Gambling on Success: Long Road Ahead for Japan’s Integrated Resorts

Thursday, September 20, 2018

The Asia-Pacific casino sector has undergone many changes in the past 15 years. The success of Macao and Singapore has encouraged other regional jurisdictions, such as Japan, to follow suit. The recent passage of Japan’s legalization bill caused heated debate across Japanese society, but stakeholders can engage the community to achieve positive outcomes.

Gambling on Success: Long Road Ahead for Japan’s Integrated Resorts
Photo courtesy of Kym Koch Thompson.

The way forward for legal casino gambling, or gaming, as it is known within the industry, in the Asia-Pacific is multifaceted compounds that include hotels, retail shops, food and beverage outlets, and conference and exhibition facilities. The resulting structures, known as integrated resorts, are nonetheless generally perceived by the public as gaming locations, as the casino plays a critical role in maintaining their business viability.

Much of the Japanese population remains skeptical about the prospect of an integrated resort and whether it is, in essence, camouflage for gambling. With the passage of the Integrated Resorts Implementation Bill on July 20, 2018, the Japanese government, businesses, and society are asking how can they reap the benefits of the proposed establishment of three integrated resorts while containing their potential harms.

Gambling in a Japanese Context

Japan is not virgin territory for gambling. It already has a long history of betting on horse races, of playing the lottery and, of course, pachinko, a century-old mechanical arcade game. Although suffering from declining numbers and revenue, there are still more than 9000 pachinko parlors spread across Japan that attract millions of eager Japanese players.

While game play on pachinko and pachislot is not categorized as gambling legally, the Japanese public sees it otherwise. Pachinko and other gaming addictions are problems that are not fully recognized in Japan. In addition, the public often associates gaming businesses with organized crime groups like the yakuza, and the media have reported rumors that yakuza leaders plan to infiltrate casinos once they are established.

Casino gaming is often perceived to be a “dirty” business socially, morally, and physically. Critics repeatedly accuse it of causing social disorder. Moreover, integrated resort employees work in stressful environments that are often smoke-filled and bacteria-infested, due to a constant influx of visitors. Because of such societal perceptions, integrated resorts must seek to minimize negative impacts. They have to address such “dirtiness” earnestly, with openness and honesty.

Casino gaming is often perceived to be a “dirty” business socially, morally, and physically.

One of the immediate priorities is the establishment of platforms to encourage regular dialogue among all key stakeholders, including government, local businesses, social workers, and the general community, who are directly or indirectly affected by the establishment of an integrated resort. Such dialogue should involve feedback and discussion on topics such as what are the acceptable levels of harm, what activities cannot be tolerated, and how economic benefits are to be distributed and shared.

For example, Nagasaki prefecture supported an integrated resort information exchange and training program immediately after the passage of the bill. The program was developed in collaboration with the Kyushu Economic Forum, Kyushu Association of Independent Entrepreneurs, and the University of Macau. Integrated resort executives from Macao were brought over to Sasebo, the site of the casino, and the program provided a platform for knowledge-sharing between Macao and Nagasaki, and encouraged discussion among the Japanese participants.

Industry Responsibilities

I posit that a Japanese integrated resort must seek to generate economic benefits not just for itself but also for the local community. It must protect the community’s heritage and culture and enhance its overall welfare, while fostering positive interactions and respect between its visitors and the local community.

Japan must first define clearly the responsibilities of each of its key stakeholders in the establishment of an integrated resort. There are a number of basic responsibilities that should be agreed upon to ensure a sustainable business model for Japan and also any jurisdictions contemplating casino legalization.

Integrated resort owners should choose a path of development that will best benefit the local community and businesses, and minimize negative impacts. They should ensure that the local stakeholders are involved in the development of the integrated resort, and adopt pro-poor growth or related policies as well as show sensitivity to the local culture, history, and heritage.

To achieve such goals, social impact must be measured and evaluated throughout the life cycle of the integrated resort, from planning to operation. Developers must research, promote, and introduce responsible gambling measures and educate all stakeholders about potential problem gambling and gambling-related crimes such as loan-sharking, illegal detention, and money laundering.

The Japanese national and local governments should take a central role in coordinating and integrating all activities.

Environmental impact is as relevant to integrated resorts as it is to other developments and it should likewise be measured and evaluated throughout a resort’s life cycle. Integrated resorts build visitor volume, and an increase in the amount of people that frequent one area will have a significant impact on the physical environment. Developers should plan and use resources sustainably and introduce reduce, reuse, and recycle strategies, wherever possible, at the onset. They must actively promote awareness of and education on sustainable environmental development to all stakeholders.

Minimizing Gaming-Related Harms

In the face of such a mammoth task, many things can go wrong. For instance, poor preparation and management may lead to over-tourism, a rise in problem gambling and gambling-related crimes, animosity between local residents and visitors, conflicts between local businesses and the integrated resort and, subsequently, a drop in the overall quality of life at the host location.

Thus, the Japanese national and local governments should take a central role in coordinating and integrating all activities, and that should include the establishment of legislation, regulations, and codes of conduct, and the promotion as well as initiation of responsible gaming programs. The government is in the best position to lead and possibly be the single largest recipient of any integrated resort revenue in the form of tax income.

In seeking the perfect model for its integrated resorts, Japan still has a long road ahead. Weighing a triple bottom-line, or stakeholder, approach, Japan needs to seriously consider and thoughtfully evaluate the impact of its soon-to-be integrated resorts on its economy, environment, and society as a whole.


Further Reading

Ahn, Jiseon, and Ki-Joon Back. "Integrated Resort: A Review of Research and Directions for Future Study." International Journal of Hospitality Management 69 (2018): 94-101.

International Conference on Responsible Tourism in Destinations. The Cape Town Declaration. Cape Town: South Africa, 2002.

Lam, Desmond. Chopsticks and Gambling. New York: Routledge, 2017.

Lam, Desmond, and Yuko Matsumoto. "The Case of Japan – The Dilemma and Way Forward for Asian Integrated Resorts." Global Gaming Business, December 2017, 24.

Prentice, Catherine, Ipkin Anthony Wong, and Desmond Lam. "Uncovering the Service Profit Chain in the Casino Industry." International Journal of Contemporary Hospitality Management 29, no. 11 (2017): 2826-846.

Opinions expressed in articles published by AsiaGlobal Online reflect only those of the authors and do not necessarily represent the views of AsiaGlobal Online or the Asia Global Institute


Desmond Lam

University of Macau

Desmond Lam is a professor in international integrated resort management at the University of Macau. He is a life member of Clare Hall, University of Cambridge, and the recipient of several awards, including the Emerging Leader trophy at the 2016 Asia Gaming Awards.

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