Inside Asian Gaming

January 2013 | INSIDE ASIAN GAMING 7 COVER STORY they’re played for prizes, not cash. The annual tax haul from all this exceeds US$80 billion. Investment bankers CLSA Asia-Pacific Markets calculates the country’s per capita spend on games of chance at US$200 a year, less than Singapore (which has a population 25 times smaller) but greater than either the United States or Macau. Some 18 million people regularly play pachinko, according to the non-profit Japan Productivity Center, an economic development think-tank. That’s 28% of the population over 15 years of age. There are more than 12,000 arcades, which CLSA estimates generate $25 billion a year in revenue, implying a total spend on the popular pinball-like devices in the realm of $250 billion. “Japan spends as much on pachinkos as others spend on full-scale IRs with both slots and tables,” the firm enthused in a report last year. It’s not only Japan’s fondness for pouring money into electronic gadgets to see what comes out that has the world’s casino operators so enthralled with the market’s potential. The country is home to five of the 25 most-visited theme parks in the world. Two of them, Tokyo’s Disneyland and Disney Sea, are in the top five. The ticket prices they command are the highest in Asia, and still the Japanese, when they’re there, spend more on average, even more than Americans, relative to what they spend to get inside. CLSA also notes that Tokyo, the largest municipal market for conventions on the continent, remains attractively undersupplied for space compared with Hong Kong and Macau. “In light of Macau and Singapore’s success,” the firm said, “we believe the Japanese market offers huge potential to become the biggest IR nation globally.” So what’s the problem? Well, take your pick. Start with 1.5 million problem and pathological gamblers. That was the estimate back in 2006, the year a couple was arrested when their 2-month-old son died of heatstroke and dehydration after being locked inside a car for five hours while mommy and daddy played pachinko. Then again, no one’s really counting. And very little by way of treatment is available for those who have been identified. As one social worker told The Guardian , “Japan already has a huge gambling problem.” Concerns about social corrosion extend to the political establishment, periodically rocked as it seems to be by one high- profile scandal or another. In 2011, a former chairman of Daio, a leadingpapermanufacturer,ascionofthecountry’sreveredcorporate hierarchy, was accused of “borrowing”more than 5.5 billion yen from subsidiaries to fund jaunts to casinos around the world. The hallowed sport of sumo, one of those reliquaries of “traditional values,” has been shaken by revelations that wrestlers were gambling illegally on baseball in cahoots withmembers of the yakuza, the feared Japanese mafia. Some ascribe officialdom’s aversion to casinos to clashes dating back to the 18th century between authorities and organized gambling gangs known as bakuto , forerunners of the yakuza. In 2000, Mr Abe’s home and political headquarters were firebombed by men later identified as members of a crime syndicate. The instigator, a real estate broker, reportedly was angry over an expected political payoff that failed to materialize. It wasn’t until Mr Abe became prime minister seven years later that the attackers were brought to justice. Then there is the problem of what happens to the existing gambling establishment, namely the massive pachinko industry, should a level of legislative reform commensurate with the needs of a large-scale casino industry actually gain traction. Pachinko provides some 300,000 jobs in operations, services and manufacturing, according to the Japan Productivity Center. Its payoffs to police are legendary. The same for the politicians whose tacit support it has enjoyed for years. As Inside Asian Gaming reported in spring of 2011: “It all adds up to the fact there is a public perception in Japan that any campaign in support of casino gaming is actually an attack on the pachinko industry and therefore de facto a campaign in support of political reform and reform of political funding. That’s a much bigger issue and far hotter topic within Japan than even the social utility of gambling as a legally sanctioned activity.” To move casinos closer to reality, then, the impetus will likely have to come from below, from influential local government leaders anxious to grab a share of Asia’s tourism boom and the economic Massive draw—Tokyo Disney Resort “There is a public perception in Japan that any campaign in support of casino gaming is actually an attack on the pachinko industry and therefore de facto a campaign in support of political reform and reform of political funding.”