Japan’s economy is only a shadow compared to the go go 80s,
when Mitsubishi purchased the Rockefeller Center and Japanese kids were playing Super Mario
on their brand new NES-console
or famicom as it is called here.
Fast-forward to today and we have the Bank of Japan printing yen out of thin
air and buying stocks with it, as not to let the Japanese stock market collapse.
The population pyramid is seriously distorted with a huge segment of elderly citizens
while the birth-rate is dwindling without a hint of recovery.
Facing this precarious situation, the Japanese politicians have been searching for an answer.
And that is when they looked at Singapore.
Foreigners bringing truckloads of money,
injecting it into the Singaporean economy and leaving empty-handed?
How was this possible?
The answer is gambling.
Marine Bay Sands and Resorts World Sentosa.
Two extremely profitable casinos. Or IR-facilities as they are called here.
The IR stands for integrated resort, which means that the facility would house all kinds
of entertainment venues such as restaurants, shopping malls, movie theaters, hotels and of
course – the real money maker, that is the casino.
This wouldn’t raise too many eyebrows in other countries,
but as gambling is technically illegal here in Japan,
the passing of the IR-bill required some creative interpretation of the law.
Despite gambling being illegal in Japan
I should point out that Japan has been no stranger to wagering,
thanks to the ever-present pachinko-parlors, horse racing, boat racing and lottery ticket booths.
So, what is another venue in addition to the already present gambling industry?
Well, apparently a lot, judging from the fierce opposition of some citizens,
going as far as gathering signatures to start a citizens vote on the matter.
But we’ll get back to this later on.
There were originally 9 candidate cities around Japan rivalling each other to host the glamorous IR-facility,
with the assumption that the government would provide up to three construction permits
to the cities with the best plans.
Because I lived in Yokohama for four years I had the opportunity
to see up close how the battle for the Yokohama IR-facility was fought and ultimately lost.
The story starts with the city of Yokohama looking at their financials and realizing
that as the population grows old they will have some really difficult choices to make.
As the city expenditures get swollen due to pensions, healthcare costs and other obligations,
the revenue will simultaneously shrink along the working population.
To avoid the awkward conversation of whether to cut cash handouts or increase taxes,
Yokohama decided to learn from Singapore and strive for an extra revenue stream.
An estimated 800 million dollars a year flowing into the city coffers
The IR-facility is forecasted to bring more tourists to Japan
whether the purpose is a family vacation, international conference or a roulette table.
The construction of the IR-facility alone
is said to stimulate the economy by around 10 billion dollars
through the so called trickledown economics, if Keynesian economics is your thing that is.
The bill to construct the IR-facility is paid by the IR operator who takes responsibility for
all the venues inside the facility and also gives the city and the government a cut of the profits.
In addition to getting piece of the action the city that hosts the IR will also get revenue in
the form of real-estate and corporate taxes. Despite these promises of the IR-facility to
contribute to the city taxes, the public was hesitant to jump on the bandwagon.
Citizens mainly voiced gambling addiction and public safety as their top concerns.
When it comes to gambling addiction Japan already has one of the largest number of
problem gamblers in the world and having a casino appear in city center of Yokohama
will certainly not solve this issue.
The government has admitted the risk of creating more addicted gamblers
and have promised to take actions towards it.
The IR-facilities will impose a 60$ entrance fee on Japanese nationals and
visa holders living in Japan as well as limit the time they can enter the casino
to three times a week or ten times a month. If you’re a foreigner visiting Japan however…
Go on right ahead, and the drinks are on the house.
The planners are also showing their responsibility by not having ATM-machines inside the casino area
and not allowing advertisements outside the IR-facility.
Let’s just hope they won’t discover the Eftpos loophole, as the Australians did.
All right, so problem gambling solved! What’s next?
Oh yeah, the deterioration of public safety.
To be honest it is difficult to prove that opening a casino
leads to public safety issues as you can find case studies in either direction.
Want to argue that casinos are bad, well you can point to the Korean casino of
Kangwon Land that is riddled with prostitution, loan sharks and casino homeless.
Trying to convince someone in the other direction? You can just refer to the Singaporean casino of
Marine Bay Sands that has shown data of decreasing crime rates after opening.
The overall evidence seems to be inconclusive so I would think that rather it being casinos that
cause the worsening of public safety, they can act as sort of a matchbox that starts the fire
if the other underlying conditions are in place. What are these conditions exactly?
Think of the overall economy, the levels of corruption and crime in the country,
the security measures enforced by the casino and so on. But I digress.
Despite the efforts from Yokohama City to get the understanding of its citizens toward the IR-facility,
the resistance was fierce.
The city mayor at that time was Hayashi Fumiko
and she would go from district to district to talk with the citizens about the IR.
When reading the records of what the citizens asked the mayor,
it was apparent that many felt that their voice was not heard in the IR decision process.
Some citizens felt frustration to the point where they started to gather signatures for a petition
to initiate a citizens vote on the matter. The number of signatures that they managed to gather
was over triple the amount needed so the petition proceeded into the city council for a vote.
Unfortunately for these citizens the city council voted to reject this petition,
thus blocking a citizens vote.
However, it didn’t take long for the citizens to strike back.
Yokohama was scheduled to have a city mayor election in August 2021 and many
citizens took this opportunity to make their mind known.
One of the candidates Yamanaka Takeharu was an outspoken IR-opposer.
He also had expertise on the medical field which most likely added
to his popularity at the time of a pandemic.
And just like that Hayashi Fumiko walked out the door
as the new mayor Yamanaka Takeharu walked in.
And shortly after the election, Yamanaka publicly declared
that Yokohama would abandon the bid for IR.
As Yokohama left the race, the remaining cities would now be Osaka, Wakayama and Nagasaki.
If everything goes smoothly the cities should have a final plan
ready to submit to the government in 2022 and then finish construction in the latter part of 2020s.
It is still very hard to ignore the question that should these IR-facilities be built,
who will they ultimately serve and who will be worse off because of it.
If Japan tries to implement the same model as Singapore did,
Japan needs a steady flow of tourists willing to gamble at the casino.
Yes, I know the IR-facility is more than the casino, but even Yokohama city officials
have admitted that the casino revenue is the backbone that keeps the whole concert going.
In the case of Singapore, a big portion of the visitors came from China as the Chinese have
stepped up as the new big spenders around the world.
Although some of this gambling revenue seems to be contributed to money laundering.
Singapore succeeded in making their casino a profitable tourist trap,
where foreigners bring money from the outside in to the city.
If the Japanese IR fails to attract foreign tourists, the possible scenarios could range from
an ghost casino to a scenario similar to Koreans Kangwon Land, meaning that it is the citizens
themselves who get eaten by the casino to profit the foreign conglomerates and the city coffers.
And yes, you could argue that the citizens will be happier due to lighter tax burdens
or increased city services. But even if that is the case,
the city would be effectively just recycling the same money, where it is the most socially
vulnerable citizens who bear the highest cost. I’m also interested in seeing how the dynamics
between the venues inside the IR-facility would work out. Would most customers spend their
whole time inside the IR-bubble or would they venture out to see other parts of Japan as well?
But this is as deep as I’m going to get into this subject today.
What about you? Are you in favor of the IR-facility to be built in Japan?
What if it was your own neighborhood?
Or maybe you already have gambling venues in your country.
If so tell me in the comments if you think your country is better or worse for it and why?
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