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Casino operators remain bullish in Japan despite bribery arrest

Foreign and domestic companies say no impact on their pursuit of license

Operators remained committed to the process of applying for licenses to open integrated resorts. (Photo by Manda Yeung)

TOKYO -- Casino operators hoping to become first movers in Japan are putting on an optimistic front, despite the postponement of the release of a regulatory framework for the sector, after a lawmaker was arrested on suspicion of receiving bribes from a Chinese betting company.

"I don't think [the arrest] diminishes our interest in pursuing our opportunity here," George Tanasijevich, managing director of Las Vegas Sands told reporters on Wednesday at an industry expo in Yokohama, one of cities spearheading plans for a casino resort along with Osaka. "We just let the process unfold, it is the government's job and it doesn't involve us. We stay focused preparing for the request for proposal."

Other operators expressed regret at the turn of events but said they remained committed to the process of applying for licenses to open integrated resorts offering hotels, restaurants, conference centers and other entertainment facilities centered on a casino. Japan had planned to open the first such resort by mid-2020s.

"It's very sad to see a parliament member involved in this kind of scandal," said Ted Chan, the chief operating officer of Japan Development of Galaxy Entertainment Group. "We need to educate the public in terms of the pros and cons of integrated resorts. There could be some negative impact but IR [integrated resort] itself has a lot of contributions too."

Wynn Resorts Development Japan President Chris Gordon echoed the same sentiment. "We are very happy to follow the process laid out by the government," Gordon said. "If there is a delay due to various steps, that's fine... As a company, we are always anxious but you don't want to rush these things."

Wynn withdrew from bidding in Osaka in October, saying in a statement that it was focusing on "the big cities in the Kanto Area" that includes the Greater Tokyo region, Yokohama and other prefectures in the east of the country.

Sands announced a similar move in August, soon after Yokohama unveiled plans for an integrated resort, saying that the company would focus on the city and Tokyo, pulling out from Osaka. The U.S. casino giant is now preparing to form a consortium potentially with local business partners "as quickly as possible," Tanasijevich said on Wednesday.

Investigative journalism group ProPublica reported in October 2018 that U.S. President Donald Trump, who is known to have close ties with company Chairman Sheldon Adelson, asked Prime Minister Shinzo Abe to approve Sands for one of the first three licenses in Japan. Tanasijevich on Wednesday called it a "false media report."

Tsukasa Akimoto, a member of Abe's ruling Liberal Democratic Party, was arrested in December and charged on suspicion of receiving 3.7 million yen ($34,000) in bribes from Chinese sports betting group 500.com. The Tokyo Prosecutors' Office alleged the lawmaker received more than 7 million yen in total.

Akimoto, who had resigned from the party, denies any wrongdoing.

The government was due to finalize policy outlines, known as the Basic Policy,for casino resorts this month, which includes publishing the criteria for the selection of zones for the resorts. That has now been postponed to February or after, as the government wants to devise rules around communications between casino operators and politicians or civil servants.

Following this criminal case, the Constitutional Democratic Party of Japan and other three major opposition parties introduced a bill to scrap laws on casino resorts to the Diet. Oppositions wants to rule out casinos. 

"The government is still willing to accept submissions as scheduled, so there isn't much impact," said Haruki Satomi, president and group chief operating officer of Sega Sammy, the only Japanese operator to exhibit at the Yokohama expo. The period for local authorities to make submissions about the appointment of operators remains unchanged at January to July 2021.

Sega Sammy operates a casino resort in South Korea via a joint venture with a local partner. Satomi said the company hopes to hold the majority vote if it enters a consortium with a foreign operator. "We don't want foreign operators to take all the fruits from Japan," he said. It announced on Wednesday several partnerships, including with Japan's renowned restaurant Kyoto Kitcho.

After the government finalizes its Basic Policy, local authorities can start evaluating candidates that have submitted proposals and invite bids. Osaka has already started the process. After the bid has been awarded, the local government can then submit a proposal together with its partner to Tokyo by July 2021. The central government will approve three licenses at most.

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