JAPAN

Politics continue to obscure IR outlook

By Daniel Cheng*

Like a delinquent child who refuses to follow the rule book, going astray is more the norm than exception for the passage of casino gaming in Japan. Notwithstanding the unwaning nurture and resources the Japanese government had poured into it over the past two decades, there was little reciprocation for the love and attention it received. The IR (Integrated Resorts) Act is on track to be the oldest alumnus in Japanese legislative history when the first casino finally opens its doors.

The current best estimate for the latter is 2028 which would mark 30 years to realise a piece of law from ideation to implementation. However, by the looks of what’s brewing in the horizon, this recalcitrant may not be quite done yet and still have some tricks up its sleeves.

We witnessed the self-expulsion of Yokohama last month which automatically ejected Genting Singapore, Melco Entertainment and Sega Sammy from the IR race as it currently stands. Nagasaki is bracing a maelstrom in threats of lawsuits from the runner-up bidder accusing the prefectural government of gross improprieties. The situation is reduced to a tarring and feathering slugfest that does no favours for either side. Even a sole bidder, and hence winner by default over at Wakayama wasn’t spared, with unfounded accusations slung at Clairvest’s advisor, Bill Weidner, who boasted stellar gaming credentials as the brains behind the global ascension of Las Vegas Sands’ success in Asia.

Comparatively to the west, it’s snoozeville at Osaka where MGM Resorts and their partner, ORIX, are filing their fingernails perfectly happily in ennui.

We are heading into two months which could see more gale force winds passing through in an exciting political calendar beginning with the just-concluded LDP presidential election which saw four contenders wrangling to take over from Yoshihide Suga to lead the party and become the 100th Prime Minister of Japan.

The Lower House national elections is to follow likely in early November and sandwiched uncomfortably between is the start of the 6-month time window for interested prefectures to submit their IR bids to the national government.

The IR train is quite safe in the hands of the incoming Cabinet as the quartet vying for the LDP helm are all supportive of the tourism initiative. Taro Kono offers the best prospects for the long haul with his Western educational background and international depth which augur well with the concept of casino gaming as a form of entertainment; he is also the least hawkish in his views towards China whose citizens represent the key customer demographics for Japan integrated resorts.

Seiko Noda was a one-time leader in the bipartisan IR parliamentary caucus while Sanae Takaichi’s election ticket rides primarily on the endorsement of Shinzo Abe and is expected to endorse the pet policies of the former Prime Minister, the IR Law being eminent among them. Fumio Kishida had visited Singapore in his capacity as Foreign Minister and toured the city’s two integrated resorts, and it was Kishida who prevailed on 29 September in a run-off against Kono after both came in neck-to-neck in the first round of voting where there were equal number of votes to be had between LDP parliamentarians and party-wide cadres.

Kono was seen to overwhelmingly dominate the latter group, which he did in securing 44 percent of the votes whereas Kishida was a distant second with 29 percent to his name.

The big surprise was the storm-back Kishida mounted in the parliamentary votes which finally allowed him to pip Kono overall by 256-255 but neither was enough for an outright win which required 383 votes. The duo’s results might look too close to call but the ground rules of the subsequent run-off voting round virtually assured Kishida of victory. First, the available party-wide votes shrink eightfold to only 47 which worked against Kono. Also, with Takaichi and Noda bowing out, Kishida will benefit in the run-off from the support of those in the Hosoda faction who had chosen Takaichi in the first round.

It was a double whammy which saw Fumio Kishida romping to a 257-170 victory over Kono and in the end, he probably didn’t even need the party-wide votes to win; such was the unassailable margin of support he had among LDP lawmakers. He’ll be most beholden to the Seiwa Seisaku Kenkyūkai, the largest faction in the LDP whose official leader, Hiroyuki Hosoda, is widely acknowledged as the main advocate and conservator for the Japan IR initiative. Hosoda will expect Kishida to make integrated resorts a priority agenda in return for his bloc’s support.

Still, don’t expect any clearer directions for the IR story immediately after Kishida is crowned Prime Minister because he is unlikely to make any rash moves until after the Lower House elections. Barring an unexpected outcome, the LDP is expected to hold on to power in November and what observers will be keenly watching is the margin of victory. An increase in seats or retaining the super-majority is an explicit affirmation for Kishida and bodes lesser headwinds in the IR department. But changes in the balance of legislators representing the bidding prefectures may alter the dynamics in the IR host category.

Also, the less than marquee remaining slate of Nagasaki-Osaka-Wakayama host contenders meant it is far from a foregone conclusion that the three bidders will automatically be awarded the three licenses. Osaka will pressure for their license in the present six-month window but brace for one or maybe two licenses kicked down the road to allow for the likes of Tomakomai, Fukuoka, Aichi and Tokyo to enroll in the race.

*Daniel Cheng is formerly the Senior Vice President of Development for Hard Rock International. He is the author of The Rainbow Upopo, a novel about the indigenous Ainu People in Japan.

Melco still committed to Japan, despite Yokohama blow

Melco Resorts & Entertainment said it will continue to explore opportunities to develop an integrated resort in Japan after politics upended its efforts to obtain a license in Yokohama. The Macau operator formally announced that it was withdrawing from the Yokohama race and closing its office in the city.

However, it will maintain a representative office in Tokyo. “For the past several years, we have worked with our partners to devise a superlative, world-class IR proposal that reflects the unique characteristics and culture of Yokohama and which would put the city on the global stage of tourism,” Melco Chairman and CEO Lawrence Ho said. “Melco has been working on the ground in Japan for over a decade.

We firmly believe in the country’s longterm potential and remain committed to exploring opportunities to develop the world’s best integrated resort in Japan,” he said.

Lawmaker sentenced to four years in 500.com bribery case

Japanese lawmaker, Tsukasa Akimoto, has been handed a four-year jail sentence and told to pay damages amounting to Y7.6 million ($69,000) for accepting bribes from a Chinese company seeking a casino license in Japan. Akimoto was found guilty of accepting payments from 500. com between September 2017 and February 2018.

He was also found guilty of offering money to two former advisors in exchange for favorable court testimony in the case. Prosecutors had called on the Tokyo District Court to impose a sentence of 5 years. They accused Akimoto, a Liberal Democratic Party member, of undermining trust in the attempt to establish an IR industry in the country.

In highly damaging testimony, former 500 .com adviser Katsunori Nakazato told the court he prepared a JPY3 million (US$27,300) cash bribe in the men’s toilet in the first floor of the House of Representatives office building by putting the cash in envelopes and hiding it in a bag filled with yokan, traditional Japanese red bean sweets.