Japan should avoid casino gambling credit: U.S. scholar
A comparative paper on casino regulation published by the University of Nevada, Las Vegas (UNLV) suggests any Japanese casino industry should avoid the practice pursued in the Nevada, Macau and Singapore casino markets of allowing certain gamblers to play on credit.
“Japan should prohibit the extension of gambling credit… at least to its citizens and permanent residents,” stated the author, Verin Valdez, an alumnus of the University of San Diego School of Law.
“Although the three comparative markets here permit this practice, there are strong arguments against it,” wrote the scholar in the paper, lodged with the UNLV Gaming Law Journal.
“Extending credit puts a patron in a leveraged financial position in order to participate in gambling. The risk of loss or default is high given that the odds of winning are ultimately against the borrower,” Mr Valdez said.
He added: “Granting credit can become predatory: casinos might become eager to extend easy credit to patrons with poor credit in order to attract them to play at their establishment; unregulated interest rates may be usurious; and the terms of repayment may be uncertain or spawn defaults.”
The scholar suggested a third argument against extending credit was “the risk of default and the potential losses that they will have to write down as uncollectible debt”.
Mr Valdez noted that while any legally incurred gambling debts of Japanese citizens or permanent residents would in likelihood be enforceable in Japan, any such debts incurred by foreign citizens might not be enforceable in their home countries, “especially” in the case of patrons from mainland China.
“If, despite these policy considerations, Japan permits the extension of gambling credit, then it should use Singapore as the model. Regulations should require citizens and permanent residents to prove that they are financially stable through a deposit account and to demonstrate that they can risk loss by drawing down the full amount in the account for gambling,” stated the paper’s author.
Three other key recommendations for Japan contained in the paper – based on comparative study of practices in Nevada, Macau and Singapore – were that the nation should consider: an entry levy on Japanese citizens and residents; set 20 as the legal age for casino gambling, to be consistent with the age of legal majority and for consumption of alcohol in that country; and that it should mull establishing a system of self-exclusion and third party exclusion for problem gamblers to mirror regulations in Singapore and Macau, “primarily… to protect casino patrons rather than the casinos and the gaming industry”.
Japan is currently in the process of introducing a legalised casino industry in the country. A piece of legislation called the Integrated Resorts (IR) Implementation Bill is likely to be discussed during the next regular session of the parliament in 2018, following the snap election held on Sunday, according to investment analysts. Legislation making casino gambling legal in Japan came into effect in December last year.
Japan’s Liberal Democratic Party – led by incumbent prime minister, Shinzo Abe – claimed overwhelming victory in Sunday’s general election, giving succour to those who hope for a casino industry in that country soon.
Japanese brokerage Nomura said in an August report that a casino industry in Japan with “two major integrated resorts” could eventually generate gross gaming revenue of US$7 billion per year.
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