Coming Full-Circle: Japan Gaming Congress 2018

Japan Gaming Congress starts next week in Tokyo, coinciding with a busy legislative season (ending June 20) that is tackling several issues relating to Integrated Resorts (“IRs”). On April 27 a consensus was reached between the ruling coalition of the Liberal Democratic Party and the Komeito on 11 key legislative points, effectively creating a regulatory framework (the “Integrated Resorts Implementation Bill”) that now goes to the Diet for approval. Key issues addressed in the Bill range from:

• Factors that could limit domestic casino gamer participation
  • A limit of 3 casino visits/any 7-day period and 10 visits/any 28-day period;
  • ¥6,000 entry fee (approximately $55);
  • The need for Japanese residents to present a “My Number” ID card for entry;
  • Setting a gaming tax rate of 30% for all gaming revenues (i.e. a uniform rate for VIP and Mass market, foreign and domestic);
• The number of casino licenses that will be offered in the first wave of licensing (3);
• How long the government will wait before analyzing the performance, pros and cons of casino resort operations (7 years from the award of the first license, likely 2020 or 2021, which may mean at most 3 years of actual casino performance);
• A mandate that the casino gaming floor cannot represent more than 3% of the gross floor area of the IR – this is a notable change from concepts that had initially been considered, such as capping casino floor space at 15,000 sqm and mandating large-scale MICE facility space. This allows bidders to determine what amenities are most feasible for development rather than be pigeonholed into developing facilities for which a market may already have an ample supply (i.e. hotel rooms, convention facilities and retail venues).

Of note is that before the Diet addresses the IR Implementation Bill, it will need to address a second bill, relating to Gambling Addiction Countermeasures. There are many towns and regions in Japan where support for casino resort development is weak due to a historically high gambling addiction rates. As a result, a strategy to combat addiction may be necessary before there can be a successful vote to move forward with the Implementation Bill.

This brings everything full-circle to the Japan Gaming Congress, which will feature speakers and attendees representing casino operators, Japanese corporations (potential partners, vendors and bankers), regional government leaders and regional IR promotion officials, educators, as well as national governmental leaders. While Japan Gaming Congress is not an altogether-new convention, it previously had not overlapped with such an important session of the Diet. This is an opportunity for partnerships between foreign operators and domestic companies to be formally built, alliances built with local governments, as well as a way to bring to light and suggest modifications to some aspects of the Implementation Bill that operators may view as unnecessarily problematic.

I’ll be there. More on my impressions post-Congress.

Scott Fisher