Casinos Face Last Milestone in Japan on Road to Legalization

(Bloomberg) -- Japanese lawmakers are expected to pass a casino bill that is the final hurdle for the legalization of gaming resorts, bringing international operators a step closer to a market that could be worth as much as $25 billion.

The Upper House of the Japanese parliament is set to vote on the casino implementation bill before the current session ends July 22. The legislation would establish important parameters for the industry that have been the subject of heated debate in Japan, including limitations to curb problem gambling and the number of locations that will receive initial licenses.

Western operators like MGM Resorts International and Las Vegas Sands Corp. have pledged to spend as much as $10 billion to tap into the island nation’s potential for mass gaming. Yet legalization won’t send the companies racing to make formal proposals for resorts. Operators must still await steps such as the creation of a national regulatory body and decisions relating to possible destinations for integrated resorts.

“There are many, many steps that need to be taken before construction takes place, and one of the first ones would be for the casino control commission to be established, funded and have a public comment process on it,” said Jay Defibaugh, an analyst at CLSA. “Adding the legal meat around the bones of the implementation law, that takes years.”

Here are some key elements of the implementation bill that will be voted on and were already passed by the lower house:

• Three casino licenses will be issued
• 30 percent tax rate on gross gaming revenue
• 6,000 yen ($53) entrance fee for Japanese nationals and residents, with a cap of 10 visits per month
• Casino space limited to 3 percent of total resort floor area

Companies will likely submit proposals to the municipalities as part of a consortium. The national government will then have the final approval and issue casino licenses. Casino resorts aren’t projected to open until 2023 at the earliest.

To contact the reporter on this story: Lisa Du in Tokyo at ldu31@bloomberg.net

To contact the editors responsible for this story: K. Oanh Ha at oha3@bloomberg.net, Jeff Sutherland

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