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Japan legalized the opening of casinos back in December.
Since then, Las Vegas' big players – like MGM and Las Vegas Sands – have expressed interest in getting involved in a new Asian market, thinking it'll be another jackpot like Macau.
But the latest proposals from the Japanese government have left the gaming industry feeling a bit taken.
Is the Japanese dream dead before it even started?
"American executives possibly have reasons for disappointment, but at the same time, they knew all along that the Japanese government intended to produce a tightly regulated industry," Andrew Gellatly, head of Global Research Services at Gambling Compliance, told KNPR's State of Nevada.
According to Gellatly, Japanese regulators have decided to pattern their rules after Singapore's rules, not Las Vegas'. In Singapore, locals are charged an entrance fee, and there are rules for how many times a local can go into the casino in a year. The idea is to prevent problem gambling.
"I think the Japanese government sees the popularity of pachinko machines," he said. "They realize that introducing another form of gambling risks the level of – while it's not called 'gambling addiction,' it's certainly addictive behavior that people display towards pachinko gambling."
In Japan, pachinko, a game that's like a cross between a slot machine and "The Price is Right" game Plinko, isn't considered gambling. It's considered an "entertainment activity."
While Japan regulators want to pattern their gaming industry after Singapore, Gellatly pointed out that Japan and Singapore are vastly different markets. One of the biggest difference is the size: Singapore is much smaller. The country has only allowed two gambling licenses. Japan is looking at handing out a small number of licenses as well and limiting the gaming floor to 160,000 square feet, about the size of Mandalay Bay's gaming floor.
"That, I think most people in the industry believe, is not enough for the demand that exists already in Japan," he said.
Gellatly said the Marina Bay Sands in Singapore is the best performing casino in the world, and has provided a great return on investment. He said that casinos in Japan have the potential to do even better.
Japan wants to embrace so-called integrated resorts, like ones in Las Vegas and in Singapore, that feature hotels, restaurants, convention space and shopping. It's part of an effort to boost tourism and business travel.
"Japan lags most other countries in the world in terms of its attractiveness for conventions and visits and meetings. In Asia, it's the sixth-ranked [destination], but in the world, Japan is only the 22nd most popular destination for international conferences," Gellatly said.
Gellatly believes it is unlikely Las Vegas operators will be shut out of the process entirely because of their expertise in creating large-scale, integrated resorts, but it is likely they'll partner with a Japanese firm.
"While U.S. operators will be involved on some level, it's very far from clear how much participation they're going to have and how much money they'll be able to take away," he said.
The regulations must be in place by the end of the year, with an eye toward opening casinos starting in 2023.
Andrew Gellatly, Head of Global Research Services, Gambling Compliance