The size of gaming floor in any Japanese casino should correlate to estimates of consumer demand, calculated jointly by the industry and government, rather than to a predetermined maximum, suggests a note from Global Market Advisors LLC (GMA), a consultancy to the casino industry and to other sectors serving consumer markets.
A Japanese casino market could generate annual gross gaming revenues of between US$6 billion and US$9 billion, depending on the number of permits, and the “physical footprint” of the venues, suggested a September memo from Fitch Ratings Inc.
The Tuesday note from GMA mentioning possible Japanese government policy with regard to casino floor areas, followed the general election victory of Shinzo Abe and his Liberal Democratic Party (LDP) on Sunday.
GMA suggested that the poll success, which confirmed a so-called “supermajority” in the lower house of the country’s parliament for the LDP and its political allies, should spur passage of a legislative bill to address problem gambling – possibly as early as this year during an extraordinary session of parliament possibly commencing on November 1. That legislation would be followed possibly next year by the Integrated Resorts (IR) Implementation Bill, said GMA. The latter piece of legislation would provide a framework for the industry.
But GMA warned that regional politics could interfere with such a parliamentary legislative timetable.
“This process may be held up due to a busy fall schedule and the political tensions with North Korea,” said the memo from GMA. According to Japanese media reports, Mr Abe had promised during the election campaign to take a robust line on Japan’s northern neighbour, which recently launched several missiles over Japanese territory.
“If they [parliamentarians] do not have a long enough session to address this [problem gambling] legislation, it is thought that the bill will pass in spring 2018 in the regular ordinary session,” added GMA.
Once the problem gambling bill is passed, the debate on the IR Implementation Bill would start in “late spring and into summer,” suggested Tuesday’s memo.
The issue of a possible cap on the size of gaming floor in any Japanese casinos had arisen in August. That month, Japan’s Office of Integrated Resort Regime Promotion – known as the IR Promotion Secretariat – suggested setting an “upper limit” to the size of casino floors in Japan, but it did not suggest what that limit should be, according to local media reports. Some media outlets had previously mentioned the possibility of casino floors being restricted to 15,000 square metres (161,459 sq feet).
GMA said in its Tuesday note: “Japan should allow the operator to work in partnership with the regulatory board to allow for a gaming floor that meets demand, thereby allowing enough profit to warrant the large levels of investment necessary to appropriately construct the other non-gaming amenities that will help spur incremental tourism and economic benefits.”
The memo also addressed the issue of a possible casino entry levy – an idea that has garnered some public support in Japan – and the question of whether credit for gambling should be made available to certain players.
“If an entry levy is charged to locals, it should be an amount that is equivalent to the cost of entertainment. Studies have shown that entry levies are not effective in preventing problem gaming. As such, an entry levy should be viewed as a tax by the government, rather than a deterrent to problem gamblers,” suggested GMA.
The consultancy suggested availability of credit in the market might actually act as a consumer safeguard.
“High dollar amounts [of play] should not be limited solely to cash. This will allow players to regulate their own play while feeling safe about the transportation of their funds,” stated GMA.
The institution said it expected the first Japanese casino resort to open no earlier than the second half of 2024, assuming that a request for proposals is held in 2019.
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