Last week the Japanese Diet approved the creation of the first Las Vegas-style casinos in Japan. Most Japanese citizens appear to be indifferent, but introducing a new form of legal gambling has been a priority for the political establishment for some time. Although the standard rationale for legalizing gambling anywhere in the world is to take money away from the local underworld, the main reason in Tokyo seems to be to attract more foreign tourists–and keep them in Japan longer.
It will be a while before gambling consortia of construction companies and resort developers, presumably with foreign partners providing the expertise, are formed and for the precise rules about allowed games and taxation to be articulated. But two issues are already clear:
–over the past ten years or so, there has been a dramatic expansion of the casino business in Macau, as well as in Singapore/Malaysia, the Philippines, Korea and, to a lesser extent, in Australia. At some point, the market in this part of the world will become saturated. Then, the fact of gambling won’t be enough. The quality of the operations will count for a lot more. So I don’t think Japanese casinos are sure-fire winners. We have seen this already in Macau, where SJM, once the monopoly operator, continues to lose market share. Will Japan push the region as a whole into maturity?
–who will run the casinos? Presumably Wynn, Las Vegas Sands and Galaxy Entertainment will all be interested. My guess is that groups including each of the three will be the key contenders for licenses. Will each get a license? Will that be a good thing? Will Wynn Macau and Sands China be involved? Certainly, Galaxy will be, since the Macau operations and the main company are the same. In the other cases, it’s not so clear. If investment capital were no object, my guess would be no.