Inside Asian Gaming

INSIDE ASIAN GAMING | April 2011 20 Cover Story in this pachinko player-card technology, creating something of a conflict of interest to put it mildly, given that the police are supposed to supervise the industry. In regulated casino gaming, the most common taxation model is the most transparent. The tax jurisdiction or licensing authority takes a percentage off the top from the gross wagered. Modern casino gaming technology and increasing global standardisation of technical and accounting protocols makes that gross easy to track (for the most part). That helps to guarantee the public purse gets its defined share and reduces the risk of revenue leakage to organised criminals or for the purposes of funding other corruption. 2. General contribution to tourism and GDP Legalisation of casino gaming can arguably be seen in its own right as both a leap of imagination and a calculated risk. What is not disputed is those jurisdictions that take the momentous decision to liberalise experience consequences that are foreseen and others that are not foreseen. Examples in Macau are that everyone correctly anticipated a surge in mainland Chinesevisitorsfollowingtheannouncement of market liberalisation in 2002. It coincided withawealthier China takingamoreoutward and assertive stance in the world after decades of relative isolation. Not foreseen by many commentators was that nine years later VIP gaming would still command such a large share of the Macau casino market. Despite Japan’s (relatively) liberal economic and political system, and its seven-year occupation by the US after the Second World War, it has successfully managed to keep the world at arm’s length in cultural terms. It’s notoriously difficult for non-Japanese to get permanent residency in the country and acquiring citizenship is even harder. This can be seen as a unifying factor in a turbulent world because it keeps the country ethnically and culturally homogenous. But that (and the cost of goods and services in Japan) has so far been proven to be a barrier to tourists— even those from culturally similar countries such as South Korea. Japan received 8.6 million tourists in 2010—a modest 3.1% increase year-on-year according to data from Japan’s Ministry of Justice and from Japan National Tourist Organization. Macau received 25 million visitors last year—three times as many. But people and places can change. Few thought strait-laced Singapore would ever legalise casinos, but it did, and is probably glad of it. In 2010—the year two casino resorts opened there in February and April— the city-state achieved 11 consecutive months of record year-on-year growth in foreign visitors. Singapore also managed a 47% year-on-year growth in tourism receipts between January and September that year, according to the Singapore Tourism Board. While some of this growth may be coincidental with the general recovery from the global downturn experienced in the final quarter of 2008 and the whole of 2009, the consistency of the gains looks to be related to casino gaming. Even during a global financial crisis, Macau managed real terms GDP growth most developed economies would be happy with in an average year—2.8% and 1.5% in 2008 and 2009, respectively. Even though Macau doesn’t make very much or ‘export’ many services other than casino gaming, it seems that vice (specifically the regulated, taxed sort) pays. Japan’s nuclear power station crisis plus the huge clean up and reconstruction operation on the northeast coast of the main island, Honshu, is likely to mean no growth for inward tourism to Japan this year—and possibly a net fall in visitors. Pachinko isn’t likely to assist in the process of rebuilding overseas tourism. It has never been marketed as a global game. It does, however, provide up to 300,000 jobs in parlours and equipment manufacturing, according to the Japan Productivity Center. But that figure is Japan’s police—better at crisis management than at run-of-the-mill law enforcement Source: Statistics Singapore Table 5: Visitor arrivals in Singapore 2000-2010 0 1 2 3 4 5 6 7 8 9 10 11 2000 2001 Visitor Arrivals (millions) 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: Macau Statistics and Census Service (DSEC) Table 6: Macau GDP growth 2006-2010 Indicator Year 2006 2007 2008 2009 2010 GDP, at current prices (billion MOP) 113.70 141.93 161.67 165.46 217.32 GDP growth in real terms (%) 14.4 14.7 2.8 1.5 26.2 Per-capita GDP, at current prices (MOP) 227,710 269,960 294,505 303,992 398,071 Per-capita GDP growth in real terms (%) 9.1 8.9 -1.5 2.4 25.8 Source: Macau Statistics and Census Service (DSEC) Table 7: Year -on-year GDP growth in real terms, 2006-2000 26.2 2006 2007 2008 2009 2010 0% 5% 10% 15% 20% 25% 30%