Until the dark clouds looming over the government's tourism strategy are lifted, the much-heralded development plan for integrated resorts (IRs) including casinos will remain at a standstill.
Before the coronavirus outbreak slammed the brakes on inbound tourism, an IR-related corruption scandal involving a lawmaker had already seriously deteriorated the image of IRs. This combination of ills has left the government little prospect of deciding even the basic policy for IR authorization standards for the time being.
-- Timing of opening undecided
The term IR refers to complexes that integrate a casino, international convention center, exhibition halls, hotel and other establishments.
"We need to work on the issue at some point in the future, but we can't do it right now," a high-ranking government official said Thursday, suggesting that the government should shelve any IR basic policy decisions for now, considering the serious economic slowdown brought about by the coronavirus crisis.
The basic policy will serve as the guideline for municipalities to select IR operators and submit IR development plans to the central government. The government had planned to decide the basic policy at the end of January. The initial schedule that aimed to open IRs in the mid-2020s is effectively back to square one, according to sources close to the government.
The first misstep was the arrest and indictment of House of Representatives member Tsukasa Akimoto, who has left the ruling Liberal Democratic Party. Akimoto was arrested in December on charges of bribery in relation to the corruption scandal involving the selection of IR operators and indicted in the beginning of this year.
With the coronavirus crisis compounding this situation, the priority of the IR project was lowered within the government. As evidenced in the 2020 Basic Policy on Economic and Fiscal Management and Reform that was adopted by the Cabinet in July, there is no mention of "IR" at all. Given that the previous year's policy had positioned IRs as a key measure to revitalize regional economies, pro-IR lawmakers were disappointed by the downgrade.
-- Business environment changes
The coronavirus outbreak has drastically changed the business environment surrounding casino operators and others. This is because casinos are regarded as facilities with high infection risks due to the so-called 3Cs -- closed spaces, crowded places, and close-contact settings.
In Macau, where 41 casinos are operated by six companies including a large U.S.-based casino operating company, all casinos were closed for 15 days in February. While many of them have resumed operations, customers have not returned due partly to entry restrictions from mainland China and foreign countries.
According to statistics from the Macau government, casino-related sales for January to June were down 77% year-on-year to about 444.5 billion yen. By comparison, last year's annual sales reached about 3.9 trillion yen.
Major casinos in Las Vegas reopened in June. While they are taking measures to operate safely, the number of customers is reportedly half compared with an average year.
-- Tourism targets in doubt
Aiming to make Japan a leading tourism country, the government of Prime Minister Shinzo Abe set a goal of attracting 60 million foreign tourists by 2030. One of the preconditions for achieving this goal is that IRs would be opened in the mid-2020s and operated smoothly.
At a lower house budget committee meeting on June 9, Abe emphasized that tourism is expected to recover once the coronavirus outbreak is contained, saying "IRs will help Japan become an advanced tourism country."
However, until the outbreak shows some sign of ending, few can take Abe's remarks at face value.
"We can't expect that casinos would have the effect of attracting customers as originally anticipated. But if we scrap the plan, we will be criticized for changing the policy. We will be damned if we do and damned if we don't," a senior LDP member said.
-- Pros and cons
The IR implementation law was enacted in 2018, when the government positioned IRs as a key measure to attract more foreign tourists. The anticipated economic effect generated by IRs has been estimated at several trillions of yen per year.
On the other hand, there are strong concerns about an increase in the number of gambling addicts and deteriorating security. Some point out that IRs could create a hotbed for money laundering to hide financial crimes.
In relation to the bribery scandal, Akimoto was arrested again Thursday for alleged witness-tampering in violation of the organized crimes punishment law. While a senior government official claims that the arrest will not affect the entire project, the opposition and criticism against IRs could become stronger.
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