The Future of Blackjack in Japan

As advanced as Japan may be in many areas of business and commerce, it has steadfastly remained one of the few Asian nations to resist the siren call of legalized casino gambling. As a result, Japanese players seeking a blackjack game have long been forced underground or to flee overseas. But that may change dramatically in the months ahead, thanks at least in part to the International Olympic Committee’s decision to hold the 2020 Games in Tokyo.

At first glance, the Olympics and blackjack might seem like an odd combination, but the linkage is being driven strictly by economics. The Japanese capital will need to add hotel capacity and entertainment venues ahead of the quadrennial sporting event and major casino corporations such as Las Vegas Sands and MGM Resorts International have indicated that they are more than happy to oblige.

The Japan Times reports that, once built, the new resort-casinos would “generate jobs, boost tourism and provide badly needed revenue in a country burdened with massive public debt and trillions of yen in rebuilding costs for the Tohoku region,” the scene of 2011’s Fukushima tsunami and nuclear disaster. According to the International Business Times, Citigroup (NYSE:C) casino analysts have pegged Japan’s gambling market as “worth a potential $15 billion in annual revenues.” That would be double the size of Las Vegas and second in the world only to Macau.

Historical & Political Factors

To date, the only legal forms of wagering in Japan are the lottery and three forms of professional racing: motorboats, bicycles and horses. Quasi-gaming in the form of “pachinko” (vertical pinball) is played for prizes instead of money, but as every player knows, the prizes can easily be redeemed for cash. Blackjack players in Japan have thus been confined to various “prize play” casinos that popped up over the years in Tokyo, Nagoya, Osaka and other major cities … or else they must take their action to casino-friendly neighbors like Korea, the Philippines or Macau.

Back when those other Asian nations first embraced table games and slot machines to boost government revenues, Japan was still an economic juggernaut that could afford to ignore casino gambling. But times have changed, and so has Japan’s political environment. With the pro-business Liberal Democratic Party now in charge, casino advocates have an ear in the National Diet. Inside Asian Gaming reports that a cross-party alliance, consisting of 140 lawmakers, has agreed on a plan to submit a draft casino bill during the Diet’s extraordinary session in the autumn of 2013.

The Sands and MGM are already scouting potential sites for new casino properties. Caesars Entertainment Corp. and Australia-based Melco Crown Entertainment Inc. have also shown interest. Bloomberg L.P. has speculated that the gaming entities will probably partner with Japanese trading companies, such as Mitsui, Mitsubishi and Itochu, as well as gaming machine makers like Sega Sammy Holdings and Konami, in order to facilitate market entry.

A Matter of Time and Money

Although some Diet members have hinted that Japan’s first full-fledged casinos could be up and running by 2015 if legislation is passed soon, analysts at Morgan Stanley have suggested a more probable timeline. If a bill permitting the formation of “integrated resorts” (hotels with casinos) is passed by December as expected, an “implementation bill” should be ready “within the next 24 months, after which interested parties could submit their bids.” Ground-breaking could begin as early as 2016, and the first integrated resorts would be ready to open their doors by 2019, just ahead of the Tokyo Olympics.

In examining the likely impact of casinos on the Japanese economy, Morgan Stanley points to the pachinko industry currently worth $36 billion annually, which “suggests enormous untapped demand for purer forms of gaming.” But it isn’t just the masses that might flock to Japanese blackjack tables. Japan also has the largest number of high net-worth individuals in all of Asia, with a cumulative net worth of $4.2 trillion, thus providing a ready supply of potential high rollers right at the new casinos’ doorsteps. An established network of air connections can help bring in whales from Hong Kong, Beijing and Shanghai, too.

Knowing the methodical way in which development activities are typically pursued in Japan, one can expect an intensive study of “best practices from other regions” to precede the formulation of official regulations to manage the new industry. When the cards are at long-last shuffled and the dealing finally begins, blackjack players will be treated to a state-of-the-art experience—the fruits of patience, designed to last.