Japan's gambling sector has long been a complex puzzle. Following the introduction of the Integrated Resort Implementation Law in 2018, international casino operators viewed Japan as a prime opportunity. However, as progress stagnated, many potential bidders pulled back, leaving MGM Osaka as the only new player with plans to open by 2030.
With the government set to issue two additional Integrated Resort licenses in 2027, interest has rekindled among ambitious bidders. Nevertheless, Japan has conveyed mixed signals regarding its casino industry.
Despite liberalizing gambling with an eye toward the economic gains associated with casinos, the nation’s regulatory environment and pervasive social attitudes remain less than supportive of gambling. The regulations impose significant restrictions: casino floor space is limited to 3% of the total area for integrated resorts, Japanese citizens may visit casinos only three times a week and no more than ten times in a 28-day span, and a ¥6,000 entry fee accompanies each visit. These measures underscore the government's aim to limit excessive gambling even as it embraces the casino model.
Japan's journey toward legalizing integrated resorts has been anything but smooth. After intense debates, the IR Promotion Act was passed in December 2016, followed by the IR Implementation Act nearly two years later, which delineated regulations covering entry restrictions and addiction-related measures. Although the government marketed IRs as vehicles for tourism and regional economic growth, significant opposition persisted.
Among the critics was Kenji Eda, a prominent member of the House of Representatives from Yokohama and a key figure in the opposition Constitutional Democratic Party. Eda has voiced concerns about the risks of gambling addiction, the economic fallout for local businesses, and whether the casino-driven model would indeed deliver its promised benefits.
Interest from international operators in Japan’s coveted IR licenses waned, as companies like Wynn Resorts, Las Vegas Sands, Genting Singapore, and Caesars Entertainment were deterred by the tough regulatory landscape, substantial investment costs, and uncertain returns. The late Sheldon Adelson, former chairman and CEO of LVS, once referred to the Japanese market as a "holy grail" and the "ultimate business opportunity," yet LVS eventually withdrew from its ambitious $10 billion project.
Japan has taken cues from Singapore’s integrated resort development model, which balances ambitious economic goals with stringent regulations. Andrew Klebanow, principal of Klebanow Consulting, asserts that Japan’s regulations have strayed too far into crafting red tape. "As the RFP process unfolded, regulators implemented more policies, leading developers to lower their revenue forecasts until the projections became too grim to justify the capital investment," Klebanow noted.
The country’s approach aims to extract economic advantages from casino gaming while keeping the social impact contained, paralleling the strategies used in Singapore and Macau. Singapore also operates within a controlled casino model, integrating casinos into large resort complexes and employing stringent entry controls along with social safeguards. Attractions like Marina Bay Sands and Resorts World Sentosa have successfully combined casino gaming with luxury retail, hotels, and diverse entertainment options.
Genting Singapore’s Resorts World Sentosa, for example, includes a range of non-gaming attractions, such as Universal Studios Singapore, designed to cater to families, tourists, and business travellers. A spokesperson explained that different businesses are designed to work together, enhancing the destination’s appeal and encouraging longer visits.
Since the opening of its IRs, Singapore's international tourist arrivals have skyrocketed from 9.7 million in 2009 to a projected 16.9 million in 2025, with tourism revenue doubling from S$12.4 billion to a record S$32.8 billion. Notably, rates of problem gambling among Singaporean adults have remained stable, even declining significantly between 2023 and 2025. The model demonstrates that tourism growth can coexist with robust social safeguards, combining the goals of tourism and responsible gambling within the framework.
The operator emphasizes that the success of an IR depends on offering a diverse range of attractions and experiences beyond gaming. The ongoing S$6.8 billion transformation of Resorts World Sentosa aims to expand hospitality, retail, and lifestyle options, further broadening appeal and encouraging repeat visitation.
Genting Singapore believes that Japan should create a framework tailored to its unique context instead of simply replicating existing models. According to their spokesperson, every integrated resort market differs, necessitating policies that maximize economic benefits while minimizing social costs.
Macau’s gambling landscape also presents a wealth of lessons. In 2019, Macau generated MOP293.3 billion ($36.3 billion) in gross gaming revenue, making up 65.8% of its GDP. By 2025, GGR fell to approximately $30.9 billion but still represented around 59% of the GDP. However, Macau's integrated resorts extend beyond the casino floor, incorporating luxury accommodations, gourmet dining, shopping, concerts, conventions, and other forms of entertainment that create an immersive experience for visitors.
