Japan set to indefinitely postpone casino legalization

Japanese Prime Minister Shinzo Abe
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Japanese Prime Minister Shinzo Abe

Japanese lawmakers are set to indefinitely postpone legalizing casinos as Prime Minister Shinzo Abe, whose cabinet has been hit by a series of scandals, lacks the political leverage to pass a bill this year, sources directly involved in the process said.

The latest in a string of delays for the controversial bill will be a blow for Abe, who has promoted casino resorts as part of his economic growth program, and for casino developers from Las Vegas to Macau. It also dashes hopes for any casino resort to be built in time for the 2020 Olympics in Tokyo.

Gaming companies such as Las Vegas Sands, Caesars Entertainment and MGM Resorts International have been hoping Abe would unlock an "integrated resort" market that brokerage CLSA estimated could generate annual revenue of $40 billion.

Pro-casino lawmakers intend to push back a vote on the bill instead of trying to pass it in the current parliamentary session ending this month, three people directly involved in pushing the casino bill told Reuters on Tuesday.

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Although they aim to keep the bill on the table, the sources said there was a considerable chance it would not come up for discussion even in 2015.

Higher-priority bills, including those related to national defense, are likely to take up debate time in the next parliament session, they said.

"If they can't pass it now, I doubt whether they'll ever be able to pass it," one of the sources said.

The bill was already in a tight race for time to pass by the Nov 30 end of the current session. It faced opposition from some members of Komeito, Abe's junior coalition party, and from some quarters of his own Liberal Democratic Party, who are concerned about the impact of gambling addictions.

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Anti-casino lawmakers recently stepped up their campaign, drawing the public's attention to Japan's already high rates of gambling addiction, mostly related to pinball-style "pachinko" games played throughout the country.

The biggest setback for the pro-casino camp, however, came last month when two cabinet ministers quit over funding-related misdeeds, putting Abe on the defensive.

"It's not just about the extra time required due to the two resignations ... it's no longer a question about casinos and addiction," one of the sources said, adding "the leadership" lacked political support.

Until a few weeks ago, most analysts still expected the casino bill to be adopted in November, allowing leaders to pass a second bill outlining regulations in 2015.

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One Japanese casino industry source said there was a chance legislation could be delayed by three or four years, meaning actual casino development may have to wait until around 2024.

Toru Mihara, who teaches at the Osaka University of Commerce and was one of the architects of the casino bill, said failure to pass the bill in this session would be a "total loss of face" for Abe's cabinet. He also said the bill will be difficult to pass next year, as newer topics come up in parliament.

"There will be a loss of momentum," Mihara told Reuters.