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G2E: Will Casinos In Japan Help Or Hurt Las Vegas?

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(AP Photo/Jae C. Hong, File)

In this July 7, 2007, file photo, Wedding photographer Sergio Lopez, left, take pictures of newly-weds Joseph Buangan and his wife Joyce, both of Torrance, Calif., with the "Welcome to Fabulous Las Vegas" neon sign in the background in Las Vegas.

Las Vegas' gaming companies are looking for their next big jackpot. 

Their hunch? 

Japan. 

Casino gaming in Japan might just be the new Macau. 

The Japanese government recently passed a law allowing integrated resorts to be built in the country. 

The change comes after years of supporters of the idea trying to get momentum, said Andrew Gellatly, head of research for GamblingCompliance. 

Gellatly spoke with State of Nevada on the floor of this year's Global Gaming Expo, or G2E.

Gellatly said the idea is to bring in more visitors to Japan with more tourism and more conventions. 

"That's what's driving the idea -- that Japan's tourism is lacking on the world scale -- and so they need to encourage more visitation," he said.

Gellatly said while other politicians have tried to get casino gambling allowed in Japan, it wasn't until the stability of Prime Minister Shinzo Abe it was able to get through.

However, there are a lot of details to be worked out and a lot of regulation to be created, Gellatly said.

"The operators are trying to make sure their golden goose doesn't turn into something worse -- like an ugly duckling -- if the regulations aren't what they need," he said.

But most of the large, Las Vegas-based gaming companies have had a presence in Japan for years. They will most likely be working with Japanese companies to build the hotels, restaurants and convention space, but the Las Vegas gaming giants will operate the casinos.

Support comes from

One of the biggest hurdles might be local attitudes toward casino gambling. Right now, pachinko parlors are found throughout the country and it is a form of gambling. But most Japanese don't consider it to be gambling -- instead, they're considered entertainment venues.

Those parlors also can have an unsavory reputation, and are often associated with Japanese gangs.

Gellatly said casino companies will have to educate the Japanese people and change their view of gaming.

And while some people might want to call Japan the new Macau, Gellatly said the Japanese would hate to become the new Macau.

He said while crime levels haven't risen since gambling was legalized in Macau, there are social problems that have come along with it -- including the fact that fewer and fewer young people in Macau are going to university because they can get a good job at a casino.

There is also the problem of junkets run on credit.

"The revenues in Macau are driven by shady so-called junket providers who provide credit to gamblers," he said. "The new casino legislation in Japan doesn't provide for this credit-based gaming."

Japan is looking more towards how Singapore has established and regulated its gaming industry. Gellatly said five years ago, 10 million visitors came to Japan in one year, which is half the number that visit Singapore -- even though Japan has more people and is much larger.

"There is a huge incentive on the part of the government to attract more tourism to Japan," he said.

Gellatly said the island country has the capacity for more tourists -- it just needs the infrastructure that big casino resorts bring.

 

Guests

Andrew Gellatly, head of research, GamblingCompliance

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