IN EARLY JANUARY, when Japan’s lower house of parliament reconvenes, a group of more than 150 MPs on both sides of the aisle will file a motion to introduce a bill that could dramatically reshape the casino industry in Asia. Getting what is essentially a private member’s bill through Japan’s bicameral Diet can be an arduous task, and with the support of at least 241 MPs needed to get any legislation through the lower house, the MPs are still way short of a majority.

 

Still, if you speak to casino industry watchers in Asia these days, they will tell you that clearly the momentum is now in favour of a Japanese casino. Although Japan has debated the pros and cons of a casino for decades, 2012 is likely the year when it takes the leap of translating the idea into a concrete plan.

 

Although casinos are officially banned, Japan is already a huge gaming market. Walk around any part of urban Japan and you would inevitably pass pachinko gaming parlours operated by ethnic Koreans. And Japanese history books claim that it was a Japanese ruler, not a Chinese emperor, who invented the game of keno to fund his government without raising taxes. Japan’s problem is that it has a huge and growing public debt — estimated at US$13.5 trillion ($17.5 trillion) in the next fiscal year — and needs up to US$250 billion more to pay for the rising cost of rebuilding the tsunamiand nuclear disaster-stricken northeast region of the country.

 

Politicians wary of raising taxes for their already-weighed-down voters have been warming to out-of-the-box solutions such as the licensing of mega casinos. Ryosaku Sawa, an economics professor at Osaka University of Commerce, estimates that within three years of being legalised, the Japanese casino industry could be chalking up US$44.5 billion in revenues annually, or about seven times what Singapore’s two casinos will rake in this year, which is almost on a par with what the global gaming mecca, Macau, will be taking in next year.

 

Across the waters, in South Korea, where there are dozens of small foreigners- only casinos, mainly inside large hotels with annual revenues of US$2.7 billion, the government is closely watching Tokyo’s moves. If Japan throws its gates open to legalised casino gaming, it is unlikely that Seoul will drag its feet. The last thing South Korea wants is for its citizens to hop across on short-haul flights to Japan to roll the dice.

 

One “black-swan” event that would trigger the fast-paced opening of the South Korean casino market — ahead of even Japan — is the collapse of the North Korean regime. Last week, the hermit kingdom’s “Dear Leader” Kim Jong Il died of a heart attack and was replaced by his 28-year-old son “General” Kim Jong Un. Korean reunification would be an incredibly costly exercise and one of the many ways to pay for that is a highly deregulated gaming market, which would help boost government revenues.

 

Elsewhere in Asia, Taiwan and Thailand are seen as the next big opportunities for large casino resorts that draw in tourists and also tap a captive pool of local punters. Asia is already the epicentre of the global gaming boom. Casino revenues in Asia are forecast to grow 37% this year and a recent report from PricewaterhouseCoopers (PwC) estimates that Asian casino spending is likely to surge from US$34.3 billion in 2010 to US$79.3 billion in 2015, accounting for 43.4% of total global casino revenues, from 29.2% last year. Yet, after several years of heady growth, gaming in Asia is slowing to more sustainable rates. Standard & Poor’s says growth rates in the Asia-Pacific gaming industry are likely to moderate in 2012 to between 15% and 20%.

 

Asia’s gaming industry has dramatically transformed since the Big Bang deregulation in Macau ended the decadesold monopoly of billionaire Stanley Ho in 2004, allowing for the entry of global gaming players such as Las Vegas Sands, MGM Resorts International, Wynn Resorts and Australia’s Packerfamily- run gaming giant Crown Ltd. Since then, gross gaming revenues in Macau have grown tenfold and are likely to touch US$34 billion this year. As the only place in the Greater China region where gambling is legal, Macau has morphed into China’s playground, catering to tens of millions of affluent Chinese not just from the immediate catchment area of southern China but, with the advent of a high-speed railway network in the country, as far as Beijing and beyond.