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Pressured by its struggling finances, Yokohama goes all in on casino bid

  • September 6, 2019
  • , The Japan Times
  • English Press

On a recent afternoon, Yamashita Park in Yokohama’s waterfront was teeming with visitors — from lovey-dovey young couples to picnicking families and foreign tourists taking selfies in front of the ocean liner Hikawamaru, a museum ship permanently moored at the park.


A short distance away, the city was also hosting the Tokyo International Conference on African Development, inviting a legion of foreign leaders as well as representatives of international organizations, civil society and the private sector.


Overshadowing this veneer of prosperity, however, are a population crisis and precarious fiscal health that figures show will start chipping away at Yokohama’s growth in the not-so-distant future.


It is this bleak prospect that propelled Mayor Fumiko Hayashi to announce last month that her city will throw its hat into the ring in a race to host a so-called integrated resort featuring casinos.


“You might think of Yokohama as this big, rosy city known for hosting a wide variety of events, but every year we find ourselves saddled with deficits of about ¥50 billion when compiling our budgets. That’s the reality,” Hayashi told a packed news conference.


“It is a strong sense of crisis over the future of Yokohama that made me decide we need to move toward hosting an IR.”

Hayashi’s decision has since earned her both praise and criticism.


Her backers are pinning their hopes on the casino resort’s potential to turn Yokohama into a hub for tourists amid its diminishing status as a center of foreign trade and manufacturing.


But for all their efforts to cast integrated resorts in a positive light, many residents still balk at the prospect of having a casino in their neighborhood, voicing concerns over gambling addiction and increased crime.


With the mayor’s announcement, Yokohama has now joined the ranks of other local governments that have already declared their bids to lure casinos, including the city and prefecture of Osaka, Wakayama Prefecture and Nagasaki Prefecture. Up to three such resorts — which incorporate hotels as well as conference and shopping facilities — will be allowed to open across the nation under a law enacted last year to introduce casinos in Japan.


The candidacy of Japan’s second-biggest city was quick to ignite the interest of U.S. casino operator Las Vegas Sands Corp., which said in a statement released soon after Hayashi’s announcement that it will no longer pursue an Osaka casino but set its sights on Tokyo and Yokohama. Chairman and CEO Sheldon Adelson said his firm will “target new development opportunities that allow us to maintain our industry-leading returns on invested capital.


“We think an investment in Tokyo or Yokohama gives us the best opportunity to do exactly that.”


Dismal future


Uniting casino advocates in Yokohama is their shared dismay over its future. According to the city’s statistics, its population is forecast to peak this year and keep shrinking in the decades ahead. In 2065, the working population is predicted to become two-thirds of what it is today, boding ill for Yokohama’s future tax revenue.


The city’s rapid urbanization over the years, meanwhile, is now taking its toll. Much of its infrastructure, including roads, bridges and pipes, are growing dilapidated and in need of renovations — a factor that threatens to further strain the city’s coffers.


Although synonymous with landmark spots such as Yokohama Chinatown and the Red Brick Warehouse, Yokohama, in fact, has been an underachiever when it comes to tourism. Official data shows that the number of tourists to the city has plateaued over the past five years, hovering around the 35 million mark after years of gradual growth.


During the news conference, Hayashi particularly lamented the fact many settle for taking a casual, single-day trip to Yokohama, rather than stay overnight for an extra day or longer.


According to the city, an overwhelming 87.3 percent of tourists to Yokohama returned home within a day in 2017, compared with 53 percent of visitors to Tokyo who did so. This tendency toward a brief stay in Yokohama — which naturally leads to reduced spending — is said to stem largely from the absence of nightlife, with many restaurants in Chinatown, for example, closing at 8 p.m.


As a result, Yokohama attracted just 730,000 hotel guests from overseas in 2017 — less than 1 percent of the nationwide total of 80 million — significantly lagging behind other mega-cities, including Tokyo and Osaka, which received 20 million and 12 million, respectively.


“Call me sentimental, but let me remind you that Yokohama became one of the first to open its port to the world in 1859 and invited civilization from abroad. That’s our history,” Hayashi told the news conference.


“But look what’s happening now: Most foreign tourists’ go-to destination is either Tokyo or Osaka. Or maybe they go to places like Hokkaido or Akita, where there is something uniquely attractive. Does Yokohama have something like this? I’m not sure,” she said. “That’s why we need the IR.”


Her government estimates the IR would generate economic effects worth up to ¥1 trillion in its first year, and lead to additional tax revenue of up to ¥120 billion a year.

