Japan’s burgeoning Integrated Resort industry may have been handed a lethal blow following the ruling Liberal Democratic Party’s (LDP) crushing defeat in the Tokyo local election at the weekend, with the much-vaunted IR Implementation Bill likely to be delayed or burdened by far greater regulations.
So says Union Gaming analyst Grant Govertsen, who notes that the loss of nearly two-thirds of the LDP’s seats in the 127-member assembly, “and by implication a weaker outlook for the LDP nationally, will make it incrementally tougher for PM Abe to push through his agenda, including the very contentious IR issue.”
Concerns over passage of the IR Implementation Bill by the end of 2017 had already been growing after the Diet failed to reach consensus over a problem gambling bill during its latest session.
The magnitude of the LDP’s Tokyo defeat is seen as confirmation of widespread dissatisfaction among the greater populace with Prime Minister Shinzo Abe which will only make it harder for him to realize his dream of boosting the Japanese economy through Integrated Resorts.
According to Govertsen, addressing the issue of problem gambling will now be even more difficult with reduced power.
“With PM Abe’s agenda on the ropes our view is that his government will need to take an even more cautious approach than before with a greater emphasis on getting support of the citizenry,” Govertsen said.
This “could mean that 1) the IR bill doesn’t come to fruition this year, and with next year being an election year it might get delayed even further, or 2) the IR bill becomes so watered down with cumbersome regulations (e.g. very high entry fee in order to placate problem gaming concerns) as to make the development opportunity much less interesting.”
However, delays in IR legislation could prove to be good news for Japan’s pachinko industry which has come under increased scrutiny as discussion of casinos has grown.
“Over the years the National Police Agency has continually stiffened regulations by reigning in high volatility pachinko and pachislot machines to make them less like gambling,” Govetrsen said. “This has been a significant factor in the longer-term decline in the pachinko industry (in terms of GGR, the number of players, and the number of parlors).
“As the IR bill has been moving forward and as the separate problem gaming bill has taken center stage, we believe this has put additional pressure on the NPA to keep pace in terms of making pachinko even more restrictive. In the now-more-likely event that the IR bill doesn’t come to fruition this year (and possibly next year too) due to the LDP’s political fortunes, we would view this as a positive for the pachinko industry as it could result in a regulatory reprieve.”
