Tuesday, July 23, 2019

Japan

AGA says US casino industry can support Japan

The president of the American Gaming Association said the U.S. casino industry  could provide assistance and experience to Japan once a ban on casinos...

Japanese courts face tax expense lawsuits

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Japan lawmakers upbeat on casino plan chances

Many Japanese lawmakers are optimistic that a bill that would create the framework to legalize casinos in Japan will be passed this year, but agree that a major obstacle may still be the cautious stance of key coalition member the Komeito Party. The administration of Prime Minister Shinzo Abe has already announced its support of the concept as a means to stimulate growth in the Japanese economy. The drafting of the bill is said to be at an advanced stage. The lawmakers consulted by AGB varied in their degree of personal enthusiasm about the IR project, but they agreed on the factors that will shape the outcome. All of them, for example, stated that there would be no visible progress until after the completion of the unified local elections on April 26, but thereafter the Abe administration would introduce the bill and seek to pass it in the current ordinary Diet session, scheduled to end on June 24. They also agreed that the major obstacle to the Casino Bill is the Komeito Party, which does not share the prime minister’s enthusiasm about the IR concept. Global casino operators have been lining up plans to invest billions in Japan, which is expected to rapidly become one of the world’s biggest casino markets. The legislation failed to pass last year after political scandals triggered snap elections, which returned Abe to power. Keiichiro Asao, the leader of a small, regional political party, appears to be unconvinced of the importance of establishing IRs in Japan, but neither is he opposed. He can see three possible benefits—drawing foreign tourists from Asia, keeping Japanese “high rollers” at home, and offering good employment opportunities at the facilities attached to the casinos—but he isn’t sure that these benefits will really materialize. Representatives Mito Kakizawa and Takatane Kiuchi of the opposition Japan Innovation Party are both confirmed proponents of the Casino Bill. They both point out that although the ruling Liberal Democratic Party supports the bill and has enough votes to secure passage, it is considered to be a lower priority than security policy legislation, and the bill could be dropped if Diet deliberations get bogged down in other controversies. Kiuchi, however, ventures the prediction that there is a 70-80 percent chance for passage of the bill during the current Diet session, which he foresees could be extended into August. Kakizawa hints that he sees passage as being more likely in late 2015, though he certainly hopes that the bill is adopted sooner. In terms of where Japan’s IRs might be sited, there is a consensus that Okinawa has now taken itself out of the running. The newly-elected governor of the prefecture, Takeshi Onaga, has made it clear that he opposes hosting casinos. This is likely to bring a close to the matter for Japan’s southernmost region. The media now identifies Osaka and Yokohama as the leading candidates due to their large populations and their local governments eager to host IRs, but both Kakizawa and Kiuchi suggest that it is simply too early to make any firm predictions. Kakizawa, in fact, believes that it is better not to speculate too much at this stage about locations as it could dampen the support of some local politicians if they understood that their own regions were definitely out of the race. Mito Kakizawa, who is his party’s policy chief and one of the leaders of the movement to bring IRs to Japan, argues sharply against Komeito and the other political forces that oppose the Casino Bill. He dismisses the argument that casinos would automatically bring about a rise in criminal activities, pointing to the fact that Singapore’s casinos did not result in that country becoming a crime-ridden nation. He takes more seriously the concerns about gambling addiction, but he points out that this is already a social problem in Japan due to the existence of pachinko parlors and horse racing. Kakizawa suggests that policies on addiction need to be upgraded in any case, and that the debate surrounding the Casino Bill could be an ideal occasion to do so. In terms of the structure of the bill, it is not yet clear what the Abe administration will propose, but representative Takatane Kiuchi anticipates that foreign companies will take the leading role in operating the casinos, since they will bring the know-how in this field that Japan currently lacks. These operations might be structured as consortiums in which Japanese companies play a part, but Kiuchi feels that they will be largely foreign-owned. The view of Japanese lawmakers, therefore, is that there is a very real prospect that the Casino Bill will pass this summer, depending on whether or not prime minister Abe can win the understanding of his coalition partner, Komeito. It will also depend on how rough a ride he faces in the Diet as he attempts passage of highly controversial bills regarding military affairs, which are much closer to his heart and the top priority for his government.  

