Japan draws up outline of IR regulations as casino operators push back

A view of the gaming floor at the MGM National Harbour in Washington on opening night in December.
A view of the gaming floor at the MGM National Harbour in Washington on opening night in December. WASHINGTON POST

TOKYO (Reuters) - Foreign casino operators are pushing back against moves to regulate proposed integrated resorts in Japan, an early sign of friction for projects expected to generate billions of dollars for the country and the global gambling industry.

Japan voted late last year to legalise casinos but specifics are still being hammered out to include in legislation on regulating proposed integrated resorts - facilities hosting casinos, hotels and conference space.

A key advisory panel on Monday (July 31) held its final meeting on the rules, proposing a limit on casino floor space and curbs on entry by Japanese nationals. The panel is expected to submit its proposals to Prime Minister Shinzo Abe within days.

According to Jiji Press, measures outlined include:

- limits on the number of casino visits by Japanese nationals, who will be required to display their "My Number" identification cards. All visitors except foreign tourists will have to pay a fee to enter casinos, with the proceeds used for regional revitalisation and other public purposes

- Gang members and those aged under 20 will be prohibited from entering casinos

- Japanese nationals will be allowed to purchase casino chips with cash only, and automated teller machines will not be allowed in casinos. Foreign visitors will be permitted to use credit cards

- IRs will have to include casinos, hotels, international convention and exhibition halls, recreation facilities such as museums, and domestic tour desks

- A ceiling will be set on the number of IRs across the country and on their floor space. The land, infrastructure, transport and tourism minister will approve IR districts and oversee IR operators, as well as host prefectures and municipalities that draw up IR development plans.

- A casino control committee with binding powers will be established under the Cabinet Office to issue casino business licenses, inspect casino operations and impose administrative punishments on any offenders.

The prospect of casino gambling is unpopular in Japan, given worries about gambling addiction and a potential increase in underground activities. As a result, foreign casino operators have been cautious against speaking out against specific rules.

And yet, casino executives and industry players said they have begun lobbying politicians and bureaucrats against specific limits on casino floor space.

Bureaucrats have looked at a limit of 15,000-square-metres, casino and government sources said, though the panel proposed only an "upper limit" and said specific figures would be set after wider consultations.

Casino executives said the 15,000-square-metre limit could hit foreign investment and neutralise the economic impact of resorts.

"The current plans risk missing the mark on achieving public policy objectives," one casino executive said they had told bureaucrats. "It's serious enough to halve the maximum investment we're willing to make."

At stake, say executives and industry representatives, is the potential revenue from casinos and the potential size of their boost to Japan's economy.

Analysts think two resorts in big cities could generate revenue of around US$10 billion a year, while the government has touted their potential for boosting Japan's tourist industry and creating jobs.

A senior source with direct knowledge of the government's position told Reuters bureaucrats are minded to impose stricter rules on casinos to placate public opposition. "There's a need to balance the promotion of integrated resorts with caution and listening to the public's views," the source said.

Las Vegas Sands Corp and MGM Resorts International are among foreign operators vying to win licences to run a Japanese casino resort. The US pair have previously said they would plough up to US$10 billion respectively into a project.

But investment of that size could be cut if the 15,000-square-metre limit is pushed through, said Seth Sulkin, chair of a taskforce at the American Chamber of Commerce Japan working on casino resorts.

"Gaming companies are very rational: they'll calculate how much revenue they can generate with a 15,000-square-metre casino floor, and they will only invest as appropriate for that, which certainly won't be $10 billion," Sulkin said.