Japanese lawmakers are adding more and more restrictions to gaming regulations under the Integrated Resorts (IR) Implementation Bill to the distress of potential casino operators.
The Liberal Democratic Party (LDP) team tasked to draft and push through parliament the necessary legislation and rules on establishing the casino industry in Japan, met for the second time this year to discuss the new set of limitations proposed on the IR Implementation Bill.
Proposed Regulations Frustrated Casino Operators
According to the notes of the meeting, the Japanese government wants to set a casino entry fee for all Japanese nationals and foreigners living in Japan. The casino entry fee will be set at JPY2,000 for a 24-hour access to the casino. According to the proposal, the casino will not be permitted to reimburse the levy fees to players, regardless of reason.
In addition to the entry fee levy, government officials want an entry limit for all nationals and foreign residents. The proposal notes that local residents are only allowed three visits to the casino per week and no more than 10 visits in a span of 28 days. International tourists will be exempt from this rule.
Implementation of the limits and entry fees will be very strict as it is outlined in the proposal that authorities will monitor all entrance to the casino floors. Local residents who are entering the casino will be required to present their government-issued My Number identification cards for monitoring.
In addition to the entrance regulations, two new tax systems were laid out during the meeting. One of the two proposed tax systems is a fixed rate of 30 percent on casino GGR. The second tax system will be what they called a “progressive” tax system, where casinos earning up to JPY150 billion GGR will be taxed 30 percent, those earning between JPY150 billion and JPY300 billion will be taxed 40 percent, and all casinos with GGR above JPY300 billion will be taxed as much as 50 percent.
On top of the fees and taxes is a plan to put a cap on the size of the casinos that will be put up inside the integrated resorts. The government wants operators to only allocate 3 percent of the gross floor area of the entire resort to the casino, with a maximum size of 5,000 sqm.
Problem Gambling Stance Contributing To Stringent Measures
Money collected from the entrance levy fees and the tax system will be divided between the central government and the local government hosting the casino. A large percentage of the funds will be dedicated to financing anti-gambling addiction measures, community projects, and promoting the country’s tourism industry.
The Japanese government is pulling all the stops in making the IR Implementation Bill as friendly as possible to the anti-gambling addiction stance of the Japanese people. According to Hakuhodo Inc, an advertising and PR firm in Japan, as much as 50 percent of Japanese residents were still opposed to the establishment of casinos in their country—this is why the government is putting all of their efforts to assuring that the entry of casinos in Japan will not cause additional harm to the residents. In fact, the Japanese parliament wants to make sure that the Basic Bill on Gambling Addiction Countermeasures will be passed before the IR Implementation Bill makes any progress.
Restrictions Will Curb Foreign Investment
While the government has good intentions in setting casino limits, Banking group Morgan Stanley believes that the long list of restrictions could be deterring gaming operators from investing in the country. According to Morgan Stanley, the potential operators could be discouraged from investing on capital expenditure because the restrictions are immensely cutting on the return on investment.
MGM Resorts, an international operator looking to apply for a Japanese license when the IR Implementation Bill is ironed out, shared the same sentiments and said that the government’s hard focus on protecting Japanese players could have a negative impact on the country’s gaming liberalization efforts.
In a statement, Ed Bowers, executive vice president for global development of MGM Resorts International, said “For political reasons, you end up inserting different things that result in unintended consequences – such as if you apply too much pressure, a high tax rate, high entry free, or limit to the floor space. As you push one lever, it may have repercussions on other areas.”
In response to the negativity towards the new Japanese restrictions, Hard Rock Japan’s Chief Executive Edward Tracy said that the key to move forward is for the casino industry, lawmakers, experts, and Japanese people to work together and address every issue, including customer safety.
The new set of limitations underlined in the proposal will be voted on and approved by the ruling coalition LDP and partner Komeito, before it is passed on to the Japanese parliament. Analysts expect the IR Implementation Bill to be ironed out before the Japanese parliament session closes in June.