A bill related to casinos was passed earlier this year, and there is a move to build a casino in Japan. What will change when a casino is created? We will explain the profit model in a typical overseas city that is successful in the casino business, and the advantages and disadvantages of being able to do it in Japan.
While online casinos like play88 casino are already doing good in many parts of Asia (and even the world), there is a huge difference between its counterpart, the traditional (land-based) casinos when it comes to income, profit, and their effect to the economy. Let’s take a look further.
What kind of facility will the Japanese casino be?
In April 2018, the government passed a bill related to casinos. The exact name is “IR Implementation Bill”. IR is an abbreviation for Integrated Resort and refers to a complex tourist facility that integrates not only casinos but also hotels, shopping malls, restaurants, theme parks, and theaters. The construction site of the facility is undecided, but the scale of the casino facility is limited to 3% or less of the total floor area of the entire IR facility.
What is the Japanese version of the casino as seen from the IR implementation bill?
Under this bill, the admission fee for Japanese and foreigners residing in Japan is 6,000 yen, and foreigners visiting Japan are free of charge. A higher fee is set for domestic users from the viewpoint of preventing gambling dependence, and it is free for foreigners visiting Japan to attract more tourists. In addition, there is a limit on the number of admissions for Japanese people, which is limited to 3 times a week and 10 times a month. In addition, my number card will be used for identity verification.
The payment charged to the casino operator is a fixed rate of 30% of the revenue. The collected payment will be split equally between the prefecture where the facility is located and the country and will be used for tourism and welfare.
How are overseas casinos making a profit?
How would you ideally make money if you had a casino in Japan? For example, in Tokyo and Osaka, which are considered to be promising construction sites for integrated resorts, it can be predicted that many people will visit the surrounding areas on a day trip. Therefore, it will be important to enhance shopping, eating and drinking, and other leisure activities, rather than focusing on casinos. In major overseas casino cities, we have adopted different profit models to succeed in our business. Let’s take the example of three typical cities: Las Vegas, Macau, and Singapore.
- Las Vegas
Before the 1990s, the business was centered around casinos, but it has switched to a comprehensive entertainment route, and casinos are now declining in overall revenue. Instead, food and drink, shows, events, and accommodation account for more than half of the revenue. It attracts tourists not only from Japan but also from all over the world by attracting large-scale events such as theme park hotels, concerts by popular artists, and Cirque du Soleil.
This model is specialized for casinos. Casino revenues account for more than 70% of the total, and nearly 70% of them are high-priced casinos for VIP customers. Most of the users of high-priced casinos are wealthy people in Asia, including the Chinese. Since it is a profit model that depends on some VIP customers who spend hundreds to tens of millions of yen overnight, the risk will be great from a profitable point of view.
The Singapore model, which opened two facilities in 2010, is somewhere between Las Vegas and Macau. Casinos make up about half of the total revenue and are regulated to prevent casino revenues from becoming too large. So far, it has been successful in attracting tourists and is steadily expanding its profits, but it is the same as Macau in that the wealthy Chinese have a big impact on profits.
Benefits and concerns of casinos
It seems that the financial benefits can be expected if a casino is created, but there are also voices that the response to gambling addiction is not sufficient. What are the advantages and disadvantages of casinos?
- Expected big economic effect
The economic effect produced by casinos is said to be 2 trillion yen or 6 trillion yen annually. These numbers are just estimates, but it seems that there is no doubt that a large economic effect can be expected.
First of all, employment is created when constructing a new large facility, and labor is also required to operate the facility. Since it is an integrated resort, it should generate profits by increasing consumption not only at casinos but also at surrounding facilities.
With the addition of the new attraction of casinos in addition to tourism and shopping, it will be possible to attract foreign visitors to a different class than before.
- Not all good things! Disadvantages of the casino
As many disagree with the IR implementation bill, we must also consider the negative impact of casinos. One of them is the deterioration of public security and the adverse effects on youth. There is also concern that it may become a place for money laundering (money laundering) by antisocial forces. But what is most worrisome is the promotion of gambling addiction. According to the results of a 2017 survey (Note 1) conducted by the Ministry of Health, Labor, and Welfare on 10,000 adults, it is estimated that there are approximately 3.2 million adults suspected of having a gambling addiction. In addition, 3.6% of people have been suspected of having addiction in their lifetime. Compared to other countries, the Netherlands has 1.9% (2006) and France has 1.2% (2011), indicating that the proportion of Japan tends to be high. Based on this situation, the “Basic Law for Countermeasures against Gambling Dependence” is being developed to promote addiction prevention and patient care.