gambling in Japan has other serious negative long-term consequences for Japan and the pachinko industry:
* Japanese pachinko executives are seen as gangsters overseas. This leads to the denial of international gaming licenses and money-laundering investigations.
* Because of limited opportunities to expand in Japan, successful Japanese pachinko manufacturers and owners are now investing their money abroad.
* Foreign companies, seeing an opportunity, are producing “pachinko-like” machines to compete with Japanese companies in Japan and abroad.
* Internet and wireless gambling present new and more interesting options to Japanese gamblers.
* Japanese tourists are going overseas to gamble since Japan does not offer the best environment for gambling. Foreign tourists, meanwhile, are not going to Japan; instead, they are going to Las Vegas, Macao and Singapore.
* Japan is not competitive in the casi no business. The global trend is to provide destination resorts with great restaurants, excellent rooms, convention facilities, spectacular architecture, retail shopping, live entertainment, and gambling.
Almost everyone (except Japanese politicians and the Police Agency) agrees that “regulatory transparency” is the best course of action for the gambling industries in Japan. Japanese citizens would prefer to get crime out of the leisure industries. A new generation of pachinko industry executives want to be respected and have new opportunities for business. Even certain elements within the Police Agency would like to have a more clearly defined role in crime control. Local governments would like to see profit from the gaming industry. The tax officials would prefer to eliminate tax evasion.
Creating a new and comprehensive gaming regulatory structure with a control board, gaming commissions and a regular staff is needed. What model would work best for Japan needs to be researched. The American model with strong state governments might not be best for Japan, but some kind of a new system is needed and needed quickly.
There are two basic options for balancing the interests of the entertainment industry and the regulation of gambling. One is to create a new regulatory framework just for pachinko. This would be good for pachinko and allow it to improve its image and operations. There is also the option to create a comprehensive framework for all Japanese gaming — casinos, public gambling and pachinko.
A comprehensive approach might be better because this would open the door to new opportunities for everyone and finally rid the industry of the criminal element.
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