Japan has officially passed a new law that outlines the legalization of casino resorts in the country, which has opened the opportunity to create three new Japanese resorts with casinos. It’s expected for Japanese companies and local municipalities to begin discussions, proposals, and other projects regarding this new attraction. Under these statutes, gaming activities to be conducted by licensed casino business operators in land-based form within IRs are legalised. Meanwhile, online gaming activities are still prohibited if they are conducted within Japan. Yet, after a number of delays, casino legalization bill was introduced on Tuesday and the outcome is said to be really interesting. This is the latest attempt of Japanese lawmakers to make casino activities on Japanese soil legal.

A law allowing casino gambling took effect Monday, prompting the government to promote the creation of “integrated resorts” that include hotels and other entertainment facilities.

The law, sponsored by a group of lawmakers mainly from the ruling Liberal Democratic Party, created controversy due to public concern about the risk of gambling addiction.

Following the enactment, the government of Prime Minister Shinzo Abe will formulate further legislation required to implement the casino system, seeing such resorts as having the potential to boost tourism.

The law urges the government to prepare legislation within one year to deal with problems connected with casino resorts, including gambling addiction and ways to prevent the involvement of organized crime groups.

While casinos may have been banned by law, de facto gambling has been permitted in the form of slot machine and pachinko parlors. Wagering on horse, bicycle and powerboat races has also been legal.

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On July 20, 2018, the Act to Implement Specified Integrated Resort Areas (the “Casino Implementation Act”) passed the Japanese Diet which legalized gambling to be operated by private entities in Japan. While there are many aspects which have been delegated to the determination by the ministry ordinance (in fact there are 331 items that are up for the ministry ordinance to determine), below are several key points of the Casino Implementation Act:

1. Size of casino facilities

   While the Casino Implementation Act is still silent on the actual limitation on the size of the casino as this has been relegated to the cabinet ordinance (Article 41 of the Casino Implementation Act), the working team concerning the ruling party’s IR Implementation law issued their opinion regarding the size of the casino floor. Considering that the location and size has yet to be defined, rather than setting a limitation on the absolute value, it was determined that the gross floor area for the casino in IR facilities shall be limited to 3% or less.
   The basis of the calculation shall be 3% of the “gross floor area” and not the land area, which should ensure the casino to be “only a part of the facilities.”

2. Limitation on the number of times of entry and means to verify identity

   Chapter VII of the Casino Implementation Act provides for a strict limitation on the number of times of entry and entry fee to prevent problem gambling. While there is no limitation on the number of times of entry for non-Japanese residents, the Japanese residents are limited to “3 times in 7 days + 10 times in 28 (Article 69 of the Casino Implementation Act), and “My Number cards” shall be utilized for the verification of identity and the number of times of entry (Article 70 of the Casino Implementation Act ).

3. Entry fee

   The entry fee will be imposed to Japanese residents in the amount of 6,000 yen, the half of which shall be paid to the national government (Article 176 of the Casino Implementation Act) and the other half to the local government (Article 177 of the Casino Implementation Act).

4. Levy

   While there was a discussion of whether a progressive system could be imposed, since this may reduce the incentive for entities to expand their business by additional investment and presents a risk to discourage investment to realize the commonwealth, the levy was fixed at the rate of 30% of gross gaming revenue, half of which shall be paid to the national government (Article 192 of the Casino Implementation Act) and the other half to the local government (Article 193 of the Casino Implementation Act).

5. Number of IR areas

   Article 9 of the Casino Implementation Act provides that the number of location shall be limited to three (3). However, the Casino Implementation Act provides that after five (5) years have passed since the first designation, the Casino Implementation Act as a whole shall undergo a review and after seven (7) years have passed since the first designation of the IR, the number of location will be specifically reviewed giving consideration to local areas which desire and are preparing to establish the facilities while securing a period for determining the effect of IR (Article 4 of Supplementary Provisions to the Casino Implementation Act).

6. Relationship with cities where the facilities will be built

   The Casino Implementation Act provides that the enforcement policy to be prepared by the local government requires consent of the city where the IR will be actually located (Article 6 of the Casino Implementation Act), requiring a method of consensus-building at the ground level.

As mentioned above, while the details on how to implement casinos are to be determined by the ministry ordinance, some of the major items which have been debated for some time are now clarified by the Casino Implementation Act to a certain extent, and it should be fair to say that Japan has taken a big step closer for the first ever opening of the legalized casinos.

Japan Casino Legalization

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Japan Casino Legalization

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