Japan casinos would get Vegas-style regulator under legalisation plan

TOKYO - Japan would establish an independent gaming regulator modelled on the authorities that police casinos in Las Vegas and Singapore under a draft plan to legalise gambling in a market seen as potentially the second-largest in the world.

The policy outline, which was prepared by Japanese lawmakers who favour casinos and reviewed by Reuters, outlines broad standards for licensing and regulating casino operators and their partners.

After more than a decade of lobbying by lawmakers, a bill to legalise casino gambling is seen as having a good chance of passing in the coming months with the business-friendly Liberal Democratic Party in power and after Tokyo - a likely casino host - won the bid to host the Summer Olympics in 2020.

MGM Resorts International, Las Vegas Sands Corp , Melco Crown Entertainment and Wynn Resorts Ltd are among the global operators that have shown interest in developing a casino resort in Japan.

Among the concerns lawmakers who favour legalising casinos believe need to be addressed is what measures will be taken to keep out organised crime, known in Japan as the "yakuza." To address those concerns, the draft plan calls for the creation of an agency that would have control over the issuing of licences and the policing of gaming operations.

"The hurdles to enter the business should be set high. It should not be easy for anyone to get a licence and participate in the industry," the policy plan says. "With proper regulation and enforcement of the law, there is absolutely no reason for casinos to become hotbeds of criminal activity."

Details of the draft plan have not previously been reported. The plan also recommends stringent checks on the"suitability" of the people and businesses involved of the kind conducted by the Nevada Gaming Control Board. For example, directors and senior executives of licensees in Japan would be required to provide bank account, credit card, and tax records for themselves and their families going back 10 years.

As a further safeguard, the agency charged with policing casinos would be attached to the Cabinet and not part of any ministry. That is intended to prevent corruption and the"amakudari" practice of ministry officials retiring to cushy posts in the industry they once regulated, the draft plan says.

A group of lawmakers, including many from the ruling Liberal Democratic Party of Prime Minister Shinzo Abe, plan to submit an initial bill to parliament by the end of this year. If it passes, possibly early next year, the government would have to come up with concrete regulations within two years to legalise some casino gambling.

That could mean the first casino resort would open in Japan by 2019, in time for the Olympics, lawmakers have said.

While the big global gaming operators have shown the most interest in the major urban hubs of Tokyo and Osaka, there are more than a dozen smaller cities and towns across Japan lobbying for the right to develop casino resorts.

According to the draft plan, a transparent bidding process should be established so that local governments would be on an equal footing with the big cities.

At the same time, the plan calls for a limit to be put on how many casinos would be allowed initially so that regulators can ensure that the new gambling resorts are being run properly.