Turning Japan into a global gambling hotspot may be just the ticket for Abenomics

Turning Japan into a global gambling hotspot may be just the ticket for Abenomics

By Lily Kuo @lilkuo February 24, 2014

The world’s biggest gambling company has vowed to spend “whatever it takes” (up to $10 billion) to set up a casino in Japan. Las Vegas Sands CEO Sheldon Adelson’s pledge comes at an auspicious time, with the Japanese government considering legalizing casinos and in desperate need of an economic boost.

Analysts say Japanese casinos could bring in as much as $40 billion a year, which would make Japan the world’s second most lucrative gambling market, behind only Macau. Japanese consumers already pour tons of money into lotteries, horse races, and pachinko, a pinball-like game that’s believed to account foralmost 30% (paywall) of the country’s leisure spending.

Legalizing casinos might even loosen the Japanese mafia’s hold on the country’s underground gambling industry, made up of as many as 1,000 illegal operations, from tele-casinos to mahjong to baccarat tables. The government already succeeded once in phasing the yakuza out of the pachinko industry, and now lawmakers are trying to keep the yakuza out of any new legalized casino industry by setting high hurdles for ownership. Some have proposed setting up a separate cabinet-level body, independent of any one ministry, to regulate the industry. (Though Japanese ministers have been known to fall under yakuza influence from time to time.)

Still, it may be that Japan’s new gambling industry will follow that of Macau’s. The Triad, Hong Kong’s longstanding organized crime force, has been incorporated into the legal casino industry, where it plays a smaller role of helping run gambling junkets for wealthy Chinese mainlanders.

In the meantime, Japan’s legislature is considering a gambling bill (paywall), backed by prime minister Shinzo Abe’s Liberal Democratic Party, that would start licensing casinos in 2016, with the goal of having at least one giant complex in operation by the 2020 Tokyo Summer Olympics. Let the games begin.


About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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