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And the next driver for Japan stocks is…

Casino Venus, a mock casino operated by Japan Casino School and Bright Inc. to provide the gambling experience, Japan, Dec. 3, 2013.
Tomohiro Ohsumi | Bloomberg| Getty Images
Casino Venus, a mock casino operated by Japan Casino School and Bright Inc. to provide the gambling experience, Japan, Dec. 3, 2013.

Japanese stocks, already up nearly 51 percent so far this year, may get another leg higher after the country's lawmakers last week submitted a long-awaited bill to legalize casinos.

The bill is considered likely to succeed as it has backing from Prime Minister Shinzo Abe, with lawmakers hoping to ensure the first casinos are ready for business in time for the 2020 Tokyo Olympics. The bill is expected to be passed in the first half of next year, press reports say.

"Any local politician who votes against it can go and get his coat because he's probably out of a job," Nicholas Smith, a Japan strategist at CLSA, told CNBC. He advised buying Japan's casino plays.

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Others also expect the bill to be positively received.

"Generally speaking, Japanese people like gambling," Hideki Makihara, a member of Japan's House of Representatives, told CNBC, noting gambling on horse and boat races is already legalized. Pachinko, a pinball-style slot machine is also very popular in Japan, with a 2012 Trilogy Capital report saying the fragmented industry generates an estimated $243 billion in gross revenue each year.

In addition, "the Tokyo Olympics is decided in 2020, so we expect many tourists will be coming to Japan and we see gambling will be a huge possibility to earn a lot of money," he said. In a report earlier this year, CLSA estimated two large-scale gambling resorts in Japan could produce revenue of around $10 billion, topping the $6.2 billion from Las Vegas and $5.9 billion from Singapore in 2012, but still below the $38 billion Macau raked in.

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Makihara expects Japan's casino business will mirror the "Singapore model," which includes the casino as part of other attractions.

"We call (it the) integrated resort model, so not only gambling but also huge convention hall and the hotels and like a Disneyland type of playground," he added.

Some expect a broad-based economic and stock market boost from the measure after it's passed.

"It's difficult to imagine that Japan with an opportunity, once they pass the bill, of spending with free capital not to produce something spectacular," said Ben Collett, head of Asian equities at Sunrise Brokers. "It looks like the tide of conservative fiscal habits has turned. The chance of a phenomenal resort is high."

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He expects steel names could see a boost as "they have to build the casino out of something." He noted many steel stocks, such as Nippon Steel and JFE Holdings, haven't risen as much as the broader market in the recent rally.

Players involved in construction, including some cement and glass names, such as Asahi Glass, may see a boost as well, he said.

The obvious direct providers to the gaming industry, such as gaming machine makers Japan Cash Machine and Sega Sammy and slot-machine maker Konami, could benefit, Collett said. "It's reasonable to assume they'll see increased revenues. They're the first ones in line."

Among other companies getting a boost, Collett cites advertising player Dentsu; "new businesses will have to spend a lot," in the segment, he said.

He also expects security provider Secom will see increased interest.

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"It's kind of the same basket as the Olympics," he said. "One would assume security is going to be a big factor. Like advertising, you would see an uptick in associated businesses."

But he called Tokyo Dome a sell; "if they're going to build a convention center, Tokyo Dome is going to suffer." He expects the older facilities will lose out on business, especially against a newer competitor with a casino.

By CNBC's Leslie Shaffer. Follow her on Twitter: @LeslieShaffer1