Japan can learn from Nevada’s experience, to ensure organised crime does not infiltrate the former’s nascent casino industry, and to make sure the social and economic effects of such gaming business benefit the tourism sector and society rather than harm the host community.
So say respectively two pieces of research published by the University of Nevada, Las Vegas, (UNLV) International Gaming Institute, that are said to have been commissioned by Japanese government officials and business leaders.
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 that nation’s parliament in 2018, once another piece of legislation dealing with problem gambling has been enacted, according to industry commentators.
One of the recently-published UNLV reports offering insights for Japan’s decision makers was titled: “Practical perspectives on gambling regulatory processes for study by Japan: eliminating organized crime in Nevada casinos”.
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, which would in likelihood be a tempting target for organised criminals.
In Nevada’s case, organised crime first colonised – then had to be eradicated from – the industry. That rooting out took several decades to achieve, via what the report authors said was a combination of regulatory moves – such as the ‘good character’ test as a condition of licensing – and robust powers of investigation and enforcement.
The UNLV authors stated – referring to Japanese public opinion on the topic of problem gambling in relation to the country’s home-grown wagering pastime pachinko: “At present, Japan’s gaming industry (and its potential future integrated resorts industry) suffers from a severe perception problem”.
Japan’s yakuza
The report team, Jennifer Roberts, Brett Abarbanel and Bo Bernhard, the latter the executive director of the Institute, also wrote, referring to a type of Japanese organised criminal network: “The global gaming industry (as well as the general public) is well aware that the yakuza have been active in gambling activities in Japan, which [fact] mandates an aggressive approach.”
It made four main recommendations. The first was that before Japan issues casino licences it should consider implementing a “stringent pre-licensing review,” that nonetheless encourages the involvement of regulated capital markets.
Ensuring that capital for the casino industry was obtained from such capital markets rather than from irregular or ad hoc sources had been a key element in clearing mobsters out of Las Vegas in the 1970s and 1980s, suggested the report.
The second piece of advice was that, post-licensing, there should be a “regulatory system with a strong enforcement structure that can help perform police-level overt and covert criminal investigations”; a system the authors said had served Nevada well.
A third recommendation was that during the application process as well as after licence issuance, Japan should encourage “strong self-regulation” among casinos, supported by the regulatory system.
“Strong compliance programmes and anti-money laundering measures will help protect against infiltration and operation of organised crime in the casinos,” indicated the authors.
Their fourth suggestion was that Japan should equip gaming regulators with the power to impose sanctions against operators that “wilfully or negligently” violate laws and regulations, as well as to exclude people “deemed to have organised crime associations” from entering into licensed establishments – in the manner of the “Black Book” – containing names of banned people – that was first compiled by Nevada in 1960.
Entry levy, wagers
The other report from the Institute is a 100-page document titled “Socio-economic impacts of Japanese integrated resorts – review and recommendations,” by Kahlil Philander, Brett Abarbanel, Bo Bernhard and Ray Cho.
The paper covered two topics that have been commonly discussed in the Japanese media and among lawmakers there: casino entry levies for locals and wager limits.
The report stated, citing previous research by Dr Philander: “Theoretical research on the topic suggests that admission fees may have unintended consequences due to… differential impact on behaviour by players with and without gambling disorders. Worryingly, admission fees likely increase the share of revenue from players with a gambling disorder…”
It added: “We strongly discourage placing any constraints on the domestic market (either through visit limits or entry fees).”
With regard to caps on amounts wagered, the authors stated there was “limited information about the effectiveness of these programmes in reducing harm when they are mandatory…”
The report’s recommendations also included: having specialised law enforcement for gaming-related investigations; a long-term research programme to assess changes in key crime statistics; an interdisciplinary committee to oversee, and report to government, on matters of public health and safety; a “gambling neutral” national problem gambling council, “with a mandate to develop a public health safety net for gamblers, and ensure advocacy for persons with gambling disorders throughout government and industry”; and development of gambling industry-wide standards for advertising and marketing that “limit risk to vulnerable populations while enhancing awareness of services that contribute to positive player health”.
The report authors added: “While there is a large international community of gambling researchers and research centres, jurisdictions often have unique circumstances, institutions, player behaviours, and other idiosyncrasies that can limit the application of insight from one jurisdiction to another. Therefore, Japan should invest in responsible and problem gambling research”.
