Inside Asian Gaming

Going straight In 1999,Tokyo Governor Shintaro Ishihara unveiled his pet project to legalise casino gambling,rallying behind him the heads of 30 Japanese prefectural andmunicipalgovernments.The interestedparties shared the view that casinos would improve the stalled economies of their cities and create new jobs. But with Japan’s recent and gradual economic recovery as well as the ongoing social, legal and political obstacles, casino opponents hope that the approval for gambling facilities will be shelved indefinitely. Keiichi Kimura, the representative of Casinos Austria International in Japan, acknowledges that, “99% of Japanese do not have a good image of casinos.” To dispel this unfavourable impression, Kimura has spent the last two years in countless discussions with leaders of economic and political groups, and led them on tours to European casinos. Following those inspection trips,“most of the participants realised that their initial prejudice toward casinos was misplaced,”claims Kimura. The speedy introduction of casinos in Japan nevertheless seems unlikely, as Seiko Noda, a former Posts and Telecommunications Minister, and an influential casino promoter, unexpectedly quit the Liberal Democratic Party (LDP) in November 2005. This temporarily stalled the activities of the association of about 100 LDP lawmakers that Noda established to pursue the casino project. But Kimura points out: “I understand that deliberations are presently being conducted within the government to select a new leader to replace Ms. Noda, in an attempt to revive the casino negotiations.” Although the central government rejected the anticipated casino gambling legislation in 2005, Kimura remains undaunted. “A decision will be taken before long.” Afurthersetback,however,wastheannouncement that the Tokyo Metropolitan Government (TMG) plans to sell the 11-hectare plot of land intended for the construction of a casino-hotel complex at Odaiba. This popular and dynamic man-made island in Tokyo Bay, which is a mere 10-minute monorail ride from downtown Tokyo, attracts some 40 million visitors annually, and has been earmarked as an ideal site for a casino.A rapid sale would help the Tokyo Metropolitan Government (TMG) recover 140 billion yen (US$1.2 billion) of the 500 billion yen (US$ 4.34 billion) it invested to develop this waterfront district. Many officials and political organisations argue that the legalisation of casino gambling would attract more foreign tourists and increase local business. The TMG estimates that in the early stages, casinos would create about 14,000 jobs and generate an additional 118 billion yen (US$1.02 billion) in annual taxes. Osaka University of Commerce’s Professor Tanioka believes that “Japanese casinos, if any, would be owned by local governments and managed by private entities. Local governments would therefore own at least 50% of the stock and would not have to impose taxes on it. Both the local governments and casinos would benefit economically.” Opening casinos would also support Prime Minister Junichiro Koizumi’s new national policy to boost tourism. He stresses the importance of doubling the annual number of visitors to Japan to 10 million by 2010. Legal casinos would also bring back some of the billions that Japanese people spend on overseas gambling trips. It is believed that between 5 and 12% of the 16 million Japanese travelling abroad visit foreign casinos. Casinos Austria International’s Kimura asserts that “there are many wealthy Mainland Chinese who would come and gamble in Japan if casinos with authentic Japanese themes were established.” “Japanese casinos would follow the European style and provide higher quality. Casinos in Las Vegas and Macau have the same style and consist of a huge entertainment complex. We want to be different,”states Kimura. Given pachinko’s gangland affiliations, many fear the underworld will eventually infiltrate Japan’s future casinos too. Inside Asian Gaming asked former racketeer turnedTV commentator,Manabu Miyazaki (whose late father was a yakuza),whether he thought criminal elements would infiltrate Japanese casinos. He answered in the assertive, - three times more than the steel industry - and it commands roughly 30% of Japan’s leisure industry, including restaurants and bars. Itwouldseem logicalfortheJapanesegovernment to cast off the pretence that pachinko is not gambling, and replace it with regulated casino gaming. This would cut off funding to organised crime groups and provide more wholesome venues for the Japanese to fill their gambling desires. It would also prove a boon to government coffers and perhaps boost tourism. Osaka University’s Ichiro Tanioka, who has conducted a series of studies on behalf of Japan’s Liberal Party, believes Japan is on the verge of introducing legal casino gaming,though obstacles clearly remain. Tanioka estimates that there are 200,000 illegally run underground casino-bars called “shanties” in Japan, that generate over US$10 billion in revenue annually. Duringaraidononeofthose illegalcasino-barsrun by the yakuza (Japanese organised crime groups) in Tokyo’s entertainment area of Shinjuku, police discovered that betting in that one establishment amounted to an estimated one trillion yen (US$8.69 billion) annually.That translates to about US$500 million in revenue or more going into the yakuza’s pockets - two of those casino-bars would equal revenue at Sands Macau, which reached a new high of about US$240 miilion in the third quarter of 2005. Swimming Into the Void Chinese gamblers are filling the void left by diminishing numbers of ‘whales’ and high-rollers in the rest of the world, particularly Japan. “The Japanese underwent a major economic upheaval, so they’re no longer the high-rollers and the ‘whales’that they used to be,”explains Las Vegas Sands Chairman Sheldon Adelson to Inside Asian Gaming. “To us a ‘whale’ is somebody who will bet the maximum. The maximum in Las Vegas is about US$150,000 per hand, and a hand takes anywhere from 30 to 60 seconds.Depending on who you talk to, the estimates of the number of ‘whales’ in the entire world go from 50 to 250. That’s all. High-rollers there are many.” Adds Adelson,“I would say more than 50 percent of the ‘whale’ market is Chinese, and more than 50 percent of the high-roller population [those betting between US$10,000 to US$50,000 per hand] I would say is also Chinese. It could be much more, and it’s the fastest growing segment without a question.” Pachinko employs a third of a million people - three times more than the steel industry - and it commands roughly 30% of Japan’s leisure industry, including restaurants and bars. 23 22