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Japan’s record earthquake may achieve what Las Vegas magnate Sheldon Adelson has been trying to do for years: Persuade the government to allow casinos.

Adelson, chief executive officer of Las Vegas Sands Corp. (LVS), has for at least half a decade sought to reverse a ban on the gambling houses in the world’s third-biggest economy, only to be blocked by Japanese legislators arguing casinos would fuel organized crime and provide little benefit. Now, a group of 150 lawmakers plans to introduce a bill that could allow resorts that combine slot machines and gambling tables with hotels, shopping and restaurants.

Japanese casinos could emerge as a 3.4 trillion yen ($44 billion) industry, according to a 2009 study by Ryosaku Sawa, an economics professor at Osaka University of Commerce. That would provide an attractive source of tax revenue for a government facing a 19 trillion yen reconstruction bill from the March 11 earthquake, on top of the world’s largest public debt.

“It would be an engine for fiscal revival and job creation that wouldn’t require raising taxes,” said Takeshi Iwaya, a member of the group of legislators from six parties, including the ruling Democrats and their main opposition Liberal Democrats.

Issei Koga, who leads the group, said today that he hoped to introduce the bill during the Diet session that begins next month, because time had run out on advancing the proposal during the current session, which ends tomorrow.

The Cards

“The liberalization of potentially Japan and Taiwan are on the cards,” Lawrence Ho, chief executive officer of Macau casino operator Melco Crown (MPEL) Entertainment Ltd. and son of gambling billionaire Stanley Ho, said in an interview yesterday. He will be “open minded” about selling more stock in Melco Crown, which listed in Hong Kong yesterday, to raise funds that may be used to expand outside the Chinese city, he said.

Other casino operators are also betting that Japan will overturn the ban.

“It’s a very attractive market,” said Steven Tight, president for international development for Las Vegas-based Caesars Entertainment Corp. “There just seems to be a very strong affinity to that sort of entertainment.”

MGM Resorts International (MGM) is also closely monitoring Japan’s moves toward casino legalization, said Ed Bowers, the Las Vegas-based company’s senior vice president for hospitality. Nanami Kasasaki, Genting Singapore Plc (GENS)’s representative director for Japan, said her company is paying attention too.

Pole Position

Adelson said he hopes all the talks he’s held with Japanese government and business leaders will put Las Vegas Sands in pole position, should the law pass.

“We’ve been lobbying there for years,” he said. “There’s no doubt that we’re the leading candidate.”

Proponents point to Singapore as an example of how casinos can generate cash without attracting the vice that some Japanese associate with gambling.

Singapore’s Marina Bay Sands, opened in April 2010, two months after Genting Singapore’s Resort World Sentosa, and the city-state is already set to raise an estimated $1 billion in gambling taxes this year, according to Richard Huang, a Hong Kong-based analyst at CLSA Asia-Pacific Markets. In Macau, the government may collect $13 billion in taxes this year from its 34 casinos, he estimated.

Korea, Philippines

The money generated by gambling in the two cities has prompted countries across Asia to embrace the concept of Las Vegas-style resorts. The Venetian Macao, operated by Adelson’s Hong Kong-listed Sands China Ltd. (1928), generated more than $2.4 billion in revenue last year. Sands China has gained 40 percent this year in Hong Kong trading while rival Galaxy Entertainment Group Ltd. (27) has jumped 74 percent. Melco Crown is up 53 percent in Nasdaq trading this year.

“There’s more momentum and greater optimism than there has ever been in the past,” George Tanasijevich, chief executive officer of Sands’ Singapore operation and Adelson’s representative for Japan, said in a phone interview.

South Korea, which has casinos catering mostly for foreigners, is making its own legislative push to permit the development of casino resorts.

In the Philippines, Japanese pachinko company Universal Entertainment Corp. (6425), the biggest shareholder in Wynn Resorts Ltd. (WYNN), plans to build a $2.3 billion hotel and casino as part of Manila’s Entertainment City project.

Yakuza Concern

Casinos in Japan would compete with existing forms of legal gambling, including bicycle, motorboat, motorcycle and horse races, along with pachinko -- a type of combination slot and pinball machine -- and some soccer matches. Those pastimes earned more than 25 trillion yen, or about $322 billion, last year, according to a 2011 White Paper on Leisure published by the nonprofit Japan Productivity Center.

Keiko Itokazu, an independent legislator, said she was concerned that organized crime, known as the yakuza, would exploit casinos for prostitution and selling drugs. “The yakuza would certainly get involved.”

Takashi Kiso, head of Tokyo-based consulting firm International Casino Institute Ltd., told lawmakers in November that it would be a mistake to assume Japan would copy Singapore’s success in controlling vice. Singapore’s gambling resorts are isolated from the rest of the city. The city-state’s small size and strict rule of law also make it easier for authorities there to clamp down, he said.

Casinos may fail to deliver the expected level of economic windfall for the country, according to William Thompson, a professor at the University of Las Vegas, Nevada. The benefits would depend on Japan’s ability to draw a large number of gamblers from overseas.

“If they don’t get foreign gamblers, for the economy it’s at best a zero and at worst a negative,” he said. “If the gamblers are Japanese, the money is coming out of the Japanese economy.”

To contact the reporters on this story: Jacob Adelman in Tokyo at jadelman1@bloomberg.net; Kiyotaka Matsuda in Tokyo at kmatsuda@bloomberg.net