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[email protected] Japan: a Post-Mortem W hen Japan’s National Diet concludes its regular 2014 session this month it will do so without voting on the much-anticipated casino legalization bill crafted by members of the Liberal Democratic Party’s governing coalition and introduced back in December. There’s still an outside chance for salvaging a market in time for the 2020 Summer Olympics in Tokyo if the bill is passed later this year in a special session expected to convene in the fall, that is, if supporters can accomplish in a matter of weeks what they couldn’t given more than six months. If not, it’s back to the drawing board for 2015 and another try at rolling the stone of political momentum up a hill that has shown itself to be rather a steep one. It wasn’t supposed to go this way. The pro-casino caucus in the House of Representatives, the more powerful of the Diet’s two chambers, is said to number 200 and includes veteran lawmakers close to Prime Minister Shinzo Abe. In March 2013, not three months after taking office, Mr Abe was in front of the House talking about the important role destination casinos could play in boosting foreign tourism. The LDP and its coalition partner, New Komeito, hold a 67% majority in the House. In June 2013, they unseated the opposition Democratic Party of Japan to regain a majority, albeit a slim one, in the upper House of Councillors. So when the bill, niftily compressed within two pages, was unveiled at the end of last year amid considerable media fanfare, most of the biggest names in the industry commenced in earnest to tallying the potential of a market projected at US$40 billion over the next decade. Morgan Stanley sounded the first alarm in a client note issued toward the end of April that suggested the LDP wasn’t satisfied with the support from New Komeito and from small but influential parties like the far-right Japan Restoration Party and the pro-business Your Party, not to mention the opposition DPJ. The bank’s research had turned up trends pointing to steady declines in pachinko and other downside risks in macro areas touching on the potential of the domestic market. It also took some shots at Japan’s viability as a destination for Chinese high rollers. This need for an all-embracing legislative consensus has plagued legalization from the start and at this stage you have towonder if it doesn’t hint at cracks within the LDP, whichmay not be havingmuch luck either with devising a licensing and taxation regime capable of satisfying the many divergent political, business and community interests that characterize Japan’s highly federalized prefecture system of government. Certainly it’s a pretty fair indicator of how controversial casinos are. Bear in mind, this is a country whose national legislature agreed only this year to consider making possession of child pornography a crime (with manga and anime exempted under the right to free expression). So the fact that no one’s bothered to ask the Japanese people what they think would seem to be more than an oversight. Actually, someone has asked them. Investment bank CLSA commissioned a nationwide survey that was conducted in January among 1,000 adult men and women divided evenly across a range of age groups. The results were published in a report on the market the bank issued in February. They are not comforting. One in five respondents wasn’t even aware a legalization effort was under way, and only 7% professed any knowledge of the details. Only 15% answered an unequivocal “yes” to the question “Do you think large IRs can boost the economy?” Fewer than 24% said they have a “good” or “somewhat good” impression of IRs. More than 51% said they believed IRs would result in a “significant increase in crime”. Only 34% said they believe the “positive aspects of IRs outweigh negatives”. No one who looked at these finding should have been surprised earlier this month when Tokyo’s new governor, Yoichi Masuzoe, a popular independent seen by some as a rival for Mr Abe’s job, said a casino was not a priority for the city. In other words, the Japanese people have more important things to occupy them. The world’s third- largest economy has been stagnant for a generation. It was sick long before the tsunami and Fukushima. The economic revival the LDP promised when it was swept back into office in a 2012 landslide has yet to materialize. The soul-searching that is going on now is of a scale not seen since 1945. They’re talking about scrapping the war guilt curriculum taught to children for 60 years. It’s an issue dear to the heart of the nationalist Mr Abe, who is also pushing constitutional reforms that imply remilitarization, which is splitting the pacifists among his lay Buddhist New Komeito partners and elevating the JRP, which holds 54 seats in the House, into something of a spoiler’s role on key policy issues. This should have been good news for the casino caucus. The JRP is led by three of legalization’s biggest supporters, Osaka Mayor Toru Hashimoto, the governor of Osaka Prefecture, Ichiro Matsui, and nationalist firebrand Shintaro Ishihara, a former governor of Tokyo. Ironically, though, it may have helped kill the bill at a critical juncture when Mr. Hashimoto and Mr Ishihara fell out with each other in May over how far to go in rewriting what the JRP calls the “Occupation Constitution”. If the Constitution winds up the subject of a national referendum, which is likely, will this complicate the legalization effort? Possibly. Or it may prove enough of a popular distraction to simplify it. At a time when casinos have never seemed more certain, or more elusive, it’s safe to say that anything is possible, which is just meaningless enough to be true.