Masaya Fukuda, head of public relations at the Yokohama Chamber of Commerce and Industry, said he shares the mayor’s concerns.


Although Yokohama thrived as the center of production during the heyday of Japan’s postwar rise to becoming an economic superpower, many firms have since moved their factories overseas, following the development of China and South Korea as manufacturing bases, or made forays into regions with cheaper labor such as Kyushu, Fukuda said.


Yokohama’s hosting of various international conferences, such as TICAD, doesn’t necessarily buoy its economy. Spending might even slow as some tourists give the surrounding area a wide berth due to tight security, he said.


“There are new hotels being built at the moment because Yokohama will host some games in the 2020 Tokyo Olympics and Paralympics,” Fukuda said. “But once the event is over, what will we be left with? Nothing. We really need to have an IR as a post-Olympics goal.”


Unconvinced locals


But the prospect of a casino in Yokohama has its share of critics, too.


One of their biggest concerns is an increase in gambling addiction — already an issue in Japan, where pachinko gaming is hugely popular. Its market size amounted to ¥19 trillion in 2017, according to the 2018 edition of the White Paper on Leisure.


Tales of pachinko addicts who wind up neck-deep in debt, or play the game for hours on end while their children, left in locked cars, dehydrate amid the scorching heat of summer, are common in Japan.


Under the law enacted last year, the government put in place what it touted as the world’s strictest regulations to curb addiction, limiting visits to casinos to a maximum of three times a week and 10 a month. Customers who are residents of Japan will be required to present their My Number identification cards upon entry, too. There will also be an admission fee of ¥6,000.


But in a statement released last year, the Japan Federation of Bar Associations questioned the government’s assertion that the nation’s anti-gambling addiction measures are the most stringent, noting that in Singapore — which Japan seeks to emulate — visits are restricted to just eight times a month and incur a fee closer to ¥8,000.


Trepidation runs deep among Yokohama residents, too.


A questionnaire conducted by the city on 350 residents in June found two of their most overriding impressions of a casino are “crimes will increase” and “addiction will deepen,” followed by the third most popular answer, “tourism will flourish.”


“Having a casino is uncharted territory for us. We don’t know what’s going to happen,” said Masako Yokouchi, a 45-year-old company employee in Yokohama. “The casino will attract a whole bunch of people, including those from overseas, and I’m just worried it might have a bad impact on the safety of our neighborhood,” she said.


Another resident, 46-year-old Hideo Takahashi, confessed to mixed feelings.


“On the bright side, I hope the casino will serve as a tourist attraction, because Yokohama, with its struggling fiscal situation, doesn’t really have anything we can be hopeful about in the future,” Takahashi said.


“But I’m worried about gambling addiction. I’m not a gambler myself, but I know some people who get really addicted to pachinko to the point of no return. I don’t want Yokohama to be associated with something like that.”


Unhealthy economy?


The Yokohama Harbour Transportation Association, which is headquartered on Yamashita Pier — a 47-hectare area presented by Hayashi as a potential site for the casino resort — is one of the most vociferous opponents of Yokohama’s casino bid.


Having long occupied the pier, the association insists it will refuse to relinquish its control of the area to foreign casino operators, accusing them of trying to usurp what Yukio Fujiki, head of the group, has called its “sanctuary.”


Hiroyuki Minakami, the group’s public relations official, agrees.


“This whole casino business is tantamount to colonization,” Minakami told a news conference the association held in response to Hayashi’s announcement.


“What will happen is foreign enterprises will drive us away and invest in the area in our place so they can take away 70 percent of profits made from the casino business,” he said, in apparent criticism of a provision in the casino law that states operators are required to contribute only 30 percent of their profits to central and municipal coffers.


The association calls for an alternative way of redeveloping Yamashita Pier that would not feature casinos, such as by using the reclaimed area as a venue for international exhibitions, Disney cruises and Formula One racing.


It projects that international exhibitions alone will rack up ¥80 billion in tax revenues and that the other facilities proposed by the group will easily produce profits big enough to match the city’s estimate.


“Yamashita Pier is a wonderful place,” Minakami said. “We’re confident we can develop it without resorting to a casino.”


The group, meanwhile, blasts an economy driven by a casino resort as “morbid,” citing the likelihood that the success of such a business will be premised on the exploitation of gambling addicts.


“Yokohama insisted that such a resort will raise our tax revenues by ¥120 billion, but where does all this money come from?” Minakami said.


“If the whole thing is about luring Yokohama residents into gambling and bleeding them dry, the city would be no different from an octopus that’s keeping itself alive by taking a bite out of its own legs,” he said.


“That would be a very unwholesome economy.”

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