With predicted profits of between $15bn and $25bn, the current push to legalise casinos in Japan could see their economy sky-rocket. Foreign investors are fighting to be the first to start building in the Land of the Rising Sun. But are the Japanese themselves crazy for casino jackpots? Or are they strongly against the casino boom?
To answer that properly, let’s have a look at Japan’s history with gambling and why they might be looking to legalise it now.
Gambling History in Japan
Historically, gambling has had a strong presence on the fringes of Japanese society and been the subject of widescale bans, either because of a moral stance or to limit the influence of games brought in from outside cultures during isolationist periods.
Despite the broadly enforced bans, the common folk would continue to gamble and invented Japanese versions of western games during the country’s isolation. Perhaps the most intriguing element of Japan’s relationship with gambling though, is how the bans directly led to the creation of the Yakuza criminal organisation.
During the 18th century, Japan had a low social class called Bakuto who were essentially itinerant gamblers. As gambling was illegal, they would set up shop and play easy games like Cho-Han (odds or evens) and card games with Japanese Hanafuda cards – leaving before the authorities could apprehend them.
The name Yakuza is one they later adopted and comes from a Japanese version of baccarat where the worst possible hand of 8 9 3 can be read as Yakuza.
The most far-reaching ban of gambling in Japan occurred in 1907 with the establishing of the Criminal Code, in which Article 185 states the punishments for gambling. Interestingly enough, certain methods of gaming have since been excluded from this, sports betting has been legalised provided bets are on an authorised sport. In addition, special exemption has been made for a unique Japanese gambling game called Pachinko. The bans on casino gambling have held in place for years until very recently with the election of current Prime Minister, Shinzo Abe.
The Rise of Abenomics
In 2012, Shinzo Abe was elected Prime Minister of Japan and set about trying to refresh the economy. For decades, Japan has been suffering from a problem called deflation. Simply put, with an aging population and economic uncertainty, people were saving their money and not spending it which meant that the economy worsened and encouraged more people to hoard their money: the problem becomes a spiral that’s very hard to break out of.
Abe’s approach to breaking out of the downward economic spiral was a novel one with a three-pronged approach that focused on fiscal stimulus with economic recovery measures. It involved trillions of yen being spent on critical projects, a highly experimental monetary policy that features an asset purchase programme (a decidedly unorthodox approach) and a series of structural reforms which will help re-invigorate the economy.
Though it’s taken some time, Abenomics appears to be having a positive effect on the Japanese economy. With Abe’s aggressive moves to stimulate the economy, and make Japan welcoming to big business, it’s little surprise that he’s one of the driving forces of the recent push to introduce integrated casino resorts to Japan.
The historic ban on gambling could be lifted with special licenses, a situation very similar to the one in China, and will be at three locations across the country. The projected profits can’t come too soon, with the Abenomic growth package showing signs of slowing down, but there are more hurdles yet to be overcome before the resorts can be completed.
Problems facing the Casino deal
The move to legalise gambling in Japan isn’t one supported by the entire nation, most particularly the opposing Constitutional Democratic Party of Japan has been trying to delay the bill’s progress. This has meant a rather forceful push from Abe’s Liberal Democrat party.
On the 19th of June, the lower house of parliament passed the bill that would make the legislation law, but this quick passing was purely down to the majority that Abe’s party held. This hasn’t stopped continued attempts to stop the bill progressing including appeals to the Speaker not to extend the parliamentary session so that the bill can’t be successfully completed.
But even outside the government, there are problems of appearance facing this new bill. As said previously, the Yakuza are strongly associated with gambling and they give the industry a tarnished image before the bill passes into law. This is only re-enforced by the new tactics used by the Yakuza in the modern day of infiltration and extortion – such a ploy would be particularly devastating for the casino industry.
Thankfully, the perceived social risks of problem gambling are being addressed by a limit on how often domestic citizens can enter a casino as well as there being an entrance fee. These measures have been enough to secure the votes necessary to get the bill through the lower house, the question is whether the coalition will still pass it through the upper house?
Worth the risk?
With an economy that’s still struggling to recover from the burst bubble of the 1980s despite Abenomics, the casino resorts plan looks like the perfect patch. The market is seen as so desirable to foreign casino operators that their efforts to win one of the licenses are usually in the form of billions offered in investments. Lawrence Ho, the Chairman of Melco Resorts and Entertainment (as well as the son of the legendary Stanley Ho), sold off his stake and resigned as Chairman of Russian Summit Ascent in case it jeopardised their effort to break into Japan. In his own words, “Even though I like the Russian market?.?.?.?nothing is worth jeopardising Japan.”
With the bill looking very likely to pass, it seems like opening a casino in Japan is soon going to be a major priority for the international gambling industry. Could it even surpass Macau?