Has COVID-19 put a halt to the development of the Japanese casino market?

Japan is a nation that maintains its conservative traditions, especially where 'exotic' western entertainment options are concerned. This has made the Japanese gambling scene rather controversial and sometimes rocky. With strong gambling regulation in the country, gambling is restricted. However, there is a thin line between legal skill games and illegal games that are luck-based.

Although the government has been allowed to run lotteries and betting on horses, boats and bicycle races are indeed permitted, casinos have traditionally been illegal in Japan. However, things are about to change.

With a new casino bill Japan got ready to develop, what’s expected to be some of the most luxury casino resorts in the world. At least that was the plan before the world was hit by the COVID-19 pandemic. The question is now how well the government of Japan manages to continue the development during this time.

Huge market potential

The Japanese casino has been estimated to worth over $15 billion. In recent years, in order to get out of the country’s economic slump, the Japanese government has been making some amendments to their gambling law to allow land-based casinos to operate legally in the country, but with strict regulations and monitoring by the government. The newly approved casino bill that enables the establishment of casino resorts led to big international casino operators like the Las Vegas Sands and MGM Resorts showing immediate interest in investing in the developmental plans for new resorts in Japan.

Many residents in some cities that the international casino operators are interested in investing money to establish casino resorts are against the idea due to the numerous harms that casinos could bring to their environments. Despite this, proposals and plans were put in place to develop three casino resorts in different cities. Local governments interested in the integrated resort projects were asked to submit proposals between January and July 2021.

Just as the sudden outbreak of the Covid-19 pandemic led to a halt of many activities in many countries around the world, Japan was not an exception. The sudden outbreak of the Covid-19 virus led to a lockdown in which citizens were asked to stay at home to control the virus's spread. Like many other activities and businesses that the lockdown brought an abrupt pause to, the plans for the development of the Japanese casino market were also affected. 

The only gambling sector that wasn’t adversely affected by the Covid-19 lockdown was the online casino market, which recorded a very high influx of customers worldwide. Having nowhere to go with limited activities to do led to a rise in online activities during this period. Although it is illegal for Japanese operators to establish online casinos for Japanese citizens, they can play on foreign platforms that allow Japanese citizens. 

Where things stand today

Due to the COVID-19 outbreak, there was doubt about the schedule and timeline can still be kept.

In May 2020, Las Vegas Sands, that has been one operator that was enthusiastic about the idea of establishing an integrated resort casino in Japan, suddenly pulled out and ended their plans. Having already faced numerous challenges, including strong opposing public opinion, this was another massive blow to Japan’s attempt to energize its economy through the tourism that casino resorts will bring to the country. Sands didn’t give a reason for canceling their plans even though only in January they were very upbeat about the idea and even put up magic shows and Broadway musical numbers trying to rally support and drum up enthusiasm for the industry during an exhibition in Yokohama.

MGM Resorts recently said that it is now looking for a smaller investment role in its Osaka dreams. In August, even Wynn Resorts closed its Yokohama office.

Due to the pandemic's impact and some other reasons, in October 2020, the Japan Tourism Agency in Tokyo announced that the central government is delaying the integrated resort timeline. Previously the submission period was set to run from January 4, 2021, to July 30, 2021, but the new deadline is now April 28, 2022. But they did not give a start date. According to sources, the central government made this decision because all candidates are falling behind in their selection of business operators and other preparations. They deemed that the local governments would not be ready to apply if they were to open for submission in January 2021.

Many gaming industry analysts observing Japan's effort to venture into legal commercial gambling said that the delay, or to state it better, the extension was expected. Due to the impact of the Covid-19 pandemic Japan government has provided financial support to tackle the pandemic's effects, and their priority right now will be to readjust budgets and economic recovery. This decision is probably for the best. It will give the interested party enough time to prepare and also potentially help raise more enthusiasm from the public that has been against the plans.