Picking Apart Japans Casino Regulations

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IAG takes a closer look at the details contained within draft casino regulations published in April by the Japan Casino Regulatory Commission.

The Japan Casino Regulatory Commission published on 2 April 2021 its draft regulations governing the nations casino industry.

Available for public comment until 9 May, the draft regulations are separated into the following four categories:

  1. Basic casino operation items
  2. Items related to operational activities
  3. Items related to Stratified/multi-stage Duty of Loyalty and Measures to Prevent Internal Collusion
  4. Items related to casino equipment

IAG takes a closer look at some of the key takeaways from the draft regulations:

COMPETENCE INVESTIGATION (SOCIAL CREDIBILITY)

One of the standards for a casino license in Japans IR Development Act stipulates social credibility regarding operators (including executives) and major shareholders. Specifically, any applicant operator, major shareholder, holder of land or facility rights, or person of influence will be disqualified if any relation to organized crime becomes apparent.

Social credibility is defined here as, Whether or not there is risk of unlawfulness or dishonesty related to casino operations, for example in terms of legal compliance, activities in social life, economic status, or social or economic relationships with others.

The Japan Casino Regulatory Commission will conduct background checks to determine the social credibility status of all key personnel.

In addition, companies and executives subject to investigation must provide their own personal information, including any history of gang membership, relationships with gangs, history of criminal punishment, history of administrative disposition, current financial status and more, as well as any information required regarding others they maintain a social or economic relationship with. These include certain relatives or related companies. The regulations are extremely strict, requiring even normal employees to submit personal information.

TYPES OF CASINO GAMES

Nine games and 21 variants of casino games will be allowed, including table games and electronic gaming machines.

The nine games are listed as baccarat (2 types), blackjack (4 types), poker (8 types), roulette, Sic Bo, craps, Casino War, money wheel and pai gow, plus slot machines. Games familiar in Japan such as mahjong, pachinko and pachislot are not included.

What stands out here is that the RTP on electronic gaming machines must be at least 90% and not reach 100%. This is similar to Nevada but higher than other jurisdictions within the Asia-Pacific region such as Macau and Australia, where RTP ranges from 85% to 90%.

STANDARDS FOR CASINO FACILITY STRUCTURE

The casino area of Japans IRs is required to be no more than 3% of the total IR facility floor space, however the draft regulations clarify that cashier/cage areas, toilets, corridors and staircases, smoking rooms and other parts not used for actual casino activities are excluded from these calculations. Depending on the layout, it may be possible to earmark a rather large space for overall casino area.

One important point is the obligation to install clocks (defined as a device that displays the correct time) in plain sight within the casino area, which is consistent with gambling addiction countermeasures. Incidentally, this sort of regulation doesnt exist for pachinko halls in Japan and there are no pachinko halls with clocks.

Gaming floor lighting must be at least 150 lux (about the same brightness of street lights). Comparing this to pachinko halls, according to Japans Entertainment Law the lighting must be at least 10 lux (about the same as a movie theater prior to the feature film), but the average brightness of pachinko halls is 1,000 lux, which means there will be a lot of room for creating mood in the casinos through lighting.

ENTRY REGULATIONS

Entry for Japanese citizens and foreign citizens living in Japan will require presentation of a My Number Card, while foreign visitors will be required to present a passport. This will allow casinos to identify those who are barred from entry. Regarding surveillance via patrol and surveillance cameras, the regulations stipulate operators must make efforts to install the latest technology, suggesting facial-recognition systems will be commonplace.

SPECIFIC FINANCIAL DUTIES

Financial services such as transfer of funds, providing change and loaning money are to be provided to customers in the casino. These are considered to be specific financial duties and strict regulations will be in place in order to facilitate appropriate operations.

Loans will be mostly limited to foreign citizens not living in Japan as a means to prevent addiction. Loans for Japanese citizens and foreign residents will be restricted to those who have a balance of at least JPY10 million (US$93,000) in their casino account. Regarding collection of loans, there is strong wording such as, [Collections] between the hours of 9pm to 8am are inappropriate, which is copied from the Money Lending Business Act.

ANTI-ADDICTION MEASURES

A lot of detail is being put into anti-addiction measures. There are advertising regulations as well as comp regulations. Comps here refer to discounted or free services such as rooms and meals depending on the amount gambled at the casino. This is not specifically described in the regulations draft, but it does say, Nothing that could potentially arouse the passion for gambling may be included.

Electronic gaming machines must keep at least three second intervals between spins and auto-play is forbidden (pachislot spin intervals are 4.1 seconds and auto-play is also forbidden). ATMs will not be allowed to be installed within the casino facility.

Usage restrictions may be requested by individuals themselves, or their family members. The operators will be required to cooperate in policies required to prevent problem gambling as enacted by the national and local governments.

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There are various provisions stipulated in addition to those included in the Act on Prevention of Transfer of Criminal Proceeds. Operators must prevent the transfer of chips and must also make it known to customers that chips cannot be taken out of the casino. It is not yet known how this would be enforced. One of the strictest regulations requires all transactions exceeding JPY1 million (US$9,300) to be reported, and in that case both the operator and the customer will have to fill out and submit a form with the customers name, nationality and address.

CASINO EQUIPMENT

These are regulations pertaining to engineering standards and testing of devices used in casinos.

Electronic gaming machines must be equipped with a door access detection system, have display functions in multiple languages including both Japanese and English, and may not allow input of more than JPY300,000 (US$2,800) at a time. Model approvals will be valid for 10 years.

There is still a possibility that the above items may be altered based on public comments.