Gaming in Japan is still a gamble for the current session, but long term is solid bet. Photo: Innovative Gaming

Everyone is getting excited about the potential Japanese gaming market. Allowing the building of casinos by companies like Las Vegas Sands (NYSE: LVS), Wynn Resorts (NASDAQ: WYNN), and MGM Resorts International (NYSE: MGM) is the next big event coming to the gaming world. Investors have patiently waited for the country's officials to give a formal go ahead to legalize gaming, which is currently forbidden in Japan. This could be a $40 billion a year industry, arriving just in time for the 2020 Olympic games in Tokyo if the bill can get passed this year.

However, that's looking less and less likely. The casino legalization bill sits waiting to be heard by the current summer legislation session. With the session coming closer and closer to an end and 17 other bills to be heard, it's becoming less and less likely that the bill will pass this session. The same pro-gaming legislators that previously gave the bill a 90% chance of passing this summer have revised that to a 50% chance.

Tokyo's winning bid for the 2020 Summer Olympics is great for Japan, as long as it can pay for the games. Photo: Japan Times

Can they open in time for the Olympics?
After winning the bid for the 2020 summer Olympics in Tokyo, Japanese officials have hurriedly tried to plan how the country will boost tourism revenues to make the games an economic success. One obvious way is to legalize gaming in time for integrated resorts to open by the 2020 games.

At the recent Japan Gaming Conference in Tokyo, pro-gaming lawmaker Takeshi Iwaya was quoted as saying that "We are doing our utmost to start deliberations on the bill this month." However, any bill passed must be sent to Japan's Upper House 20 days before the legislative session ends; this makes it less likely that the government will pass the gaming bill this summer. If the bill is not passed this year, there might not be time to get the casinos built in time for the Olympic games.

50% is probably not a good bet for investors, so should this stop investors from making a bet on this coming industry? It's not stopping Las Vegas Sands, Wynn Resorts, and MGM Resorts from betting on this market, and it shouldn't stop investors.

A bet on Japanese gaming is not 50/50. For the short term it might be, but long-term odds are still highly in favor of the bill passing. Full support of the prime minister, support in both parties of the Japanese legislature, and the looming challenge of funding the Olympics support that.

Japan P.M. Abe at a conference in Singapore. Photo: AP

Even Abe is betting on it
Japanese prime minister Shinzo Abe, who was previously quiet on the topic, has recently stated that he thinks that casinos could be a new pillar of economic growth for his country. The growth would come from both tourists and gaming tax revenue, and this is something that could really help Japan's economy which struggles to recover to its pre-crisis levels.

On May 30, Prime Minister Abe addressed a conference in Singapore and stated that he believes that "integrated resorts will be a key part of Japan's economic growth strategy." To drive this point home, MGM Resorts CEO James Murren urged Japanese legislators to approve the bill soon, claiming that "These type of developments would generate millions of incremental tourists and a tremendous amount of jobs and economic benefits for the country... The longer the delay, the more the missed opportunities." 

Now, everyone wants to play in Japan
Each casino company is trying to get in on this market. Wynn Resorts is hoping to expand outside of Macau in Asia, where the company already gets 75% of its global revenue; it's hoping to do this with a bet on Japan. Wynn wants to prove that its the best pick for Japan as well. President Matt Maddox recently said that "Japan is known for hospitality, high quality and precision. The culture of almost perfection here fits very well with Wynn and its details-oriented focus. That would allow Wynn to be a strong contender in the Japanese market."

Hoping for the same thing, MGM Resorts plans to place a bid as soon as it is allowed. With much less of its overall global revenue currently coming from Asia, at just 37% compared to Wynn's 75% and Las Vegas Sands' 88%, MGM Resorts would be happy to further their footprint in Asia with a resort in Japan.

Perhaps the most outspoken of the group, Las Vegas Sands CEO Sheldon Adelson said that "We will spend whatever it takes... would I put in $10 billion? Yes."

The bill will eventually pass, so what's that best early bet?
As long-term investors, it's important to believe that Japanese gaming legislation eventually will pass and not get too bogged down if the bill isn't passed in this current summer session. When it does pass, Foolish investors will want to have bet on the right company.

Sands Singapore resort, Marina Bay Sands is everything Japanese law makers want a Japanese resort to be. Photo: Las Vegas Sands

MGM and Wynn both have chances to get in on this new market. However, Las Vegas Sands might be your best early bet. Japanese lawmakers have used Singapore as a model of how they will allow casinos to operate in Japan, and Sands is the only U.S. casino company that was able to win a bid there. In fact, in Prime Minister Abe's recent visit to Singapore, he visited its Marina Bay Sands resort to have a look around. With its clear track record of pleasing Asian governments, Sands is probably the company to back in the race for Japan.