What Does Japan’s Casino Legalization Mean For The Country’s Tourism Industry?

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Last year in July, Japan’s parliament approved a controversial law which will allow up to three casino resorts to be built throughout the country, with the aim of attracting foreign investment. The law adds rules of operation to a previous law on casino promotion passed back in 2016, and requires that casino resorts have hotels with more than 1.07-million-square feet for guest rooms, with an average of 538-square feet per room. This means the resorts will be the largest in the country, with roughly 2,000 rooms each.

Other requirements include large exhibition halls (far larger than what can be found currently in any hotel in the country), with floor space for casinos comprising just below 3% of the total resort space. These rules of operation were approved by the National Diet just this past March – but already they’re introducing some interesting questions regarding the future of tourism in Japan.

The latest moves to legalize casinos come amidst additional policies and reforms enacted by the government of Prime Minister Shinzo Abe to promote Japan’s tourism industry and revitalize the country’s economy. Beginning in 2012, these reforms, along with a weaker Yen and lowered visa restrictions, have resulted in a significant spike in tourism. And with legalized casino gambling, Japan expects to compound this growth in the years ahead.

Historically speaking, Japan’s rich natural and cultural heritage has always been at the heart of the country’s tourism offerings, and culinary tourism has also been among the sectors that have appealed greatly to visitors from abroad. However, analysts have warned that these factors alone – natural heritage and culinary offerings – might not be enough to help Japan meet its ambitious tourism goals by 2020. Accordingly, it’s been suggested that Japan will need to diversify its appeal, which is what led to the recent Integrated Resorts Promotion Bill emulating models that have been used successfully in other Asian countries.

The concept of meetings, incentives, conventions, and exhibitions, or “MICE,” with integrated resorts, worked extremely well for Macau and Singapore, and is viewed as one of the reasons these two cities have turned into popular gaming and entertainment destinations. Singapore’s Formula 1 event, which draws investors and crowds from all over the world, is perhaps the most well-known example. Japan could likewise leverage its own Formula 1 event with new, integrated resorts that could attract more visitors and make it more of an event. And now that gambling is partially legalized, the country’s local resort properties can also emulate international online bookmaker listings to turn an event like an F1 race into a betting spectacle in and of itself. This may seem like a small thing, but attaching a betting market to a major sporting event can turn it into a whole new attraction entirely, and one that generates more buzz and more money.

This is one fairly easy example to think about, but more broadly the integrated resorts model will fill several needs within the country’s tourism industry, and will also cater to a variety of tourists with different budgets, priorities, and desires. In addition to glamorous resort properties, it will include full-scale casinos with table games, slot machines, and other, online offerings. Analysts predict might just turn Japan into one of the largest casino hubs in the world, generating (potentially) between $10 billion and $25 billion in gross annual revenues. In the meantime, Japan’s efforts to promote tourism already seem to have been working, given that the number of visitors has been growing for a few years running. The hope and expectation is that the government’s decision to integrate casino activity into its expanding tourism industry will keep this trend going.