The house always wins. This gaming industry truism has Japan racing to become the latest Asian economy to bet on casinos.

Yes, lawmakers have been angling to build so-called integrated resorts for years now. It seemed like a done deal back in 2009 and 2011, when previous governments pitched Las Vegas-ization as the quickest way to morph Japan into a tourism mecca and create jobs. The debate went cold, though, as critics warned of social costs eclipsing public revenue, including gambling addiction, crime and surging bankruptcies.

While valid concerns, they ignore how gambling is already one of Japan’s biggest industries. Administrative desensitizing enables 127 million people to pretend those ubiquitous pachinko parlors, cycling tracks, horse-racing stadiums and boat-racing circuits aren’t betting businesses. Never underestimate the power of collective denial.

But the real denial here is Tokyo believing it’s not too late to join Asia’s casino party.

Irked that his 4-year-old structural reform drive netted few victories, Prime Minister Shinzo Abe is going all in. Recent days saw his Liberal Democratic Party ramming gaming legislation through the Diet. Shocked lawmakers were howling. “How could this possibly be a growth industry?” asked Renho, head of the opposition Democratic Party who goes by one name. “I think it will debase Japan’s national dignity.”

Just like the rest of Abenomics, gains are unlikely to be anywhere near what the Abe administration is pitching. Back in 2009, when the legislative table was hot for casino legalization, an Osaka University of Commerce study predicted a roughly $40 billion annual gaming windfall. The hope was to re-create Macau’s success in attracting Chinese tourists, with Japan’s cultural attractions helping to rake in VIP punters.

A few factors changed since then. One is a bubble in casinos from Cambodia to Macau to the Philippines to Saipan to Singapore to South Korea to Vietnam and Russian cities in the general Asian vicinity, including Vladivostok. Australia and Malaysia also boast established and expansive gaming industries. A stronger yen and generally high costs, meanwhile, diminish Japan’s appeal for punters who may prefer to sit before the sacred green felt at venues a bit closer to home and offering cheaper lodging and transportation.

China’s slowdown swings the odds against the house. In 2009 and 2011, China was growing 10 percent, the ranks of the mainland nouveau riche were exploding and Communist Party bigwigs could leave with suitcases full of cash. What Asia’s Vegas wannabes all have in common is they are pitching for the very same customer: the newly mobile mainlander.

Along with slowing growth, the sliding yuan is denting their betting power. So is President Xi Jinping’s crackdown on official corruption. Xi’s curbs on capital flight are also thinning out the high-roller ranks. What’s more, Xi could always create his own special gambling zone inside China.

There’s a luckier view, of course. As Rick Santos, founder and CEO of property consultancy CBRE Philippines, told me in Manila recently, Asia’s gaming pie is getting bigger, not dwindling. Also, knock-on effects like real estate demand, conferences, exhibits and arts events can give casinos a powerful economic multiplier effect. “It’s all about how a city or country positions itself,” he says.

One way Japan could come out a winner is avoiding the immediate Tokyo area, building integrated resorts in less-traveled rural areas that provide additional cultural seductions. Putting casinos in central Tokyo will only exacerbate the city’s dominance. Building them in, say, the Tohoku region, which is still recovering from the devastating 2011 earthquake, would spread the benefits of growth.

Placing some out west in Kyushu, perhaps near Fukuoka, would harness the island’s equidistance from China, South Korea, Taiwan and elsewhere. Okinawa deserves its own Las Vegas Sands, MGM or Wynn Resorts project. It bears the biggest U.S. military burden, and some payback from Tokyo is long overdue.

That will be a tough sell, of course. Lawmakers hope to tie integrated-resort construction to the 2020 Tokyo Olympics. What’s more, Tokyo is the stomping ground of Shintaro Ishihara, the pro-casino former governor, who still wields considerable power. Let’s not count out the influence of the yakuza, the mobsters notorious for getting a piece of virtually every infrastructure development. Gangsters are rubbing their nine-fingered hands together at the prospect of tens of billions of dollars of new Tokyo projects.

There’s also a matter of allaying public concerns about an explosion of gambling addiction, a problem that already confronts 5 percent of the population. Seoul tried to address the problem by barring South Koreans from casino floors; Singapore by charging high admission fees for locals. Abe’s LDP needs to ensure the casino industry does more to absorb Japanese culture than taint it. It also mustn’t overstate the size of economic jackpot in the long run.

Based in Tokyo, William Pesek is executive editor of Barron’s Asia and writes on Asian economics, markets and politics. www.barronsasia.com

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