Japan, as an attractive tourist destination, set to give Republic a run for its money: Analysts
Japan's integrated resorts (IRs) will roll their first die only in 2022 at the earliest, but Singapore needs to brace itself for the competition, analysts have said.
After much political wrangling, the world's third-largest economy passed a law in the wee hours of yesterday morning to allow casinos in the country, a move that Prime Minister Shinzo Abe hopes will give a fillip to the country's stagnating economy.
Japan has looked to Singapore for inspiration. Mr Abe, who in 2014 visited Marina Bay Sands and Resorts World Sentosa in Singapore, told the Diet during the debate: "It's not like whole cities will be taken over by casinos. These facilities will attract investment and do much to help create jobs."
He has been quick to stress that the IRs will also feature retail, entertainment, hotel and conference facilities and provide something for everyone.
Singapore was the second-largest gambling market in Asia behind Macau last year, with revenues of about US$3.5 billion (S$5 billion), but analysts said the odds will be stacked against the Republic, given the allure of Japan as a tourist destination.
The passage of the law also gives the gaming sector an inroad into the world's largest untapped market - brokerage firm CLSA predicts Japan will draw potential gaming revenue of US$25 billion a year.
Estimated potential gaming revenue a year for Japan.
Singapore-based lawyer Yap Wai Ming, who sits on the editorial board of the Gaming Law Review And Economics journal, told The Straits Times: "Japan is already an attractive tourist destination and will certainly give Singapore a run for its money with its larger offering of more than just two casinos, as in Singapore's case."
Mr James Murren, chairman of Las Vegas-based MGM Resorts International, has been reported as telling analysts in a recent conference call that Japan "would dwarf the Singapore market in size and could be extraordinarily lucrative for all the investors, real estate and operators alike".
Mr Abe has set a target of drawing at least 40 million tourists a year by the 2020 Tokyo Olympics and expects the launch of the IRs to keep the momentum going beyond the one-off Games.
But this casino legislation has not come easy. The ruling party withstood no-confidence motions tabled by the opposition, among other delay tactics, to pass the vote on the final day of this year's Diet session. A similarly worded Bill had been abandoned in 2013 after it was submitted to the Diet, while the debate was delayed during a second submission last year.
Public disquiet is also strong, with a poll by national broadcaster NHK earlier this week showing that 44 per cent of respondents opposed casinos, with only 12 per cent in favour and the rest unsure.
Even so, passing the new IR Promotion Bill is but the first step. A separate IR Implementation Bill will need to be tabled and debated in the Diet next year, laying out the nitty-gritty of the roll-out strategies and safeguards.
On this front, Japan will likely take a leaf from Singapore's book by having Japanese nationals pay a levy for entry into the casinos, as well as by establishing exclusion programmes and problem gambling counselling, among other things, reports said.
This is especially crucial, given concerns over Japan's gambling addiction problem and potential money laundering by yakuza crime syndicates.
Japan has more than 12,000 pachinko parlours worth an estimated US$27 billion yearly - the pinball-like slot machine game operates in a legal grey area, as prizes won are redeemed for cash at another place. Another US$8 billion comes from legalised horse, speedboat and bicycle racing.
An estimated 5 per cent of Japan's adults - or 5.4 million people - are said to be gambling addicts.
Mr Jonathan Galaviz, a chief strategist of Las Vegas-based gaming consultancy Global Market Advisors, said Japan should consider "redirecting a good portion of gaming taxes to responsible-gaming social safeguards".
He cited Singapore as a model that "creates a balance between commerce and social needs".
A version of this article appeared in the print edition of The Straits Times on December 16, 2016, with the headline 'Competition for S'pore as Japan legalises casinos'. Print Edition | Subscribe
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