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Hitoshi Ishihara is a partner at Anderson Mōri & Tomotsune. As the sole Japanese attorney admitted to the International Masters of Gaming Law (IMGL), Mr Ishihara has extensive focus and knowledge concerning Japanese gaming law, including the recently legalized casino operations in Japan, and has been recognized as the Japanese Gaming Lawyer of the Year by multiple sources in recent years. The legalization of Japan casinos is exactly the card that WYNN was hoping to be dealt. Shortly after the Japanese government made the critical concession, CEO Steve Wynn remarked: “To us, the.

Japan may soon be able to list casinos from MGM, Caesars, and Sands to its long list of major tourist attractions. Except for pachinko, takarakuji, and racing bets, gambling is currently illegal in Japan. That will soon change if certain bills are passed by Japanese parliament, and experts are indeed expecting them to pass. The bills would allow big name casinos like MGM, Caesars, and Sands to set up shop in the Asian archipelago country, opening the Japanese market to the booming casino industry just in time for the 2020 Olympics.

2020 Tokyo Olympics Expected to Spur on Casino Legalization

Tokyo was announced as the 2020 Olympics site on September 7, 2013. These summer games, scheduled to take place from July 24th-August 9th, will mark the second time Tokyo has hosted the global event; the last time was in 1964. This highly anticipated festival of sports, coupled with the possibility of a slew of big name casinos opening up on the islands, has fed speculation that casinos will soon be legalized in Japan.

Politician Takeshi Iwaya of the Liberal Democratic Party has remarked that although Japan might be the “only developed country without casinos,” lawmakers are now doing what they can to help the nation “sprint . . . to the finish line.”

Japan: In Need of Fiscal Healing

The idea of casinos in Japan has been floating around for years, but only recently has it received the recognition and support it needs to become a reality. One reason for this is Japan's floundering economy. Reduced marriage and birth rates, a growing elderly population, and a cumbersome government debt that, according to Bloomberg.com, is the largest in the industrial world, have taken their toll on the country's financial stability. Adding casinos to the scenic and exciting landscape of Japan would enhance its reputation as a vacation destination with surrounding Asian territories, the United States, and wealthy people all over the world, thereby stimulating revenue.

Like many countries on the globe right now, financial gain from casino revenue would play an important role in the fiscal healing of Japan.

Pachinko Parlors Aren't Enough

Pachinko is a highly popular Japanese gambling activity that is legal. The pachinko machines of Japan are similar to the slot machines of the western world. These arcade-type games resemble pinball in that the player must use skill to correctly maneuver as many balls as possible. The degree of a player's success in the game reflects the quality and/or amount of prize won; prizes range from ball point pens to expensive electronics to cash.

Pachinko parlors employ a large number of Japanese citizens and will likely never become obsolete for this reason. The number of parlors and amount of revenue generated by them, however, has diminished in the past several years. This is due to increasingly strict pachinko parlor advertising guidelines. In order to combat the devastating effects of problem gambling, the Japanese government banned advertisements that promote gambling in 2011. That prohibition, meant to protect citizens from the perils of gambling addiction, had an unwanted side effect: significant revenue loss for the country.

Japanese Lottery Isn't Enough

Takarakuji, or Japanese lottery, is the country's largest gambling market. The lottery was created to earn money for the government and the rule of thumb is that no more than 50 percent of ticket expenditures can be given away as prize money. Six types of lottery exist throughout the regions of Japan. The “All Japan” lottery is the only type available on all of the islands and is conducted 12 times per year. The “Dream Jumbo Draw” is held only four times a year and is the largest paying lottery in all of Asia.

In spite of the popularity of lottery in Japan, the revenue generated has not been enough to lift the country out of its economic slump. The addition of brick-and-mortar casinos would increase gambling revenue and boost tourism in a way that lottery simply cannot.

Yakuza: Illegal Gambling in Japan

Japanese criminals belonging to a group called “yakuza” often promote illegal casinos and other types of forbidden betting in Japan. This group of miscreants is similar to the American mafia in that they integrate the concepts of violence, brotherhood, and strict organization for significant personal gain. Secret casinos and mahjong games are sometimes operated by the gangs of yakuza. Other illegal activities include drug dealing, loan-sharking, and the promotion of prostitution. Although yakuza was somewhat romanticized by Japanese culture in the past, natives of the country have grown less tolerant of the criminal group in recent decades as evidenced by the 1991 Anti-Yakuza Law. Money made through yakuza gambling obviously does not pad the pockets of government or charity groups the same way brick-and-mortar casinos can.