Japan continues to position for IRs despite legislative delays

By David Rittvo*  As the Japan Diet begins its winter 2015 session, there is renewed anticipation for the passage of the Draft Integrated Resort legislation. Although the previous special session ended without the passage of the bill, there have been notable developments at both the federal and regional levels. The Innovation Group has been tracking the process in Japan for the past three years, including meeting with stakeholders in Tokyo, Osaka, Yokohama and other smaller regional markets. Last week, Yomiuri Shimbun, Japan’s largest newspaper announced that the federal government is currently considering draft legislation that includes the possibility of developing large-scale IR’s in Yokohama and Osaka only by 2020, in time for the Olympics. The draft legislation did not mention Tokyo as a possible other development. There was also no mention of a regional casino development in this announcement, but any IR is most likely to be placed in a smaller city away from the large city zones so that the developments do not cannibalize one another. The sizing of the Japan market remains a moving target due to the fluid nature of the legislation being considered. Analysts, including Jay Defibaugh from CLSA, have provided estimates that ranged between $4 billion and $10 billion depending on the location and operational dynamics. The smaller regional casinos have been pegged at between $350 million and $1 billion, depending on the development size and scope.   Seeing as the current legislation includes a lot of moving variables, including the potential to limit local access and/or require an entrance fee, as well as potentially limiting access to junkets and credit, exact estimates for the market are difficult to ascertain at this time. Regardless of the exact legislation, the potential IR developments in either the Tokyo Metropolitan Area or Osaka will be the single largest property, in terms of revenue generation, in the world. The regional level effort has seen the most progress since the last Diet Session. As most are aware from related press, Okinawa, considered by many to be a serious candidate for the first regional casino, has decided not proceed. As a result, The Hokkaido prefecture has emerged as the leading regional casino candidate. Similar to Osaka, Hokkaido has initiated its regulatory, development and information gathering process. In late 2014, the prefecture released a request for information to over 25 casino companies and developers. The request included background information regarding the operation of casinos, a view on potential development sites around Hokkaido and background on gaming potential for the regional market. The outcome of the RFI should begin to shape Hokkaido’s next steps for the development process and position it for continued momentum once the legislation is passed on the federal level. Meanwhile, activity in Osaka continues to move forward on both the governmental and private sector fronts. A group of Osaka based businesses, under the umbrella of Kansai Association of Corporate Executives, KACE, has released plans for a large-scale IR to be developed on Yumeshima Island. Both the Osaka City and Prefecture governments are continuing their pre-development, planning and information gathering phases. Our impression is that Osaka is positioning itself to be ready to start the lengthy development process once legislation is passed on the federal level, with the hope of being the first Integrated Resort in Japan. In the greater Tokyo and Yokohama area, it appears that Yokohama has increased its profile in communicating its ability to be the host city for a large scale IR development for the region. In 2014, Tokyo Governor Yoichi Masuzoe stated he would like to concentrate on the Olympic developments and continue his information gathering regarding the social and economic impacts of IR developments. In light of Tokyo slowing down its development process and the renewed interest on federal level support, Yokohama has continued to progress. Last week, The Yokohama City council submitted comprehensive plans for the waterfront development that would include an IR. The sites would allow the IR to take advantage of Tokyo Bay, Yokohama’s relative location to Haneda International Airport and strong transportation access. Finally, on the federal level, as previously mentioned, the initial IR legislation is “in the queue” to be considered and is awaiting presentation to the legislative body. Conflicting reports continue to surface, with some stating that due to the number of more pressing bills in front of the legislation, including on national defense, the bill might not be introduced or considered until a special session in July or November 2015. However, recent reports have also stated that the bill will be introduced this week. In addition to the legislative process, the members of the Diet and other stakeholders are fielding questions and concerns regarding the potential social impacts of the Integrated Resorts. One prominent example of this occurred in late 2014 when a study was released by the Ministry of Health, Labor and Welfare stating that close to 5 percent of the population has a pathological gaming problem. While some might dispute the methodology and overall results of the study, it raised concerns in Japan and led to further discussions amongst politicians. The outcome of these discussions has led to potential problem gaming mitigation factors being introduced with the bill. These could include a local entrance fee, strict self-exclusion policies and strong identification checking systems. In addition to these discussions, Congressman Takeshi Iwaya, Secretary of the IR Giren in Diet and a strong IR proponent, stated that the legislation will include a provision that allocates a certain amount of gaming revenue to tackling gambling addiction and creating care facilities for problem gamers. It is important to note that all of these measures are still under discussion as the Diet members continue to consider this bill. Federal bureaucrats are also continuing their information gathering trips and research to other IR markets. These markets include Singapore, Las Vegas, Atlantic City and Europe. The goal is to gather the best practices from established IR markets and implement those into the draft legislation and second gaming bill. Whether the legislation is passed is yet to be determined, but 2015 could be a make or break year for the stakeholders involved. Should the legislation pass, the scale and energy around the development opportunity and resulting product should be unlike anything seen in Asia. * David Rittvo, executive vice president of the international division for The Innovation Group, is leading a team to expand the company’s presence on an international level, with a focus on the Asian Region. He joined The Innovation Group as a Senior Analyst in 2009 to provide gaming feasibility analysis and to help formalize a specialty advisory discipline within the organization that provides F&B-specific consulting, marketing, development, financial, operational and management advisory services to the firm’s gaming, entertainment and hospitality clients. The international studies have included feasibility, market assessments, financial pro forma projections and master planning for multiple clients in Vietnam, The Philippines, Sri Lanka, Macau, Australia, Japan, Korea and Taiwan.  

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