The Fate of Tokyo Casinos is in Jeopardy After a Change in the Governor’s Seat

Tokyo’s plans to introduce casinos in the city may be jeopardized by the change in Governor’s seat.

During the last couple of months Japanese gambling news were full of reports and facts that casinos will finally make their way to Tokyo just in time for the 2020 Olympics. However, it looks like these plans may have met a brand new hurdle.

A larger group of politicians have been working hard to change Japanese gambling laws and finally allow casinos on the island country. Tokyo was regarded as an excellent place to establish gambling destinations thanks to hordes of tourists and wealthy local residents. Former Tokyo Governor Shintaro Ishihara was a true supporter of the cause, proposing legalization as far back as 1999. His successor, Naoki Inose, continued to support legalization as well.

A change at the top

A change in Tokyo government can jeopardize casino plans

• The new Governor of Tokyo shows open opposition to casinos

• Other jurisdictions are eager to allow casinos in their cities

• Japanese gambling laws are expected to change allowing casinos

However, when Yoichi Masuzoe took the Governor’s post from Inose, the official stance has changed dramatically. Masuzoe’s view on legalization of land-based and online casinos in Japan has been described by many as “cautious”.

A large tract of public land on the waterfront of the capital, previously earmarked for an integrated casino resort, has been leased out to BMW. This proves that the new Governor is keen on keeping the casinos outside of Tokyo, even if they are legalized. Another change was a reorganization of the metropolitan government, which practically rendered the division in charge of casinos irrelevant.

Then followed Masuzoe’s appearance on a Fuji TV talk show on August 17th, when the Governor spoke about not wanting casinos in Tokyo. And of course the choice of Fuji TV was obvious – the company was collaborating with Mitsui Real Estate and Kashima Construction submitting a casino resort plan last year.

Other municipalities

As usual there are others besides Tokyo, who dream of casinos in their cities. Osaka is very much looking forward to allowing casinos in their municipality, so are Okinawa, Nagasaki, and Hokkaido. However, to foreign investors – Tokyo is seen as the best choice from many points of view.

Takayoshi Koike of Capital & Innovation is working closely with foreign investors and Japanese companies to turn plans for casino resorts into reality. The company stresses that the investors find Tokyo uniquely suited for casino resorts.

According to Koike, the Japanese casino market could yield between 1.2 and 2.2 trillion Yen a year. And these figure are only based on already existing markets including racing, pachinko, and lotteries. The company stressed that if the government regulates the casino industry properly, operators will be assured of high, permanent returns.

But then again, Tokyo is more assured than other municipalities because it is a major world capital whose residents are better off on average than the rest of the country. Koike goes on to claim that in case Tokyo takes advantage of its special qualities, it could even perform better than Macau and Singapore, two of the biggest casino markets in the world.

Both of those destinations still get the majority of their money from foreigners (well, Chinese mainland high-rollers), but in case of Tokyo – no foreign players are needed to keep the industry viable.

Media and casinos

Besides the top officials, there are other supporters of casino legalization in the country. Toyo Keizai, financial media group is one of them. But the mainstream media are now putting their words behind Masuzoe’s “cautious” approach.

Asahi Shimbun says that legalizing casinos will lead to social deterioration just like in Singapore and other Asian destinations. Tokyo Shimbun pointed out a great number of uncertainties around casino plans, and the lack of clear-cut taxation policy.

Taxation issue

Currently, there are different tax schemes for existing gambling operations. Lottery winnings are not taxed, except for the tickets themselves. In case of racing administrated by the local governments – only winnings are taxed. Pachinko is a whole different story – it’s not taxed at all, because, well, it’s not exactly gambling.

A while ago, casino supporting lawmakers inquired figures about pachinko winnings from the National Police Agency. The body replied that there are no winnings, since pachinko isn’t considered to be gambling. But these legislators want to introduce a 1 percent tax on winnings stemming from pachinko, in order to level the playing field for the would-be-legal casinos.

Taxed or not taxed, pachinko still generated 20 trillion Yen a year, which is 10 times what casinos will make according to estimates. The National Police Agency is not in direct opposition to casinos, but still cites the same reasons as Masuzoe – youth gambling problems, organized crime involvement, etc.

However, the reasons for opposition are quite simple – the police have a stake in pachinko, in a way they administer the shops where players trade prizes. And that’s the reason the body is not acknowledging pachinko as gambling.

Adding more oil to the flame, the Ministry of Health, Labor and Welfare estimates that there are over 5 million Japanese citizens suffering from gambling addiction. The ministry wants to ban Japanese from entering casinos, just like South Korean government banned their citizens from playing at local venues.

It remains to be seen which way the government will go, but it’s hard to imagine they will want to stay away from such a large market and of course millions in taxes.