Japan’s LDP Lawmakers Submit Parliament Bill to Legalize Casinos

Photographer: Tomohiro Ohsumi/Bloomberg

A dealer places gaming chips on a roulette table at Casino Venus, a mock casino operated by Japan Casino School and Bright Inc. to provide the gambling experience, in the VenusFort shopping outlet in Tokyo. Close

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Photographer: Tomohiro Ohsumi/Bloomberg

A dealer places gaming chips on a roulette table at Casino Venus, a mock casino operated by Japan Casino School and Bright Inc. to provide the gambling experience, in the VenusFort shopping outlet in Tokyo.

Japanese lawmakers from the ruling Liberal Democratic Party submitted a bill to legalize casinos to parliament, bringing the nation closer to opening up what is estimated to be the world’s second-largest gaming market.

The bill was jointly submitted with the Japan Restoration Party and other groups, Hiroyuki Hosoda, the chairman of a cross-party group of pro-casino lawmakers, said yesterday. LDP’s junior coalition partner New Komeito has approved the submission, LDP’s policy chief Sanae Takaichi said.

The parties aim to pass the bill in the next Diet session that begins January, said Hosoda, who is also an executive acting LDP secretary-general. International companies including Wynn Resorts Ltd. have said they plan to spend billions of dollars to build resorts after the opening of the market that Union Gaming Group estimates will generate $10 billion in annual gambling revenue.

“I think the bill will definitely pass,” said Kazuaki Sasaki, assistant professor at Nihon University College of Economics. “LDP is supporting the bill and even for those parties that are against the bill, I don’t think they will put restrictions on each member’s vote.”

While betting on horse, boat and bicycle races is allowed in the world’s third-largest economy, casinos are currently banned. A competitive bidding process will be needed before one or more casino resorts can be developed and it would take five years after the legalization before the first casino is operational, Hosoda said in September.

Party Majority

While New Komeito has approved the submission, policy chief Keiichi Ishiisaid the party remains undecided whether to support the bill and needs more time to consider. This is the first time lawmakers from the LDP have submitted a casino bill to the Diet.

The LDP has a single-party majority in the lower house and would probably gain enough opposition support to pass the bill in the upper house and enact the law even without New Komeito’s backing. The bill was drafted by a group of pro-casino lawmakers across parties.

Tokyo’s selection to host the 2020 Olympics Games has boosted confidence that the law legalizing gambling resorts will pass. Its potential as a gambling market has drawn the interest of Las Vegas Sands Corp. (LVS), MGM Resorts International (MGM), Caesars Entertainment Corp. (CZR) and SJM Holdings Ltd. (880), Asia’s largest casino company.

“The legalization has been discussed for more than a decade,” said Sasaki. “The 2020 Tokyo Olympics became the change of tide. People started to consider it more seriously as they need infrastructure.”

Operators in Macau, the world’s largest gambling hub, are also looking to expand into Japan. Melco Crown Entertainment Ltd. (MPEL), a joint venture between Macau businessman Lawrence Ho and Australian billionaire James Packer, has said it would spend more than $5 billion if it receives permission to build. Galaxy Entertainment Group Ltd. (27) plans to invest at least $2.58 billion.

Local Partners

Some of the overseas firms are interested in partnering with local investors to open casinos, with Tokyo and Osaka seen as potential sites.

Among the potential local partners are gaming machine companies Konami Corp. (9766) and Sega Sammy Holdings Inc. (6460) Pachinko company Dynam Japan Holdings Co. (6889) has said it is interested in operating a casino in Japan. Gaming equipment maker Japan Cash Machine Co. (6418) and Oizumi Corp. (6428), a pachinko equipment maker, may also benefit.

Macau, the only place in China where casino gambling is legal, recorded gaming revenue of 327.3 billion patacas ($41 billion) in the year to November, more than the $38 billion it raked in 2012.

Macau’s turnover was about seven times that of the Las Vegas Strip, which generated $5.3 billion in the first 10 months of the year.

To contact the reporters on this story: Takashi Hirokawa in Tokyo at thirokawa@bloomberg.net; Yuki Yamaguchi in Tokyo at yyamaguchi10@bloomberg.net

To contact the editor responsible for this story: Stephanie Wong at swong139@bloomberg.net

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