Inside Asian Gaming

inside asian gaming February 2015 12 potential implementation bill, attempting to break down bureaucratic resistance. That’s creating “smoothness” for passage of the final bill next year, says Mr Sasaki, the director of Japan’s IR Gaming Academy. With the task force at work, “Japan’s gaming opportunity is just around the corner,” claims Mr Okabe. He thinks 2016 enactment of the implementation bill would enable an IR to open before the 2020 Olympics, though the timing would be tight. Variables include how quickly national and local authorities can agree on sites and how fast the selected jurisdictions can produce bidding documents for IR aspirants. Localities keenest for IRs, such as Osaka, would likely move fastest. Others, such as Tokyo, where Governor Yoichi Masuzoe has said casinos are “not a priority” with Olympic projects looming, could lag. Overall, even this rosy scenario has a lot of ifs, and plenty can go wrong. With one disappointment in the books and present uncertainty, the international gaming community has turned skeptical on IR legalization. “It’s being perceived as a missed opportunity despite the fact that some of the people are saying they’ll try to push it in the [2015] session,” Mr Bromberg says. “Because we’ve already heard that now for two sessions in a row, it starts to look like they’re not going to get their act together.” In a recent report on Macau gaming, Morgan Stanley Asia Pacific noted that Melco Crown Entertainment could be reallocating capital earmarked to Japan for other purposes. (Melco Crown didn’t respond to an inquiry on the matter.) Mr Galaviz agrees it’s sensible that “business development budgets of the major corporates are being allocated to more promising opportunities.” GOING PUBLIC Behind the international skepticism is the observation that proponents of casino legalization haven’t tackled major factors behind last year’s failure. Though separate polls in 2014 showed Pachinko’s Long Shadow In Japan’s discussion of casino legalization, pachinko is the elephant in the room. Analysts are divided on how much casinos would impact pachinko, as the game, combining elements of pinball and slot machines, primarily caters to a shrinking, ageing demographic. Nevertheless, estimated revenue from pachinko players’ pursuit of steel balls for cash—paid at a location outside the parlor to preserve the fiction that pachinko is for amusement, not gambling—was US$36 billion in 2013, four- fifths of Macau’s total gaming revenue and about six times that of the Las Vegas Strip. There’s a logical argument to bemade that IR legalizationwouldn’t be such a radical step for Japan, given the already huge presence of pachinko gaming. But because pachinko officially isn’t gaming, politicians can’t make that point publicly. “To legalize casinos, we need to do something about pachinko,” explains J Squared Business Development Director Aya Kudo. Last year, the government proposed introducing a tax on pachinko which would not only give the treasury a share of its revenue but also constitute a form of official recognition. Ms Kudo, whose company helps casinos market their products to Japanese customers, believes taxation could let pachinko become part of the IR legalization debate, allowing lawmakers and the public to reach more honestly- considered conclusions. Legitimizing pachinko could also make it easier for some eager investors to sit at the table. Several pachinko manufacturers have expressed interest in becoming IR licensees or partners, including Konami; Kazuo Okada’s Universal Entertainment, the maker of Aruze gaming machines that’s now building the $2 billion Manila Bay Resorts in the Philippines; and Sega Sammy, a partner with South Korea’s Paradise on a $1.7 billion IR adjacent to Korea’s gateway airport in Incheon and whose Chairman Hajime Satomi is said to be close to Japan’s Prime Minister Shinzo Abe. “The recession is just one more factor adding to the growing list of issues that are of greater immediate priority than passing IR legislation,” Spectrum Asia CEO Paul Bromberg says. nearly identical majorities for and against IRs—and Japan already has pachinko and lotteries, plus pari-mutuel wagering on horse, boat, motorcycle and dog racing—the negative poll result more likely reflects Japan’s public mood. “When you look at the UK or Australia, everybody gambles on sports, it’s a way of life. In Japan, it’s a negative to gamble,” says Aya Kudo, business development director for J Squared, a specialist in casino marketing for Japanese customers. “The government needs to show Japan what casinos can bring: entertainment, shows, MICE. The government has been bad at explaining that—it’s just casino, casino, casino.” Mr Govertsen agrees opposition to casinos may stem from “the Feature SPECIAL REPORT