If integrated casino resorts are legalized, the Japanese economy could follow a similar trajectory to Macau s and Singapore s.

　　As evidenced by Las Vegas Sands CEO Sheldon Adelson’s recent comments that he would spend “whatever it takes” to build a casino resort in Japan should the country legalize gaming, it’s clear there is a lot riding on an upcoming decision.

　　A group of Japanese lawmakers submitted an initial bill to parliament in December to legalize gaming, and sources expect it will be debated in May. After a lengthy regulatory process, what are termed “integrated resorts” could be legalized in Japan as early as 2016 and casinos could be operating in time for the Tokyo Olympics in 2020.

　　The legalization of gaming in Japan would create both positive and negative impacts on the Japanese hotel industry.

　　It would open the Japanese hotel industry to much of the world yet to experience it, creating demand from casino-goers, bringing an increase in international meetings and events, and boost business opportunities for global investors. It would also increase Japan’s tax revenue.

　　On the flipside, opponents to the legalization of gaming often predict it will attract gang activity, dependent gamblers and other antisocial activists. It also could create an oversupply of hotel rooms in Japan.

　　But the high rates of return on casino development will often attract investors, and the Japanese government is no different. The Japanese economy today is less powerful than in the past, and the government has been looking for an opportunity to generate additional revenue. China and South Asian countries are beginning to capitalize on leisure travelers with more discretionary income.

　　Currently, gambling in Japan is limited to certain games and establishments, such as horse racing; bicycle racing; and Pachinko, a pinball-style machine that pays out in prizes that must be traded in for cash at separate establishments.

　　However, casinos play an important part in the economies of several countries and cities surrounding Japan. It is an important part of Macau’s history, especially after 2002, when international businesses were first permitted to operate in Macau, and Wynn, Galaxy and MGM each claimed a large presence on China’s coast. In 2013, casino revenue in Macau generated $44 billion, the highest gambling revenue in the world, crushing Las Vegas’s $9.4 billion, according to a report from Credit Agricole Securities.

　　Macau’s hotel construction pipeline is extremely active, particularly along the Cotai Strip. Similar to Las Vegas, weekend business is remarkably well. Analyzing aggregated STR Global data over the past three years, occupancy levels were above 80% through the week. Weekday occupancy was reported as 82.1% with weekend occupancy at 88.6%. Average daily rate for mid-week was 1,093.40 Macau pataca ($136.78) and 1,153.4 Macau pataca ($144.28) on the weekends.

　　In Singapore, where two federal casinos operate in Sentosa and Marina Bay, aggregated weekday occupancy over the past three years was higher at 84.5% than weekend occupancy at 83.6%. Weekday ADR was 321.90 Singapore dollars ($254.56) and weekend was 323.60 Singapore dollars ($255.85).

　　STR Global is sister company of Hotel News Now.

　　There is a high probability that, if gaming is legalized, Japan would follow similar practices and follow along similar paths as Macau and Singapore.

　　Hotels are almost always built adjacent to casinos so players can stay overnight. These hotels should be built and operated as revenue generators rather than simply a place to give away rooms to players.

　　If they should open, the target audience for casino-resorts in Japan would be 90% Japanese residents who have never been to a casino. However, for that group, accompanying entertainment might be more important than the gambling itself because Japanese would use the resorts as getaway destinations for weekend travel.

　　Should the law pass, casino companies are expected to develop their own accompanying hotels and others will partner with proven hotel brands. We believe that international hoteliers will be more successful because of their experience.