Japan’s casino quest thrown into turmoil

By Mia Chapman Updated
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Japan’s quest to open casinos has led to the arrest of a lawmaker from the country’s governing party on charges of accepting bribes from Chinese online lottery firm 500.com.

Calvin Ayre reports that Japanese authorities announced last Wednesday that they’d arrested Tsukasa Akimoto, a lower house member of the ruling Liberal Democratic Party.

Earlier this month, news broke that Akimoto’s aides were suspected of bringing in large amounts of cash from overseas without declaring the cash to customs officials.

On Wednesday, the Tokyo District Public Prosectors Office announced that Akimoto had been arrested on suspicion of accepting US$34,000 from 500.com, which at the time was pursuing an integrated resort project near Hokkaido.

Until a few months ago, Akimoto held a cabinet position with influence over Japan’s casino development process.

Akimoto confirmed his arrest in social media posts, in which he apologised for “causing this kind of situation and such a commotion.”

Akimoto continued to deny any wrongdoing, although local media quoted LDP sources saying Akimoto had formally indicated his intention to quit the party to save it further embarrassment.

Japanese police also arrested three individuals connected with 500.com, including a former vice-president and two Japanese corporate advisers.

The company is said to have paid to fly Akimoto and his family to Hokkaido in 2018 and also organised trips for Akimoto to Shenzhen and Macau.

500.com has never operated any land-based casino operations, but the Hokkaido integrated resort bid was part of the financially struggling company’s efforts to diversify its revenue streams, which were dealt a serious blow in March 2015 when China suspended all online lottery sales.

As luck would have it, 500.com was scheduled to hold its annual general meeting in Shenzhen last Monday.

The company has yet to publish anything on how the meeting went down or whether shareholders voiced any concerns over the company’s involvement in this growing Japanese scandal.

Concerns are mounting within the LDP that the scandal could negatively impact the country’s push to legalise casinos.

The Japanese public already views the whole integrated resort movement with suspicion and Akimoto’s allegations clearly won’t help alleviate those concerns.

Local media quoted Chief Cabinet Secretary Yoshihide Suga saying the LDP “will steadily push ahead” with its casino development plans “so that benefits from building integrated resorts will be reaped as soon as possible.”

Suga also said the LDP would seek to clarify policies regarding what type of contact between casino operators and government officials are permissible.

Japan flags casino tax for non-resident foreigners

The Japanese government is considering a plan to withhold taxes on winnings by non-resident foreigners at casino resorts, according to sources close to the matter.

The Japan Times reports that the government is studying the tax system, because tracking down foreign nationals after they leave the country would be difficult.

The United States, South Korea and other nations employ a tax withholding system for winnings at their casinos, similar to the system Japan is looking to implement.

In the system, the government is also considering making it compulsory for casino operators to keep records of chip purchases and win-loss results.

Under the system, winnings at casinos will be taxed in a similar fashion to horse racing.

A tax will be levied on the difference between the value of the chips purchased and the amount of those converted back into cash.

The requirement to keep records of purchases and win-loss results is designed to prevent players from pretending the chips they won were ones they purchased or from leaving some chips with a friend inside the premises to reduce their winning amount.

The proposals will be included in the outline of fiscal 2020 tax reforms to be finalised by the ruling parties by the end of the month and implemented under tax system reforms after April 2021.

“If we do not decide on a certain framework in advance, it will affect the investment decisions of operators,” a government official said.

Japan plans to choose up to three locations at which to construct so-called integrated resorts – casino resorts that incorporate a large hotel, conference rooms and gambling areas.

The complexes are expected to start operating in the mid-2020s.

So far, Yokohama, Osaka and Osaka Prefecture, Wakayama Prefecture and Nagasaki Prefecture have declared their intention to bid.

Hokkaido recently pulled out of the race, citing local concerns about the project’s environmental impact, with many citizens also expressing unease over gambling addiction and other potential issues.

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