POLITICS  DEC. 15, 2016 - 06:50AM JST  (  9  ) 

TOKYO &mdash

The Diet early Thursday enacted a law on &ldquo integrated resorts&rdquo that is the first major hurdle in allowing casinos to set up shop in the wealthy nation.

The upper house of the Diet approved the bill on Wednesday after it was pushed through the lower house last week. Prime Minister Shinzo Abe has sought passage of the long-delayed legislation for years, over the objections of many in his own ruling Liberal Democratic Party.

The bill was amended in the upper house, so it was returned to the lower house for final approval early Thursday morning. Given the ruling party&rsquo s majority and support from some other parties, it passed.

Supporters of the casino legislation say it would enhance Japan&rsquo s allure as a tourism destination and draw in wealthier travelers. Opponents object to an expansion of legalized gambling, saying it will fuel organized crime and compound gambling addiction. Surveys have shown a majority of Japanese oppose the plan.

Casinos are unlikely to start operating in Japan until 2021 or beyond, after the Tokyo 2020 Olympic Games. The new legislation would authorize the drafting of regulations for details such as the number and location of casinos, entry restrictions for Japanese and tax rates, which are expected to take up to a year to gain approval.

Opposition lawmakers tried and failed to pass a no-confidence motion against Abe earlier Wednesday.

Tokyo, Osaka and Yokohama are among the cities said to be planning to seek casino licenses.

Casino operators view Japan as a lucrative &ldquo final frontier.&rdquo In a report this month, analysts at investment bank CLSA estimated the potential market at $30 billion a year in gross revenue.

CLSA&rsquo s forecast is based on revenues from Japan&rsquo s existing forms of gambling, which include lotteries, pachinko &mdash a kind of pin-ball machine &mdash and wagering on horse, auto, bicycle and power boat racing, which combined rake in more than $30 billion.

Facing down fierce objections from opposition lawmakers, Abe argued that gambling would amount to only a small fraction of the total business of the hoped-for integrated resorts, which combine casinos with hotels, convention space, theme parks and shopping malls.

&ldquo It&rsquo s not like the whole city will be taken over by casinos,&rdquo Abe said in response to sharp jibes from an opposition leader. &ldquo These facilities will attract investment and do much to help create jobs.

Japan could become the world&rsquo s second largest gambling market behind No. 1 Macau, said Grant Govertsen, a Macau-based analyst at investment firm Union Gaming.

&ldquo Quite simply, it represents the next and perhaps only other large opportunity to develop large-scale integrated resorts in Asia for a lot of these companies,&rdquo said Govertsen. &ldquo Some of these companies, their revenues and cash flow are so large today that it would take an opportunity like Japan to move the needle for them.&rdquo

Billionaire U.S. casino moguls such as Sheldon Adelson, head of Las Vegas Sands Corp, and Steve Wynn of Wynn Resorts, or their representatives have often visited Japan to lobby for legalization.

Adelson told analysts in 2014 that his company was &ldquo willing to commit substantial capital investment to develop large-scale, truly iconic integrated resorts&rdquo if Japan legalizes casinos.

&ldquo The reason why everyone&rsquo s spending the time on this is that the potential is absolutely enormous,&rdquo James Murren, chairman of Las Vegas-based MGM Resorts International, said in a recent conference call with analysts. Japan &ldquo would dwarf the Singapore market in size and could be extraordinarily lucrative for all the investors, real estate and operators alike.&rdquo

Japan is taking a gamble as the market cools elsewhere. Macau raked in about $29 billion in casino revenue last year, about five times more than the Las Vegas strip, but that was down about a third from the year before.

Chinese President Xi Jinping&rsquo s extended anticorruption campaign has crimped lavish spending by high-rollers from mainland China, causing gambling revenue in Macau, which provides the bulk of profits for companies like Wynn and Sands, to fall for 26 straight months until August.

Japan&rsquo s casinos could follow Singapore&rsquo s model in some areas, perhaps charging an entry fee to local residents, said Govertsen. Some Asian nations with legalized gambling such as Vietnam and Malaysia have tighter bans on their own citizens visiting casinos. Other places like the Philippines and Macau have no restrictions.

