Asia Embraces the Casino Economy
After the earthquake, tsunami, and nuclear meltdown in northeastern Japan, what could possibly lure tourists to Fukushima? Masayoshi Oiwane has an answer: gambling. President of the Tokyo-based Japan Casino School, which trains students to be croupiers, Oiwane hopes Japan’s Parliament will soon allow casino gambling in the hard-hit northeast region, not to mention the rest of Japan. Currently, Japanese gamblers who want to try their luck in casinos usually have to hop on the plane for Macau, Singapore, or other Asian destinations (the graduates of Oiwane’s school work in casinos overseas, and on cruise ships). “Now is the moment when casinos are most likely to be legalized,” says Oiwane. “Casinos would lead to a burst of rebuilding.”
Asia is upping its bets on casinos, with the gaming industry hoping to expand in Japan, South Korea, the Philippines, and Taiwan. The recent enthusiasm stems from the impressive financial success of Macau and Singapore, where recently built, high-end gaming halls are flourishing. Asia’s newly affluent have also transformed the area’s leisure industry by flocking to deluxe destinations embodied best by the Vegas-style gambling palaces in Macau and Singapore. Regional governments also need revenue—and the taxes levied on legalized gambling can be fat indeed. Asia, of course, is already a gambler’s paradise, whether it’s the pachinko halls of the Ginza or the horse tracks of Hong Kong. In the world of gambling, Asians are ready for the next step.
So by yearend, residents of the Taiwanese island chain of Matsu—just six miles from the Chinese mainland—will vote on a proposal to legalize casino gambling. In April, Gary Loveman, chief executive officer of Caesars Entertainment, visited Kinmen and Penghu, two other Taiwanese-controlled island chains that the gaming industry is eyeing as venues. Las Vegas Sands, which operates in Macau and Singapore, expects either Japan or South Korea to allow integrated resorts of casinos and convention space next year, Chairman and CEO Sheldon Adelson told Bloomberg last month. “If one makes noises about legalizing gaming, the other is going to jump right in,” says Adelson. Aaron Fischer, head of consumer and gaming research at CLSA in Hong Kong, estimates a casino in Tokyo and another in Osaka could each generate more than $10 billion in revenue. In Macau, casino revenue was four times that of the Las Vegas Strip last year and grew 46 percent in the first nine months of 2011. Singapore has only two casinos. Both opened last year, yet the city-state is already on track to surpass Vegas in revenue by the end of 2011, according to a forecast by Frank J. Fahrenkopf Jr., president of the American Gaming Assn.
The semi-puritan experience of Singapore in particular is seen by aspiring casino powers as the one to emulate, because of its strict enforcement of anti-corruption laws and insistence that casinos include other, more wholesome attractions, such as a convention hall and theme park.
The city-state has yet to issue a license to any junket operators that organize trips for high-end gamblers from China and other countries to Macau, while lending them money to bet in the casinos. To discourage locals from frequenting the casinos, the Singaporean government imposes an entrance fee of S$100 ($79) or an annual casino charge of S$2,000 on its citizens. “Everything works primarily because the authorities have been successful in minimizing crime activities,” says Song Seng-Wun, an economist with CIMB Research in Singapore.
The question now is whether or when the Japanese will treat their citizens to casinos too. Pro-gaming activists in Japan are counting on the threat of Korean liberalization to help win passage of their own plans. Since a restricted form of gambling already exists in Korea, the legislature in Seoul “just needs to amend the law to create an integrated resort,” says Toshihiko Satake, policy secretary for Kazunari Koga, a member of Japan’s ruling party and chairman of a working group of 130 pro-gambling lawmakers. The group aims to present a bill to the Diet before January. If it passes, Satake says the Japanese will move with Singapore-like speed. “Casino operations,” he promises, “will be ready in three years.”