Natalie Meyer, founder and CEO at cultural insight agency Tokyoesque, offers an update on what’s happening with gaming in Japan, ahead of participation at next month’s CasinoBeats Malta.
Last summer, I introduced Japan’s emerging gaming market, painting a picture of a country that is ready to connect with the rest of the world. Let’s revisit what’s happening and how non-Japanese suppliers and operators can get involved in this emerging ecosystem.
Regulations have been passed
First, we can look at the regulatory journey the integrated resort has seen in Japan up until now. The IR Bill was first passed in 2016, formally signifying the Japanese government’s decision to allow integrated resorts to operate in Japan. This was followed by the establishment of the IR Promotion Headquarters in 2017 with Prime Minister Abe at its helm to bring about new legislation; and in 2018, the IR Implementation Bill began to specify details such as size, entrance fees, licensing, etc.
Most recently, in January 2020, the Japan Casino Regulatory Commission was established, a body responsible for the management and regulation of casinos after they’ve opened. This includes ensuring the entire process remains above board, with special attention being paid to curbing addiction, preventing relationships with criminal groups like the yakuza, and problems with money laundering.
Mainstream caution remains high among the Japanese media
A lack of familiarity with the concept of integrated resorts is causing anxiety among the Japanese. This is especially apparent in the case of the Japanese media. What’s more, in late 2019, a bribery scandal emerged which saw a Japanese lawmaker allegedly becoming entangled with a Chinese gambling company. Incidents like these threaten more delays to the IR industry in Japan, and will continue to be high on the radar of Japanese consumers, who are typically quite cautious by nature.
This is precisely why the way companies communicate with the media and with mainstream society about IRs will be key to success in the market.
With the actual casino floor being limited to just 3 per cent of an IR’s total space, and with only three being setup initially, it is not an exaggeration to say that a part of this has been blown out of proportion, too, with many Japanese afraid that gambling addiction will become a serious issue in society. This concern comes despite the ubiquitous nature of pachinko parlours, which even by themselves have a massive yearly revenue of 190 billion—more than ten times the UK’s entire gaming industry.
The situation with the pachinko industry, in my opinion, demonstrates that Japanese society can coexist with the gaming industry, and makes the case not only for land casinos but also for online gaming in the future.
Responsible gaming is a priority for the Japanese government
‘Gambling Addiction Awareness Week’ takes place between 14-20 May 2020, in a roster of events and proposals meant to ensure responsible gaming is placed at the forefront of the IR movement.
Legislation around gambling addiction demonstrates the government’s willingness to tackle these issues. What’s more, up until now, pachinko was never formally grouped in the category of gambling. But in the ‘Basic Law on Measures Against Gambling Addiction’, passed in 2018, pachinko is for the first time officially recognised as a type of gambling and as one of the causes of addiction.
The concept of gaming addiction already exists in Japan (e.g., pachinko, horse racing), so it is possible to say that the IR project has brought something positive into the spotlight in its efforts to put responsible gaming legislation into action – and to get the populace aware and talking about it.
The Japanese gaming market has the potential to be massive – if players localise wisely
The size of the pachinko industry points to the scale of the opportunity for gaming in Japan as a whole, both online and offline, even if the maturation of this industry will take some time. IRs are due to be launched in 2025 at the earliest. With this, the industry can gain acceptance from mainstream society. Looking further down the line, perhaps in 10-15 years, it also has a strong chance of making an impact on regulations in online gaming.
The sense of caution we are seeing from Japanese consumers must be overcome by being sensitive to local attitudes and needs. It is a tricky balancing act: IRs do not necessarily seek to target those with a prior interest in gaming; instead they seek mainstream visitors who will come to enjoy the entire entertainment complex, as they might visit Tokyo Disneyland or an onsen resort.
At the same time, IRs are meant to attract international travellers – arguably the bigger draw. Sensitivity should be demonstrated in keeping the locals happy, particularly in those parts of Japan not yet familiar with international tourism, despite benefits for the local economy. What will not work is a foreign company barrelling into the region without balancing each of these aspects: the locals, the various levels of government, the multitude of international travellers and the domestic travellers.
It is important that we customise services and content to suit Japanese tastes, no matter how much is ultimately targeted at non-Japanese visitors. Even more importantly, however, we must also consider how to localise the very way in which we operate and interact in Japan.
So, what will happen now?
The Basic Casino/IR Policy, set to be released in January, has not yet been presented to the public after being pushed back to Q2 this year.
The candidate locations for the development of an IR, as of February 2020, are; Tokyo, Osaka, Kanagawa, Wakayama, Nagasaki and Aichi (Tokoname and Nagoya). From this list, three will be selected.
The first Integrated Resorts themselves are set to open in 2025.
Meyer is to participate at the second CasinoBeats Malta conference, taking place at the InterContinental Malta on 24-26 March, in a panel sessions titled ‘Online Casino: Big in Japan.’
The event will see more than 1,500 industry delegates gather at the InterContinental Malta for a six-track conference featuring 150 expert speakers, together with an exhibition showcasing innovations from 40 leading suppliers.
Tickets for CasinoBeats Malta are now available via the official website, with special rates available for group bookings.