Inside Asian Gaming

INSIDE ASIAN GAMING | November 2010 18 by the country’s parliament in January 2009. It lifted a decades-old ban on casinos. The Penghu islands in the Taiwan Strait to the west of the main island were initially viewed as the front-runner in the race to host Taiwan’s first casino. On 26th September 2009, around 30,000 Penghu residents cast votes in a referendum on a proposal to develop two casino resorts there, and 56% of them voted ‘no.’ Penghu casino advocates claim a major reason for the ‘no’ vote was the central government’s failure to come up with detailed measures to counteract local concerns about the potential social ills created by the casinos. At least three years must pass before Penghu can hold another casino referendum. Lesson learnt Kinmen submitted a rival bid with an application in August 2009 for a referendum on casinos. Approval of the referendum appears to have been held back, and in the meantime, the pro-casino lobby, learning from the lessons of the Penghu failure, have been working on an improved pitch to get locals on side. As we reported in our story ‘Lessons from the Lion City?’ in October, even in the absence of legal casinos, Taiwanese are avid gamblers. They get their fix at electronic gaming arcades to which the authorities turn a blind eye, or at least a pretty myopic one. Taiwan currently has around 3,000 electronic game arcades offering quasi-gaming, in a similar fashion to Japan’s pachinko industry. Taiwan’s Electronic Game Arcade Business Regulation Act provides for two categories of arcade: i) Generate rate, which provide entertainment-focused games to the public, including minors, and ii) Restricted rate, which are off limits to people under eighteen years of age, where quasi-gaming is understood to take place. Despite their less-than-ideal operating environment, Taiwan’s restricted rate arcades are estimated to generate over US$5 billion annually. That suggests plenty of pent-up local demand for legal gaming to support an ambitious casino venture, even if, as many fear, mainland China blocks its citizens from playing at Taiwan’s proposed casinos. Cover Story A bridge too short?—Penghu residents voted to continue relying on their islands’ seaside appeal, rather than allow casinos T here appears to be a disconnect between Westerners’ expectations for liberalisation of casino gaming in Japan, and what’s actually happening in the country’s politics. People can hardly be blamed for trying to wish casinos into existence in Japan. If and when they arrive, there could be a very big pay day for investors. Japan is the world’s biggest gambling market on a per capita basis, according to Felix Ling, chief consultant of Platform Asia Management Services. Mr Ling was one of a number of consultants that provided advice to the Singapore government in the run up to casino liberalisation in that market. Pachinko is played by about one-sixth of Japan’s 124 million population. Those enthusiasts annually spend north of 21 trillion yen (US$6.6 billion) on the pinball-like machines. But legalisation of casino gaming has been reported as ‘imminent’ in Japan since at least 2002, and nothing has happened so far. Setbacks In 2003, Shintaro Ishihara, Governor of Tokyo Prefecture, proposed a radical plan that avoided the need for new legislation and would have allowed casinos run in administrative terms in the same grey area as pachinko halls. Prizes won in Governor Ishihara’s planned casinos would have been exchanged for cash. But he couldn’t get the idea past the National Police Agency and the Justice Ministry. Since then, it has been generally accepted that any attempt to build a casino in Japan must be preceded by legislative reform. Part of the reason for the gap between the expectation of casino reform in Japan and the reality could be that the Japanese people who tend to talk to foreign investors and journalists about the issue are pro-casino. While they are no doubt speaking sincerely and in good faith, they are giving a partial view. Nor does it do any harm for Western casino operators to talk up the prospects of casinos in Japan, especially if it helps to support their share prices. Dr Toru Mihara, a visiting professor at Osaka University of Commerce, gets plenty of space in Western publications regarding Japanese casino legislation. He has also worked as an Advisor, Casino Study Group, to the Liberal Democratic Party of Japan. In 2008, he told the G2E Asia Conference in Macau:“I still believe we will see some initiative within two weeks, before the end of the current Diet [parliament] session.” “We are not now discussing whether or not to build casinos, but we have moved on to discussing the structure of the regulatory authorities,” he added. Jumping the gun It appears he was premature in his assessment. In September this year, Dr Mihara, now a member of Land of Rising Expectations Reports of casino liberalisation in Japan have been somewhat exaggerated JAPAN