Tokyo leading push to bring casinos to Japan

Mari Yamaguchi

Friday, Jan. 3, 2003 | 9:51 a.m.

TOKYO -- It was a rare taste of Las Vegas in Tokyo, and for two days the casino crowds hosted by Tokyo Gov. Shintaro Ishihara pumped the handles of slot machines and bet feverishly on the roulette wheel.

Although better known for his hawkish advocacy of building a stronger, more assertive Japan, Tokyo's often controversial leader has found a new cause celebre: legalized casino-style gambling.

And, on this one, he's got a lot of support.

Japan's capital is badly in need of money. Tokyo has been losing money for four years in a row and suffered an $80.65 million deficit in fiscal 2001. Tax revenue is expected to plunge this year, prolonging Tokyo's fiscal slump.

In a report published in October, the Tokyo government estimated that building casinos could generate $733.87 million in casino revenues, $177.41 million in tax revenue and create 13,800 jobs.

"We need to create jobs, stay culturally active and maintain sources of revenue," Ishihara said. "I think casinos can be very appropriate."

With Japan's economy overall still in a downturn -- unemployment is at record highs, banks are teetering under bad loans and stock prices are at 19-year lows -- Ishihara isn't alone in courting casinos. More than a dozen mayors and governors from across the country have voiced their support for laws to expand the scope of legal gambling.

The central government is listening. Prime Minister Junichiro Koizumi's tax panel has begun studying the feasibility of casinos, and about 40 lawmakers from Koizumi's ruling Liberal Democratic Party have set up a team to promote their legalization.

Tokyo, however, is by far the important and potentially lucrative test market.

Metropolitan government official Yoko Murano says gambling is a money machine that Tokyo has long ignored.

"We can expect casinos to be a great benefit to employment and the local economy," Murano said. "Even though people are somewhat affected by the economic slump, most Japanese can still afford to spend a little to have fun."

Officials point out that many are doing so already, but not in Japan. According to government report, two-thirds of the visitors to South Korean casinos are Japanese.

For smaller towns, the matter is more urgent.

"The number of visitors here has been falling every year, and we need to revive the town's economy badly," said Yuichiro Itakura, an official in charge of tourism at the city of Atami, one of Japan's largest hot springs resorts. "We have high hopes that casinos can boost our economy."

Though located just a short train ride west of Tokyo, the number of visitors to Atami, where hotels are designed largely for company and group parties, has fallen to 3.1 million last year, half what it was 30 years ago.

Japan is no stranger to gambling. The law here prohibits gaming and betting, but public-run gambling enterprises are common. Gamblers can legally bet on the horses, on bicycle, boat and auto races and also play the lottery.

Privately-operated "pachinko" pinball is also considered a kind of gambling because a legal loophole allows winning prizes to be exchanged for money. The annual payout amounts to some $241.94 billion, about three times as much as Las Vegas' annual earnings.

Tetsuro Murobushi, chairman of the pro-gaming Japan Casino Society, said casinos can create a market worth $241.94 billion and generate about $24.19 billion in tax income for the nation if managed successfully.

Not everyone agrees with the predictions of how casinos will save Japan.

"Gambling causes moral decay. We surely need to promote employment, but there are many other ways to do so," Mako Aramaki said in a letter recently published on the op-ed pages of the Yomiuri, Japan's biggest newspaper.

Ishihara's critics have raised a host of practical issues -- the possibility of organized crime involvement, of corruption, of tax evasion. Lives could be ruined by overindulgence.

And while legal gambling continues to thrive, it's not as profitable as it used to be.

Sales from legal gambling -- not counting the lotteries -- dropped to about $51.6 billion last year from $72.6 billion a decade ago, largely because of the economy and declining interest.

Instead of creating a completely new market, the introduction of casinos, some experts say, would just take a cut out of the kinds of gambling that now exist.

"Casinos are largely seen as an easy, quick remedy, but running them is not so easy," said Shiro Komatsu of the Mitsubishi Research Institute, a private think tank. "Their introduction should only be used like a trump card, a last resort."