Japan’s casinos must move forward after so many delays

Japan’s long-awaited legalization of casino gaming, through the integrated resorts project, sparked widespread industry excitement for a new, highly engaged market. However, delays, setbacks, and high costs indicate that things are beginning to go wrong. However, Muhammad Cohen writes in his first piece for iGB that the pandemic has provided an opportunity to rethink integrated resort rules and broaden the appeal of the properties.

Legalizing casinos in Japan has been on the cards for decades, but the legislative and bureaucratic finding has stifled interest. The only certain thing so far is a delay at every stage of Japan’s integrated resort process.

The national government’s selection of up to three IR licensees, scheduled to start in January, will now begin in October. After all these delays and missed opportunities, it’s time for Japanese authorities to suspend the process to get it right.

Prime Minister Yoshihide Suga’s government should take a step back and consider why three of the world’s top five international casino operators, as well as Japan’s largest city Tokyo and top vacation destination Hokkaido, have decided to skip the IR race.

Participants in the IR process who were contacted generally agree that it is time for a break. However, they disagree on whether authorities will pause the process.

Chris Wieners, the managing partner of Hogo Japan, believes the IR process will continue but not the best strategy. “Using Covid-19 as a rationale for a complete rewrite would allow the government to save face. It will also provide ample time for a thorough review of the entire IR plan,” says the Osaka-based consultant. “It would also provide time for the global IR scene to recover from the pandemic.”

Requests for a new IR process

Strock, who worked on Barriere Group’s abandoned IR effort in Japan from 2014 to 2020. It sees extending the gaming license term from five years as critical to securing bank financing for projects that could cost more than US$10 billion.

“No one knows whether the convention business can still work after Covid-19,” says Suganuma, a game designer turned executive. “Japanese or international experts must present a fresh perspective that goes beyond existing models.”

“An initial qualification process would be ideal for filtering out any problematic bidders who might try their luck with local jurisdictions and taint the pool of bidders,” says Kenji Okamoto, managing director of Vector Risk Management.

The arrest of Liberal Democrat legislator Akimoto on charges of taking bribes from a Chinese gaming company highlighted public concerns. It raised issues about probity and problem gambling, which the current rules address. However, the public may dismiss casino legalization as yet another ineffective government economic recovery scheme. It will be unless each IR licensed emphatically succeeds.

Few see three clear winners among the current IR candidates, Osaka, Wakayama, Yokohama, and Nagasaki, at this time.

“If the government is smart enough, it should disqualify potential unsuccessful bidders,” says Toru Mihara, chairman of the National Council on Gaming Legislation. “However, I am unsure of their intelligence.”