How Successful Would Japanese Casinos Be?

Experts estimate that, should Japan decide to add casinos to its gambling mix, the country would rapidly elevate to the uppermost ranks of the gambling world. Some speculate that a casino-loving Japan would surpass Atlantic City, Las Vegas, and even Macau as the world's most desirable gambling destination. These experts point their fingers at the successful Singapore model as a sign that Asian gambling is hugely profitable in a depressed economy.

Naysayers believe that the gambling industry would only temporarily inflate Japan's struggling economy. They point out that foreign companies who open casinos in Japan would get the lion's share of the profit, not Japan. They maintain that the casino industry is not a sure thing: casino business, like any other industry, can become sluggish in times of financial stress. Adding casinos to Japan is not the end-all solution that some hope it would be, according to these critics.

If casino gambling becomes legal in Japan, a whirlwind of tourism and revenue is sure to hit the country, especially with the 2020 Tokyo Olympics approaching in seven years. The coming months will determine whether Japan will indeed open its doors to the business of MGM, Caesars, Sands, and other big name casinos.

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On July 20, 2018, the Act to Implement Specified Integrated Resort Areas (the “Casino Implementation Act”) passed the Japanese Diet which legalized gambling to be operated by private entities in Japan. While there are many aspects which have been delegated to the determination by the ministry ordinance (in fact there are 331 items that are up for the ministry ordinance to determine), below are several key points of the Casino Implementation Act:

1. Size of casino facilities

   While the Casino Implementation Act is still silent on the actual limitation on the size of the casino as this has been relegated to the cabinet ordinance (Article 41 of the Casino Implementation Act), the working team concerning the ruling party’s IR Implementation law issued their opinion regarding the size of the casino floor. Considering that the location and size has yet to be defined, rather than setting a limitation on the absolute value, it was determined that the gross floor area for the casino in IR facilities shall be limited to 3% or less.
   The basis of the calculation shall be 3% of the “gross floor area” and not the land area, which should ensure the casino to be “only a part of the facilities.”

2. Limitation on the number of times of entry and means to verify identity

   Chapter VII of the Casino Implementation Act provides for a strict limitation on the number of times of entry and entry fee to prevent problem gambling. While there is no limitation on the number of times of entry for non-Japanese residents, the Japanese residents are limited to “3 times in 7 days + 10 times in 28 (Article 69 of the Casino Implementation Act), and “My Number cards” shall be utilized for the verification of identity and the number of times of entry (Article 70 of the Casino Implementation Act ).

3. Entry fee

   The entry fee will be imposed to Japanese residents in the amount of 6,000 yen, the half of which shall be paid to the national government (Article 176 of the Casino Implementation Act) and the other half to the local government (Article 177 of the Casino Implementation Act).

4. Levy

   While there was a discussion of whether a progressive system could be imposed, since this may reduce the incentive for entities to expand their business by additional investment and presents a risk to discourage investment to realize the commonwealth, the levy was fixed at the rate of 30% of gross gaming revenue, half of which shall be paid to the national government (Article 192 of the Casino Implementation Act) and the other half to the local government (Article 193 of the Casino Implementation Act).

5. Number of IR areas

   Article 9 of the Casino Implementation Act provides that the number of location shall be limited to three (3). However, the Casino Implementation Act provides that after five (5) years have passed since the first designation, the Casino Implementation Act as a whole shall undergo a review and after seven (7) years have passed since the first designation of the IR, the number of location will be specifically reviewed giving consideration to local areas which desire and are preparing to establish the facilities while securing a period for determining the effect of IR (Article 4 of Supplementary Provisions to the Casino Implementation Act).

6. Relationship with cities where the facilities will be built

   The Casino Implementation Act provides that the enforcement policy to be prepared by the local government requires consent of the city where the IR will be actually located (Article 6 of the Casino Implementation Act), requiring a method of consensus-building at the ground level.

As mentioned above, while the details on how to implement casinos are to be determined by the ministry ordinance, some of the major items which have been debated for some time are now clarified by the Casino Implementation Act to a certain extent, and it should be fair to say that Japan has taken a big step closer for the first ever opening of the legalized casinos.

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