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Is Japan's Casino Gambling Plan About to Come Undone?

By Rich Duprey - Oct 7, 2017 at 6:32AM

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The chances of legalized gambling in Japan may be doomed.

Japan's plan to legalize casino gambling was already facing mounting odds, and now the odds that the enabling legislation will get passed are getting astronomical.

Prime Minister Shinzo Abe has called for snap elections to be held late this month, a move that although intended to shore up legislative power, will also end up dissolving the current legislature. Doing so will disrupt plans to pass the casino legalization legislation and upset the rest of casino regulation.

Roulette wheel

Image source: Getty Images.

A political gambit

This past summer, Abe's ruling Liberal Democratic Party suffered big losses in elections held in Tokyo, losing a majority of the seats they held. On its own, it had no impact on the national legislature, but it was seen as an ebbing of support for the LDP.

However, as tensions between the U.S. and North Korea have risen in recent weeks, support for the prime minister has grown. Polling done  only a few weeks ago showed support of the Abe administration rising ahead of opposition for the first time in three months. The administration has been dogged by complaints of cronyism that saw the prime minister's popularity fall to around 30% in summer polling, but the North Korean crisis boosted those numbers to over 50%, and Abe is using the opportunity to maintain control, even if it comes at the expense of legislative initiatives like casino gambling.

A slow crawl

Late last year, the Japanese government passed the first of a series of measures needed to get casino gambling legalized. It was a significant achievement, but it was only possible because of the large majorities Abe's party held. Other portions that still need to be passed are now in doubt, even if the LDP retains power.

While gambling exists in Japan, large portions of the population are said to be opposed to expanding it further because of high rates of addiction. Where other countries are said to have populations where 1% are addicted, Japan's gambling problem reportedly runs closer to 5%.

Japanese pachinko parlor

Image source: Getty Images.

A risky bet

The snap elections and the sitting of a new legislative body would allow gambling opponents more time to rally public opposition to any measures introduced. And with support for the ruling party fairly soft, legislators may not be so willing to back it a second time.

That could be a major blow the the multinational casino companies like Las Vegas Sands (LVS 4.04%), MGM Resorts (MGM -0.50%), and Wynn Resorts (WYNN 3.15%) that have been lobbying to be granted one of the two licenses expected to be issued initially. Others, including Caesars Entertainment, Galaxy Entertainment, Hard Rock, and Melco Resorts & Entertainment have all also expressed great interest.

And the big casino operators have said they were willing to spend upward of $10 billion apiece to construct integrated casinos in Japan, a market that has been estimated to be around $40 billion, larger than even Macau, China, at its peak.

Abe pulled off a similar snap election scheme three years ago, which brought him his legislative supermajorities and the possibility of enacting legislation legalizing casino gambling. But it's a different environment he's facing now, and the power play he's pulling this time may actually doom the chances for casino gambling ever being enacted.

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