Discussions regarding the formation and passing of the Integrated Resorts (IR) Implementation Bill in Japan has been going on for a long time which has been widely covered by the media. Prime Minister Shinzo Abe and his government have fought hard to et the bill passed as the newly regulated casino industry is expected to bring in billions for the country.
Parliament Finally Approves Bill
Prime Minster Abe extended the session this month in order to come to a final decision on the bill and he succeeded in getting his legislators to finally sort out their issues and approve the bill.
This was the second bill that was approved by Japanese legislators which has now paved the way for the government to move forward with the regulation process and the issuance of gaming licenses which are being highly sought after by international casino operators including Las Vegas Sands Corp and MGM Resorts.
Very Comprehensive Gambling Bill
One of the reasons why these gaming regulations took so long to get approved was because Japanese legislators wanted to examine all of the loopholes and then put in place measures to mitigate any such risks. Problem gambling was a huge factor and legislators finally managed to come to terms that appeased everyone.
Japanese legislators studied a number of gaming markets, especially Singapore before coming up with its own set of regulations and policies. The current legislation is very comprehensive and casino operators appreciate the attention to detail.
Jim Murren, who is the CEO and chairman of MGM Resorts International heaped praised on the detailed process and Japan’s commitment to social responsibility. Murren said that he felt that the IR bill was easily one of the most comprehensive bills in the global casino industry. MGM Resorts and Las Vegas Sands Corp have already made it clear that they are willing to invest up to $10 billion in developing an integrated casino resort.
Opposition Still Not Very Happy
Prime Minister Abe faced a lot of criticism as the opposition party had accused his government of giving into the demands of US Casino operators who promised a lot of money in return for relaxing gaming laws that made it more flexible for them to operate but put the Japanese people at greater risk.
Despite the opposition and criticism, the IR implementation bill went through and it has now paved the way for international casino operators to start making progress in establishing domestic partners and making plans to apply for a casino license and outline their investment, development and operational plans. Casino licenses are expected to be released before the end of 2020.
These integrated resorts are expected to provide a major boost to the tourism industry, create thousands of jobs, bring in billions in terms of foreign investment and also generate a significant amount in gaming tax revenue. To please the opposition, the new bill limited the casino gaming floor to 3 percent of the total size of the property, a limit of three IR licenses, 30 percent tax rate and limitations on locals which include an entry fee and number of times they can visit a casino in a 4 week period. Despite these limitations, the opposition groups are not very happy.
Japan Will Threaten Macau Casino Industry
Macau is the global gambling hub in the world and has been that way for the last decade. However, analysts from Morgan Stanley predict that within a few short years, Macau’s casino industry will be challenge by Japan’s casino industry. This is because Chinese VIP gamblers will prefer coming over to Japan than crossing the border and going into Macau.
Tokyo and Osaka are expected to be two of the locations that get approval for these new integrated casino resorts. A number of Macau operators have already committed to finding Japanese partners and toss in their hats for a potential Japanese casino license. Some of these operators include Melco Resorts, Galaxy Entertainment and Suncity Group which is a major junket operator in Macau.
In a statement, Morgan Stanley analysts said “In the case of Osaka to make a reasonable return of 14 per cent (EBITDA/total investment) on a US$8 billion investment. Assuming 15,000 square meters of casino area, gross gaming revenue of US$4 billion, VIP and mass table yield of US$36,500 and US$8,500, respectively, are necessary. That’s much higher than Singapore”