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The Time is Now

Japan’s IR reality 20 years in the making

Makoto Katayama by Makoto Katayama
Tue 29 Jan 2019 at 10:45
The Time is Now
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With the dream of Japanese IRs edging closer with each passing day, Inside Asian Gaming takes a closer look at what to expect from Japan’s lawmakers, candidate locations and hopeful operators in 2019.

The Japanese vision for IRs has had to walk a long road. July 2018 saw the establishment of the IR Implementation Act and marked the real starting line in the race to win a Japanese IR license.

Precisely 20 years ago, in 1999, Shintaro Ishihara, the governor of Tokyo at the time, showed great enthusiasm for IRs saying, “Building a casino in Tokyo will come with great economic benefits.”

In 2001, he raised the idea of an Odaiba casino. In 2002, the ruling Liberal Democratic Party built on this by establishing the “Alliance for Considering Casinos and International Tourism”, but it has been a rocky road since then with casino development having repeatedly been put on the backburner.

In 2009 the Liberal Democratic Party was voted out and the debate was interrupted again by the tragic Great East Japan Earthquake in 2011.

The IR Promotion Bill, first proposed in 2013, was temporarily scrapped when the House of Representatives was disbanded.

But now it’s full steam ahead and this time there is no turning back.

After many twists and turns, the IR Promotion Act was established in December 2016 and while it took even longer than expected, the IR Implementation Act was finally established on 20 July 2018.

THE GOVERNMENT HOLDS THE BALL

The turn of the new year has seen candidate cities for IR development step up their preparations to find a partner and bid for an IR license.

Japan’s parliament will initiate the Casino Administration Committee in July.

The recent decision to award Osaka the 2025 World Expo has given the city a massive boost in the IR promotion race. Each of the international IR operators interested in developing a casino resort in Osaka has in turn organized courtesy visits with Governor Ichiro Matsui.

MGM Resorts International’s Chairman and CEO Jim Murren, Wynn Resorts’ Matt Maddox and Melco Resorts & Entertainment boss Lawrence Ho have all met with Matsui. MGM has even made the declaration that they are putting “Osaka First”. In general, it is widely believed that Osaka will host one of the three Japanese IRs to be built as part of this first batch. The Minister of Land, Infrastructure, Transport and Tourism has not yet, however, announced the basic policies that will apply to Japan’s IRs.

Before local governments submit their official bids, there must first be a detailed cabinet order regarding the IR Implementation Act. For example, the international conference center and entertainment facility criteria need to be set, and there must be guidelines established regarding the quality of new hotels, amongst many other issues. There also needs to be specific numbers detailed in the cabinet order such as the maximum floor space of the gaming area and what monetary amounts will be subject to cash transaction reports for anti-money laundering measures.

The cabinet order is scheduled to be ready by late April at the latest. Following this, in July, the Casino Administration Committee (details below), the most important entity for maintaining the integrity of Japan’s IRs, will be formed.

Osaka looks increasingly likely to be home to one of Japan’s three initial IRs.

The policy announcement from the Minister of Land, Infrastructure, Transport and Tourism will be after that. In other words, the government will keep possession of the ball until the latter half of this year. In the meantime, local governments and IR operators hoping to be selected will be polishing their plans.

Think of baseball batters warming up on the bench. This is the phase where these batters will prepare the perfect stance to make contact with the ball thrown by the pitcher, namely the Minister of Land, Infrastructure, Transport and Tourism.

WHAT IS THE CASINO ADMINISTRATION COMMITTEE?

Regarding Japanese IRs, Prime Minister Shinzo Abe has stated, “Our casinos will be clean with the highest standards in the world and at a standard acceptable to the wide majority of our citizens.”

With this he established the Casino Administration Committee, responsible for various screenings related to casinos and with supervisory authority.

This Committee is scheduled to be initiated on 1 July 2019. It will be an external bureau of the Cabinet Office and will have strong independent authority as a committee established under Article 3 of the National Government Organization Law.

Examples of these types of committees include the Fair Trade Commission, National Public Safety Commission and Nuclear Regulatory Commission, and from this line-up we can expect the supervisory role of the Casino Administration Committee to be robust.

Overseas casino regulators to be used as reference points include the Nevada Gaming Control Board and the Casino Regulatory Authority of Singapore among others. The structures of these organizations will be studied and there will be supervisory departments relating to screening and granting of licenses, as well as research departments for conducting background investigations. In addition, there are plans for departments that specialize in countermeasures for problem gambling and money laundering.

Hokkaido is expected to bid for a regional IR license.

In the government’s 2019 budget proposal, JPY2.9 billion was earmarked for the establishment of the Casino Administration Committee. According to the requirements, there will be four committee members and one chair, requiring the consent of the Diet, and a total of 95 persons assigned for bureau operations.

Incidentally, only people holding prominent positions, such as the Governor of the Bank of Japan, the General Accounting Office Inspector or the Fair Trade Commission Chair, are eligible.

UNQUESTIONABLE INTEGRITY

All eyes will certainly be on the key figure to be appointed as the very first Casino Administration Committee Chair. This person will oversee an organization slated to impose the most stringent casino regulation standards in the world, carrying out strict background investigations into all individuals and enterprises involved with IRs.

The words “unquestionable integrity” come to mind. The committee chair will need to be a person with strong moral values and who can act with no hint of self-interest. Japanese politics has unfortunately been marred by various scandals and verbal blunders from new ministers shortly after taking office and it is vital to the future of IRs that no similar stumbling blocks emerge as this significant new industry develops.

KICKING IT UP A GEAR

Once a detailed cabinet order pertaining to the IR Implementation Act and the subsequent Casino Administration Committee are enacted, the Minister of Land, Infrastructure, Transport and Tourism will then be able to announce the basic policies for IR operations. This is the pitcher’s match-defining fast ball and it will be up to local governments and their IR operator partners to hit this pitch out of the park.

Japanese Prime Minister Shinzo Abe has promised that the nation’s IRs will adopt “the highest standards in the world.”

Considering the fast pace that Osaka prefecture and city are moving on this – Governor Matsui stating, “We will independently make a public offering of plans for IR operators and will have narrowed down the candidates by summer” – other local governments and operators may not have the time to wait for a slow curve ball. Although Osaka is looking to open an IR property the year before the World Expo in 2025, other local municipalities may need to expand their strike zone.

If that’s the case, it won’t be long before overseas IR operators, aiming to infiltrate regions other than Osaka, kick it up a gear. We do know that concepts and plans from various operators are being presented to local municipalities and are at the stage where the foundation for forming a consortium with a local company is being laid.

As per the timeline displayed in this article, as long as the preparations of IR operators and local governments are progressing, there is a possibility that once the Minister of Land, Infrastructure, Transport and Tourism releases his basic policy announcement in 2019 and the IR operators are chosen by prefectural governments in early 2020, everything else will move quickly afterwards.

Once this milestone has been reached, all that is left will be to turn the innovative designs for Japan’s first IRs into a reality. Now is the opportunity to take back the time lost waiting for this legislation to arrive.

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Makoto Katayama

Makoto Katayama

After completing both undergraduate and graduate studies at the University of Tokyo’s Faculty of Agriculture, majoring in veterinary medicine, Katayama spent 28 years as the horse racing specialist for the evening Nikkan Gendai. For the second half of that stint he has served as Predictions Managing Editor and Editor-in-Chief. He now develops the weekend horse racing predictions for Yuukan Fuji. He has 29 years’ experience in the casino industry and plays a mean game of blackjack, not to mention the occasional game of poker.

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