An agreement has been reached in Japan between the ruling Liberal Democratic Party (LDP) and allied Komeito party for a flat integrated resort casino (IR) tax rate and to limit the number of IRs in the country to three. The LDP had been pushing for as many as six IRs and Komeito had been insisting on no more than two or three.
Several media outlets are reporting that Komeito has softened its stance on taxes. The party, founded by Buddhists in 1964 is known for social conservatism, and recently wanted an escalating tax rate that would grow from 30% to as much as 50%. While the number of IR is in line with Komeito wishes, the tax rate was favored by the LDP.
According to an earlier report in the Japan Times, Komeito wanted any revenues between ￥300 billion (~US$2.83b) and ￥400 billion to be taxed at 40% and the portion from ￥400 billion to ￥500 billion should be hit with a 50% tax rate. By comparison, casino taxes in Las Vegas are about 20% while Macau revenues are taxed at 40%. The 30% rate is believed to be a level that would have the best chance of helping the casinos survive international competition while still providing the government with enough revenue to fund social programs and maintain anti-gambling addiction measures.
Last week it was announced that the coalition had agreed to limit how often local players could visit the casinos. The anti-addiction measure would reportedly allow Japanese citizens to visit the gaming establishments no more than 10 times in any 28 day period. Only 3 visits would be allowed during any 7 day period. It’s unclear if the current compromise sets out guidelines for entry fees which LDP members were seeking at?$47 charge per visit with Komeito requesting the threshold higher at $74 per visit.
As has been the case since positive progress began a couple of years ago, lawmakers in both houses are pressed for time to get the measure passed in the National Diet. Lawmakers have about two weeks to submit the bill for consideration.
Osaka, Tokyo, and Yokohama are seen by many industry observers to be the frontrunners due to their large populations, but the selection process is complicated and operators may not be able to dictate the location in the bidding process. Global operators such as MGM and Las Vegas Sands have said they were willing to invest as much as US$10 billion for the right to develop integrated resort properties.
According to a report in Asia Gaming Brief, the casino portion of any IR will be restricted to 3% of “total area” yet how total area will be determined seems to be flexible at this point.
Additional IRs could be added when the legislation comes up for review in seven years, a shortening of the trial period from 10 years as was initially proposed.