Betting on Tourism: Rumblings in Japan's Diet

With the 2020 Olympics only a few years away, lawmakers in Japan are hard at work deliberating whether or not the country should legalise gambling, traditionally an illegal enterprise in the North-East Asian state. Amid opposition from the ruling Liberal Democratic Party's coalition partner, the New Komeito Party, it's beginning to look less likely that key legislation aiming to legalise and regulate the gambling sector will be passed in time for resorts and venues to open by the beginning of the games.

Gambling has always been a contentious issue in Japan. Concerns that the Japanese, unused to the thrills and addictive potential of betting, would be too prone to addiction and financial ruin have blighted official and public discussion of the merits of the industry. Gambling on the results of public sports, including horse racing, powerboat racing, bicycle racing and motorcycle racing, has been legal for a while in Japan, as have state lotteries and mahjong parlors. There are grey areas such as the multitudes of pachinko and mahjong parlors. However all other gambling, such as casinos, online poker and internet casino games are still illegal in the country, though their legalisation has been touted as a potential boost to the country's lacklustre economic progress.

In May, during an interview for Businessweek magazine, James Murren, MGM chief executive officer, compared potential Japanese earnings to the successes of Macau (the world's largest gambling destination), where profits from regulated gambling totalled $45.2 billion last year. Accordingly, Japan could accrue around $40 billion a year by 2025, with an enormous boost gained in 2020 by the vast amounts of tourists expected during the Olympic Games. International casino tycoons such as Las Vegas Sands Corp., Wynn Resorts Ltd., and aforementioned MGM Resorts International have pledged to spend billions on resorts and casinos if the law was to be passed, though despite this potential economic boon, political wrangling persists.

Such pitched political battles persist due to the opposition of the coalition New Komeito Party, which draws support from the Buddhist Soka Gakkai sect. For religious and moral reasons, Soka Gakkai are very much against gambling, citing the possible negative implications on public safety. There also exist many other groups in Japan who argue that legalised gambling and the casinos that come with it would promote money laundering, gambling addiction and organised crime (though currently Yakuza groups are well known operators of back street casinos where individuals can indulge in the illegal activity).

If the current legislation fails to pass through the current Diet session, there is a chance it could be passed during September's extraordinary session. Past then, however, it will be unlikely that laws will be passed in time for the necessary facilities to be built in time for 2020, and the financial possibilities that abound.