Japan’s Parliament Begins Debate on Introducing Casinos

Japan started debate today on a bill to legalize casinos, paving the way for its passage before the end of the year.

Discussions began in a committee of the lower house on a bill that was submitted to parliament in December by a cross-party group of lawmakers and which Economy Minister Akira Amari has said should have enough votes to pass. It will not be approved before the end of the session on June 22 and will be taken up again when the Diet resumes in autumn, said ruling Liberal Democratic Party lawmaker Hiroyuki Hosoda, who heads the group.

Backers of the bill say it will boost tourism to Japan, which is preparing to host the 2020 Olympics, while casino operators are considering investing billions of dollars in what could become Asia’s second-largest gaming market after Macau. Japan currently allows betting on horse, bicycle and boat races, as well as pachinko.

“I want to pass it in the lower house at the beginning of the next session of parliament, then enact it without fail in the upper house,” said Hosoda, whose group backs what are called “integrated resorts.” Opposition Democratic Party of Japan lawmakers agreed to the debate on certain conditions, including the holding of regional hearings on the issue.

Shares in Japanese companies that could gain from gambling advanced yesterday. Game-maker Konami Corp. rose 2.1 percent while Japan Cash Machine Co. rose 8.4 percent and Oizumi Corp., which makes equipment for pachinko parlors, added 8 percent. Konami announced in May it would set up a company aimed at investing in casinos. Its shares were 0.9 percent lower at 10:00 a.m. Tokyo time today.

Preventing Crime

“We can expect a boost to tourism, the regions and to industry, but we need to consider measures to prevent crime, maintain public order and the healthy education of the young as well as to prevent addiction,” the government said in a strategy document on economic growth released on June 16. The document urged the government bureaucracy to proceed with consideration.

The experience of U.S.-based gaming companies in dealing with anti-graft rules in other countries would reduce the risk for local leaders, Billy Ng, head of Asia gaming, lodging and leisure for the Bank of America Merrill Lynch, said in an interview. Ng declined to identify any companies that would be likely to be selected for a license.

“They have experience dealing with very tight racketeering environments in different jurisdictions, not just the U.S.,” Ng said of the U.S. companies. “It’s a lower risk for Japan politicians if they pick them.”

‘Healthy Pastime’

Komeito party lawmaker Masakazu Hamachi, who serves on the cabinet committee, said in a May interview that it would be difficult to pass the bill in the current session for scheduling reasons. He added that once debate began, the bill had a good chance of passage in the next session, which is likely to start in September or October.

“If a vote is held, those in favor will be in the majority,” Amari told reporters on June 16. He said that allaying concerns about casinos would be an important part of the process. “I think there is know-how around the world about developing it as a healthy pastime and tourist attraction.”

Prime Minister Shinzo Abe’s LDP has enough backing from opposition parties to pass the bill in both houses. The LDP’s junior coalition partner, New Komeito, is divided on the issue.

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