The Japanese parliament approved a controversial bill legalising casinos back in December 2016. That has seen ‘integrated resorts’ companies including Melco, Wynn, Sands MGM and Galaxy Entertainment line up for a crack at what they see as a highly lucrative market. Analysts have valued it at around US$25 billion.
At a CLSA conference in Tokyo earlier this year, Melco chief executive Lawrence Ho called the opportunity “priceless” and vowed to do whatever is necessary to win the right to be present. Of course, while the level of investment offered is a key consideration, being selected is not as simple as throwing money at the regulators.
Casino operators are in talks with a number of PR firms to determine how to best position themselves in an environment where many still find the idea of gambling distasteful. The area is sensitive: a number of ordinarily vocal industry observers Campaign approached declined to provide commentary. One head of a public affairs consultancy in Tokyo said a number of casinos had approached his firm but that he had rejected them on the basis that he prefers to work with companies that make a more overtly positive contribution to society.
Kreab is one consultancy exploring possible work in the sector. Jonathan Kushner, Tokyo-based managing partner for Asia, says things have not yet progressed beyond the basic education stage. Integrated resorts are already trying to raise awareness of their individual brands through CEO visits and promotional forums. But they may be trying to run before they can walk.
“There has to be a public discussion, which hasn’t happened,” Kushner says. “The industry as a whole needs to get people comfortable with the concept. The first thing is to get people to understand what an integrated resort is, and its benefits to Japan.”
Those in favour of casinos argue that it will be a boon to tourism, and indeed integrated resorts do have a wholesome, ‘family friendly’ side that could in itself prove beneficial to Japan. But such a discussion also needs to address serious concerns, which include addiction and associations with crime and money laundering. At best, Kushner says, people associate gambling with “smoke-filled pachinko parlours”.
To move forward, he says it will be essential not only to gain public trust but also to win over members of the ruling coalition, made up of the LDP and the Komeito, many of whom are still uncomfortable with a number of aspects of integrated resorts. Only then can the jockeying for position between brands begin in earnest.
Aston Bridgman, co-CEO of Finsbury, a specialist in crisis management that recently launched in Japan, notes that there is almost always some resistance to “outsiders”—new companies or industries looking to establish themselves in the market. But he reckons they can mitigate this by demonstrating good management and transparency in their operations elsewhere. They will also need to show evidence of a “sense of community” and social responsibility, he says.
“The public as a whole will be looking to see if they are going to become good neighbours or not,” he explains. “They need to focus on building credibility before getting into what benefits casinos can bring to Japan … they have to prove they will accommodate to how Japanese society works. Only then can they start to advocate for themselves and their benefits.”
They will need to not only share success stories, but also “be frank about where they’ve learned lessons”, Bridgman says. Some overseas cases will give fuel to the sceptics. ‘Problem gambling’ undeniably exists in Macau (where China has imposed strict controls to regulate the inflow of gamblers from the mainland), Singapore and South Korea.
In South Korea in particular, allowing locals to gamble even at just one premises—a casino in Sabuk—has proved problematic. A report by Bloomberg in January painted a picture of a town where leagues of addicted gamblers are marooned, unable to return home after having lost everything.
However things eventually turn out, casino operators will need to have patience and show a commitment to dialogue. “The process won’t simply be about bidding” for the right to build an integrated resort, Bridgman says. “The debate is going to go on many years after the decision is made. They are going to be in the public eye.”
Any resistance to the established system is also inadvisable. “If they don’t show willingness to engage, regulators are going to get curious and start digging into things. A good governance model should mean no additional burden, but if they’re not willing to listen, they’re going to find themselves the target of a lot of difficult attention that will consume resources and goodwill.”