MOST forms of gambling are banned in Japan, but many Japanese still like to have a flutter. Over ¥23trn ($203bn) is waged annually on pachinko, a noisy variant of pinball. Add in lottery tickets, plus horse, boat and bicycle racing—the only other types of betting allowed—and you have a vast industry. Pachinko players alone spend more than the combined betting revenue of all the casinos in the world’s top gambling resort, Macau.
Japan’s government has struggled to convince citizens that the current strictures should be relaxed. When the Diet legalised casinos in December after years of political wrangling, a poll by NHK, the country’s public broadcaster, put support for the move at just 12%. The leader of Komeito, a party with Buddhist roots that is part of the governing coalition, voted against the bill. Critics said it would exacerbate problem gambling and attract “anti-social forces”, a euphemism for yakuza gangs.
Shinzo Abe, the prime minister, insists casinos will be only one part of family-friendly resorts, with hotels, shops and conference facilities. In an anaemic economy, his enthusiasm is not hard to understand: the construction of these huge complexes could generate ¥5trn in economic activity—with another ¥2trn a year once they have opened, largely from increased tourism, estimates Makoto Yonekawa of the Daiwa Institute of Research, a think-tank.
Foreign casino-operators have already begun lobbying for a slice of this pie. Las Vegas Sands, MGM Resorts and Hard Rock Café International are among the companies looking for licences and local partners. Bureaucrats are crafting more legislation to decide how many resorts to permit and where to put them. This, say analysts, is where the road could get bumpy.
Some politicians want to deter locals from visiting casinos by imposing an entry tax. Pachinko’s seedy reputation is one reason. Though the industry has shrunk by about 40% from its peak 20 years ago, there are still about 11,000 pachinko parlours—and thousands of addicts. Public hostility recently forced the mayor of Yokohama, one of three proposed sites for the resorts, to begin back-pedalling on her support. Investors fear outbreaks of NIMBYism elsewhere, too. In a recent survey 75% of Japanese said they would not like a casino to be built near their homes.
Officials in Osaka have come up with a way around this problem: they want to build a resort on an artificial island in Osaka Bay. Well-heeled tourists, mainly from China, are expected to be the main punters, says Susumu Hamamura, a Komeito politician. About 20m people visited Japan last year. The government wants to double this by 2020, along with the roughly ¥3.5trn that tourists spend annually.
Even if the casinos get off the ground, Japan faces stiff regional competition from Macau, Malaysia and Singapore. What will give the country an edge, predicts Mr Yonekawa, is Japanese culture. The proposed sites for another mooted resort, in Hokkaido, Japan’s northernmost island, are onsen (hot spring) retreats, he points out. “Japanese cuisine and hospitality will win many customers.”
Mr Hamamura agrees. He voted for the casino bill despite opposition from his own party boss because he believes it will be good for Japan. “Over 140 countries have legal casinos; why should we be left out?” he asks. Even he accepts, however, that most Japanese are “emotionally” against casinos and will need to be convinced. He plans to win them over, he says, by explaining one of the overlooked benefits of the resorts: they will give foreigners something to do at night.
Source: The Economist - February 4, 2017