Japan: Will certification delays bring additional bids into play?
Expert Insight published in G3 Magazine, October 2020 and provided by Koh Ueda and Shuhei Mikiya at Greenberg Traurig's Tokyo Law Offices

Overview of Japan’s casino regulation
Under the Act on Development of Specified Integrated Resort Districts (‘Act”’), the process of obtaining the licence for the development and operation of IRs (including casinos) mainly involves:

(i) The adoption by Minister of Land, Infrastructure, Transport and Tourism (‘MLIT’) of national-level policies (‘Basic Policies’) which are applicable to all the prospective IR projects, and determine the details of IR/casino regulation;

(ii) The adoption by each local government having interest in the IR project of its own policies (‘Implementation Policies’) based on the Basic Policies, which are applicable only to the IR project contemplated by such local government;

(iii) The interested local governments’ request for proposal (‘RFP’), where the interested local governments will select and form a consortium with a private operator to apply for the MLIT’s certification;

(iv) The MLIT’s certification of up to three consortiums; and

(v) The application for a casino licence by the selected private operators of the three consortiums.

Expected plan of Japanese ‘first casino’
When the public comment period for the Basic Policies ended in October 2019, it was initially expected that the Basic Policies would be adopted in early 2020. However, following a bribery scandal related to IRs in December 2019, the Basic Policies were assumably re-scheduled to be adopted by July 2020. Despite the re-scheduling, the Basic Policies have not yet been finalised or adopted partially because of the outbreak of Covid-19.

Impact of Covid-19 on policy
The outbreak of Covid-19 in Japan started at around the end of March or the beginning of April, and since then all international travel has been restricted. Because most of expected applicants of RFPs are foreign operators and they are unable to fully commit to RFP due to the travel restriction, the RFPs in Osaka and Wakayama local governments which have already adopted Implementation Policies and started RFPs based on draft Basic Policies, had to be postponed. On July 20, 2020, it was reported that the Japanese government postponed its adoption of the Basic Policies and the schedule is now in the air. Because the Basic Policies remain in draft form, some interested local governments have taken measures, such as postponement of the adoption of Implementation Policies (in the case of Yokohama) and postponement of the commencement of RFP (in the case of Nagasaki).

Future of Japanese casinos
Since only three private operators will be certified to operate casino in the first wave of IR openings, at least one of the interested local governments will inevitably miss the chance among the current four interested local governments: Osaka, Wakayama, Yokohama, and Nagasaki. If the application period for MLIT’s certification is postponed, other local governments might join the IR race in the first wave of IR openings. If Tokyo, being the capital of Japan, or Hokkaido, being one of the most famous tourist destinations in Japan and at one point interested in the first wave of IR openings, join the race, the competition will be completely unpredictable.

IRs were expected to provide enormous economic synergy with the Tokyo Olympic Games initially scheduled for 2020 and Osaka EXPO in 2025. However, if the whole process is delayed due to the postponement of the application period for MLIT’s certification, the first casino operation may not start until a while after these events, and the synergistic effects might not be as great as expected.