Following numerous postponements, Japan’s gambling houses must advance… at a later date.
Japan’s long-awaited acceptance of casino wagering, through combined resort plans, has ignited widespread excitement in the field for a fresh, highly involved market. However, postponements, setbacks, and high expenditures have revealed that this excitement is gradually diminishing. But in the initial piece penned for iGB by Mohammed Cohen, he argues that the pandemic has presented a chance to reset the regulations of integrated resorts and broaden their appeal.
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After numerous postponements, Japan’s gambling houses must advance… at a later date.
Japan’s casino legalization has been in the works for many years, but legislative and bureaucratic postponements have dampened excitement. So far, the only certainty has been delays at every stage of the Japanese integrated resort process.
The national government’s selection of up to three IR licenses, initially planned to begin in January and end in July, has now been pushed back to October and will continue until next April. After all these delays and missed opportunities, it is now time for Japanese authorities to finally learn their lesson and… halt the process to get it right.
Prime Minister Yoshihide Suga’s government should take a break to determine why three of the world’s top five international casino operators, as well as Japan’s leading city Tokyo and top resort destination Hokkaido, have withdrawn from the IR race.
Discovering a resolution will permit Japan to construct casino retreats suitable for the world’s third-largest economy. These combined resorts are most likely to satisfy the requirements of the government, operators, investors, patrons, and maybe even the doubtful Japanese population.
Those involved in the combined resort procedure generally concur that it’s time to take a break, although they disagree on whether authorities will actually do so.
“I believe they would be better off waiting until the COVID-19 outbreak is no longer a problem before moving forward with the combined resort plan,” stated Dominic Carter, chief executive officer of market research company Carter Group. “Our nationwide surveys show a significant decrease in the percentage of people interested in combined resorts over the past year, from 27% to 22% – but the percentage of opponents has also decreased, from 46% to 39%.
“Combined resorts have naturally fallen in their position on the public’s list of pressing issues.”
Experts disagree on whether the public can be persuaded to support combined resorts. “Ever since I lived in Las Vegas, I know the many advantages that combined resorts bring to a city,” said Masa Suganuma, chief executive officer of ReNeA Japan, who now lives in Yokohama, where the combined resort bid is a key issue in the August mayoral election. “Yokohama must promote the positive aspects of combined resorts.” Others believe that opposition to combined resorts is politically motivated and unavoidable.
Chris Wieners, managing partner of Hogo Japan, believes that the combined resort procedure will continue, but he doesn’t think it’s the right approach.
An advisor in Osaka proposed that the authorities should thoroughly re-examine the combined resort scheme, citing the COVID-19 outbreak. This would enable the authorities to save face and provide them with ample time to scrutinize the entire plan, many aspects of which have been met with tepid acceptance at best. It would also grant the global combined resort industry time to recover from the pandemic.
Jonathan Stroock, an independent gaming advisor, stated that the absence of many of the world’s largest gaming operators should serve as a wake-up call for Tokyo. Las Vegas Sands, Wynn Resorts, and Caesars Entertainment, all pioneers of the modern combined resort, have all withdrawn from the Japan bid.
Stroock, who worked on the Barrière Group’s abandoned combined resort project in Japan between 2014 and 2020, believes extending the gaming license duration from five years to a longer period is crucial to securing bank financing for projects that could cost over $10 billion.
Such a hefty price tag, made more daunting by the COVID-19 outbreak, which has caused global gaming revenue to plummet, and China’s threat to blacklist gambling destinations targeting its citizens, is partly due to government mandates. Each combined resort must include at least 100,000 square meters (1.1 million square feet) of hotel space, larger than any existing hotel in Japan, and 120,000 square meters of MICE space, 44% larger than Japan’s largest existing convention center. The latter requirement appears to have been custom-made for Sands, which abandoned its Japan bid last May.
The fate of gatherings is unclear following the COVID-19 outbreak, remarked Kanuma, a previous game developer. Professionals in Japan and globally must devise a novel vision that surpasses traditional methods.
Masahiro Terada, a senior executive at PwC, believes the answer might lie within the February revision of Osaka’s request for proposals, which permits the construction of MICE facilities in stages. “My suggestion is to observe market trends,” he stated.
The national administration has not voiced any opposition to Osaka’s interpretation of the regulations. Some individuals have proposed incorporating arenas, museums, and other public spaces into MICE areas. They also advocate for relaxing regulations in regions outside major urban centers such as Tokyo, Yokohama, and Osaka.
“We anticipate the national government to maintain its adaptability,” said Aska Ishiyama, senior vice president of Spectrum Gaming Japan. However, Terada emphasized that bureaucracies are not renowned for their flexibility. Officially modifying the rules would enhance clarity for bidders.
Conducting preliminary evaluations of potential IR applicants to assess their suitability prior to local governments nominating them would also improve transparency. “It would be optimal to perform preliminary assessments before local governments select them to eliminate bidders who might attempt to deceive local governments and degrade the pool of bidders,” said Kenji Okamoto, managing director of Vector Risk Management.
The administration is committed to achieving international benchmarks in issuing permits, stated Yoji Oguritsu, a leading investor and former Macau compliance specialist. “If a gambling enterprise can’t secure a permit in Nevada, it’s going to be difficult for them to obtain one in Japan.”
Citizens are concerned about dishonesty, particularly after a politician was apprehended for accepting bribes from a Chinese gambling firm. The government is also striving to prevent individuals from becoming dependent on gambling. However, if the majority of the casinos don’t perform well, people might conclude that legalizing casinos was simply another poor decision by the government. At present, it’s uncertain if all four cities that aspire to construct casinos – Osaka, Wakayama, Yokohama, and Nagasaki – will actually be granted permission.
“If the government is astute, they should reject the proposals from the companies that are unlikely to succeed,” suggested Toru Mihara, a gambling specialist. “But I’m not convinced they are that astute.”
Mohammed Cohen, a former US envoy, has been documenting casinos in Asia since 2006. He’s contributed to Forbes and Asian Gaming Insider, and even penned a novel about Hong Kong.