For Japan, the challenge lies in whether it can create casino resorts that offer a more culturally appealing experience, providing visitors with ample reasons to visit beyond gambling. Klebanow urges that the lesson Japan should learn extends beyond recognizing the importance of non-gaming attractions. Policymakers must also establish clear regulations while allowing operators enough flexibility to develop projects that cater to both local and tourist markets.
He cites successful examples like Macau's Cotai Strip and Singapore's resort offerings as proof that regulatory discipline can coexist with substantial developer freedom. The essence of Japan's policies, he argues, should be pragmatic, enabling successful developments without imposing constraints that lead to failure.
As for which operator might succeed in securing Japan’s next IR license, it hinges on the perceived attainability of regulatory requirements. "If the regulations are overly burdensome, most developers may hesitate to invest upwards of $10 billion in an integrated resort," Klebanow cautions. One notable exception could be the Seminole Tribe of Florida, which has plans for a Hard Rock Resort Casino in Tomakomai, Hokkaido. Their expansion of the Hard Rock Casino brand includes ongoing projects in Las Vegas, New York City, Greece, Puerto Rico, and Jamaica, and they appear to have garnered local government support.
Japan’s fragmented regulatory approach to gambling has raised concerns about the growth of its IR sector, and Suzanne Perilloux Leckert, co-founding partner of Convergence Strategy Group, echoes this sentiment.
"Japan is moving cautiously, learning from mistakes made elsewhere and proceeding in a manner that suits their context," Leckert explains.
The uncertainty surrounding regulations is a factor that has led some operators to withdraw from the licensing competition. Investors looking at Japan opted for either a large IR license or nothing, and with cities like Tokyo and Yokohama off the table, interest diminished.
"Concerns about the brief license duration and renewal processes pose additional hurdles for operators," Leckert adds. Under current regulations, casino business licenses are renewable every three years, while IR development-plan authorizations last for only a decade, in contrast to the Philippines, which permits an 18-year IR license term.
This limited duration raises questions about the viability of substantial capital investments. Klebanow notes that additional regulations, such as limiting residents to ten visits per month and requiring a 'My Number Card' for gambling, have further chipped away at project viability. Ultimately, many developers opted to walk away from potential multi-billion-dollar investments due to perceived risks.
In Japan, online sports betting is largely illegal, save for four regulated sports—horse racing, bicycle racing, motorboat racing, and motorcycle racing. However, the government does permit controlled betting through the official toto system, covering soccer and basketball.
Broadly speaking, online gambling remains prohibited, and government initiatives have indicated a trend toward diminishing the activity, including proposals to block websites associated with illegal gambling.
Conversely, Japan's cultural love for pachinko presents an intriguing contrast. With around 8,000 parlors filled with metallic ball machines reminiscent of slot machines, pachinko allows players to win balls that can be exchanged for non-cash prizes, which can then be converted into cash at nearby outlets.
"Pachinko is ingrained in Japanese culture," Leckert states, emphasizing the appeal of easy access to these parlours. The size of the pachinko industry, valued at approximately $130 billion in 2020, illustrates Japan's complex relationship with gambling—it represented around 2.5% of the nation's GDP and plays a significant role in the country’s leisure economy.
Lessons can be gleaned about entertainment and engaging local audiences from Japan’s longstanding pachinko tradition. Leckert suggests that casinos may fare better with a focus on slot machines, given the cultural enjoyment of such gaming experiences. However, Klebanow points out that pachinko's appeal has mainly been limited to a younger male demographic.
Despite its scale, pachinko parlors often do not attract the critical demographic of women aged 40 and over, who represent nearly 60% of gaming customers in the US. Klebanow argues for creating environments within integrated resorts that prioritize comfort and safety for this demographic. The essential takeaway from pachinko should be to avoid replicating those gaming environments.
Leckert remains optimistic about Japan’s prospects for integrated resorts, suggesting that stringent regulations can co-exist with a robust industry. "What has worked successfully elsewhere can be adapted for Japan," she argues.
The government's upcoming regulatory framework will be vital in enticing the world’s leading casino developers back to Japan, according to Klebanow. If the regulations strike a better balance to promote economic development, the best casino operators are likely to submit proposals. Klebanow believes the government must provide enough flexibility for developers to manage the risks associated with substantial financial commitments.
Yet, the commercial potential of Japan's emerging integrated resort market faces challenges, particularly in light of strict limits on gaming capacity. With only five casinos anticipated, the number of gaming machines and tables could be relatively modest when considering Japan’s population. Hence, it is reasonable to suggest that gaming opportunities will remain socially and physically contained. The more pressing concern is whether these constraints will provide operators with enough capacity to deliver adequate returns to justify their investments.