He said future casino projects could add iconic buildings to those cities, just as Adelson&rsquo s Marina Bay Sands resort in Singapore transformed the city-state&rsquo s skyline when it opened in 2010.

Public opposition to the casinos is mainly based on concerns over gambling addiction. In a 2014 study, researchers with Japan&rsquo s health ministry found that nearly 5 million people, or 5 percent of the adult population, were thought to be addicted to gambling. That&rsquo s far higher than the 1 percent rate found in many other countries, said the researchers, who said pachinko was the main problem.

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The Upper House approved an unpopular piece of casino legalization Wednesday evening, making its enactment all but certain amid ongoing public concerns over a potential raft of social ills, including surges in gambling addiction and organized crime.

For Japan, it seems casino legalization could be equivalent to opening Pandora&rsquo s box.

The nation is already plagued by high rates of gambling addiction stemming from its tolerance of pachinko and other types of high-stakes activities, including horse, boat and bicycle races.

The public has been skeptical of the bill, too, with an NHK survey showing Monday that 44 percent of respondents opposed it, versus 12 percent who supported it and 34 percent who were undecided.

Political wrangling over the bill unfolded during the course of the day, bringing this year&rsquo s extraordinary Diet session to a tumultuous finale that saw the opposition bloc resort to no-confidence motions and delay tactics.

The bill, which proponents see as a crucial boost for Abe&rsquo s drive to make Japan a more tourism-oriented nation, was approved by the plenary session of the Upper House late Wednesday evening with the backing of the ruling Liberal Democratic Party and conservative opposition Nippon Ishin no Kai.

LDP lawmaker Ryosuke Kozuki told the plenary session that hosting casinos will play a key role in helping realize Abe&rsquo s growth strategy of luring some 40 million tourists annually by 2020.

After clearing the Upper House, the bill was then expected to be sent back to the Lower House, as per a parliamentary rule that says any bills tweaked in the Upper House are subject to scrutiny again by the more powerful lower chamber of the Diet.

On Tuesday night, in order to quell a swelling backlash from opposition parties, the LDP had proposed key amendments to the casino bill, including defining the government&rsquo s responsibility to better combat gambling addiction and stipulating that the legislation be reviewed within the first five years of its enactment, reports said.

Still unsatisfied, four opposition parties &mdash the Democratic Party, the Japanese Communist Party, the Liberal Party and the Social Democratic Party &mdash on Wednesday went all-out to delay voting in hopes of thwarting the bill&rsquo s enactment before the end of this legislative session, which was slated to wrap up Wednesday.

They submitted a joint no-confidence motion against Upper House chairman Chuichi Date, only to see it vetoed Wednesday afternoon.

They also agreed to submit a similar motion against Abe&rsquo s Cabinet to the Lower House, but such a move was likely to be struck down, too, given the strong majority commanded by the ruling coalition in the chamber.

The opposition&rsquo s moves brought the Diet to a temporary standstill, pushing Lower House re-examination of the bill late into night and leaving open the possibility that the LDP may resort to extending the extraordinary session for the second time.

Fierce resistance to the bill persisted Wednesday, with critics saying that Japan is doomed to experience the same casino-driven fiascoes already plaguing other nations that have legalized gambling.

The DP&rsquo s Saori Yoshikawa told the Upper House that casino industries in Asia by and large lost momentum due to China&rsquo s economic slowdown and excess investment, and that Japan was about to make the same mistake.

She also branded Japan a &ldquo gambling superpower,&rdquo with its combined market size for pachinko as well as horse, bicycle and boat races estimated at about ¥ 26 trillion annually.

The haste with which the LDP debated the casino legalization mirrored its handling of other controversial bills that raised hackles among the opposition during this legislative session.

It forced through a bill to ratify the Trans-Pacific Partnership trade deal, despite U.S. President-elect Donald Trump&rsquo s pledge to withdraw from the pact on his first day in office.

A bill to revamp Japan&rsquo s pension system was also enacted Wednesday, despite concerns it may result in pension payments being reduced in tandem with falling wages. Abe has defended the revamp as necessary to increase the sustainability of the system.