Strict Rules Could Hamper Japan’s Future Casino Industry

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Sunday, July 30th, 2017 | Written by Shane Larson

In 2016, Japan finally legalized casino gambling, opening the door to a potential goldmine for operators, with experts estimating that gambling could be a $25 billion industry for Japan, whilst creating thousands of jobs that would further stimulate the economy. Despite the financial benefits of legal casino gambling, though, many Japanese lawmakers are worried about the social impact of legalizing gambling and fear that gambling addiction rates will sky rocket. These concerns have led to the institution of strict rules that could cripple the industry before it even starts.

Some of the problematic proposed restrictions that Japanese regulators are considering include:

1: A ban on cash machines on the casino floor.

2: Preventing or placing strict limits on the use of credit cards to purchase chips for table games. One proposal would only allow casino patrons from outside Japan to purchase chips using a credit card.

3: Preventing casinos from offering credit of any kind to Japanese patrons.

4: Placing limits on the number of times that Japanese patrons can visit casinos.

5: A ban on the VIP junkets that are popular in nearby Macau.

Credit Concerns

Of all the proposed restrictions, the ones most troubling to operators is the ban on extending credit to patrons. Much like banks, casinos rely heavily on interest paid on credit as a source of revenue for paying out winnings to players. One financial analyst firm predicts that the proposed restrictions would slash the amount of potential gambling revenue in Japan by 50 percent. Eliminating the revenue stream would make it difficult for Japanese casinos to be as profitable as casinos located in other countries. In turn, this would make it difficult to attract casino operators and investors to the Japanese market.

Furthermore, it has been suggested that organized criminals will simply take advantage of the situation by becoming third-party creditors, and debt collectors from insolvent gamblers. As David Suzuki from the Blackpeak Group private security firm, explains:

“The Japanese police have been using new organized crime exclusionary ordinances to clamp down on traditional sources of income for Yakuza groups. I believe they see the legalization of casino gambling as a massive, historic opportunity to resuscitate themselves.”

Responsible Gaming Policies

While concerns about gambling addiction in a country where casinos have long been illegal is understandable, Japanese lawmakers and regulators do have other ways of protecting consumers. Casinos in Las Vegas, Singapore and Massachusetts have all developed responsible gaming policies that discourage reckless play and make it possible for those with gambling addiction to receive assistance. One of the newest methods of addressing gambling addiction is adding responsible gaming terminals to casinos. With these terminals, players can put self-imposed limits on themselves, and even ban themselves from casinos temporarily or entirely.

Operators and industry experts are encouraging Japanese regulators to explore responsible gaming terminals and other methods of curbing gambling addiction rather than placing financially damaging limitations on casinos. Japan could follow the lead of Massachusetts, which has very strict responsible gambling language in their casino bill. By putting the onus on operators to ensure that players have ways to control their spending and opt out of casino play entirely, Japan can have a thriving industry that is attractive to investors, whilst minimizing gambling addiction as much as possible.

ID Checks

Connected to the previous point is the fact Japan is also considering the implementation of ID checks via their social security numbers before being permitted to enter a casino. If all goes according to plan, Japan’s first casino rsort should be opened by mid 2020, but such a strict entry requirement could deter further people from visiting the gambling venues. As Liberal Democratic Party (LDP) panel head Takeshi Iwaya, explains:

“It’s important to make sure access doesn’t become extremely restricted. These will be leisure and entertainment facilities, so they must be friendly to customers and we mustn’t go too far”.

According to Iwaya, the showing of passports and driver licenses could be used as a more viable and amenable alternate forms of ID.