THE sun beats down on a queue of punters outside the Espace pachinko parlour in central Tokyo. Inside is an air-conditioned oasis. Japanese people wage over ¥20trn ($180bn) a year on this pinball derivative, fleeing the tedium of office and home life for its noisy thrills. Now it is to have competition.
On July 20th the Diet (parliament) ended years of wrangling when it passed a bill allowing the establishment of casinos in three Japanese cities. A pet project of Shinzo Abe, the prime minister, the casinos will be embedded in family-friendly resorts, partly in a bid to counter their seedy image. Tempers ran high as the bill inched toward law. An attempt by the government to cut off debate sparked scuffles among lawmakers.
Most Japanese have little enthusiasm for casinos, which they associate with gambling addiction and yakuza gangsters. Nearly two-thirds of the population oppose them. Yet it is not hard to see why the country sets the hearts of casino operators aflutter. Greater Tokyo, with legions of wealthy retirees among its 35m residents, could handily outstrip tiny Singapore as a gambling hub. Sheldon Adelson, the boss of Las Vegas Sands, calls it the “ultimate business opportunity”. Hard Rock Café and MGM Resorts have spent years cultivating local partners in the hopes of getting some of the expected ¥2trn in annual revenue.
Firms anticipate juicy construction contracts to build the resorts. Pachinko companies may benefit, too. Some have already branched into making slot machines. At the head of the pack is Konami, which supplies about a tenth of America’s slot machines and holds hundreds of gaming licences in America, Australia, Singapore and South Africa.
Yet the bumpy Diet ride means the operators themselves will be kept on a tight leash. The bill limits customers to three visits a week and specifies charges of ¥6,000 to get in the door (foreigners will go free). Identity cards containing microchips will ensure compliance, a Big Brother touch that makes some nervous. The target customers are well-heeled Japanese and foreign high-rollers, says Susumu Hamamura, a politician from Komeito, Mr Abe’s coalition partner.
The government wants to stick the casinos in new resorts alongside hotels, shops and conference facilities. Casinos will be the engine for revenues, says Ichiro Tanioka of Osaka University, but they will be limited to 3% of floor space. Operators will face stiff taxes of up to 30%, higher than competitors in Las Vegas or Singapore. The police will watch closely to ease concerns about crime.
Done well, the resorts will attract tourists and generate local wealth, says Toru Mihara, an academic who sat on a government panel last year. What will give them an edge over places such as Singapore and Macau, says Mr Tanioka, is Japanese hospitality. Once the resorts are up and running unsavoury perceptions around them will change, agrees Jay Defibaugh, a research analyst with CLSA, a securities firm. But it will take time before the bet pays off.