By Tetsushi Kajimoto and Yuko Yoshikawa

Japan's plan to legalise casino gambling is likely to be delayed yet again, a senior official said, dealing a new blow to Prime Minister Shinzo Abe and a setback to operators anxious for the launch of Asia's next big gambling market.

Las Vegas Sands, Genting Singapore, MGM Resorts, Melco Crown Entertainment and others are waiting in the wings as potential investors in what analysts say is one of the world's biggest untapped markets, worth tens of billions of dollars a year.

But parliament was unlikely to have enough time to pass the controversial law during the current session, which ends on Nov. 30, the coalition official said.

"The hurdle is quite high for both lower and upper houses to enact it during the current session," Keiichi Ishii, policy chief of Komeito, the junior partner in Abe's coalition government, told Reuters, adding that there was concern among some Komeito members over the effects of gambling on society.

Abe, who wants Japan's first casino open in time for the 2020 Tokyo Olympics, saw two cabinet ministers resign earlier in the day over the dubious use of public funds; moves that could complicate tough decisions on key policies.

Both analysts and lawmakers said the scandal could affect the casino bill, already delayed by criticism that legalised gambling would lead to higher crime, gambling addiction and money laundering.

"Abe's support will fall, and things will not go as planned, for example enacting the casino law could become difficult," said Tomoaki Iwai, Nihon University political science professor, "Implementing policies will become more difficult."

One pro-casino, parliamentary source said the outlook was "uncertain," saying he feared the scandal would make Abe less capable to exerting influence over coalition colleagues, emboldening anti-casino lawmakers within the coalition.

Another pro-casino political source, however, said he expected parliamentary debate to start in the next few months.

"We are definitely seeing delays. The resignations don't really directly affect the bill, but they don't help either," said one of the sources, requesting anonymity because legislation was still pending. "We're still hoping for parliamentary discussions of the bill to start early next month, perhaps around November 5th or 7th."

Support from Komeito is seen as crucial for the bill since Abe's Liberal Democratic Party does not have a majority on its own in the Upper House. But many members of the party, backed by a Buddhist group, oppose the bill.

Pillar of growth

Other parties have also been mixed, reflecting a divide in public opinion. A nationwide survey by the Mainichi newspaper conducted over the weekend showed 62 percent of the public opposed the bill, with only 31 percent in favour.

While some members of the opposition Democratic Party have taken part in drafting casino legislation, others have been highly critical.

"They were trying to squeeze the bill through, without much debate ... but that is not going to work," said Toshio Ogawa, a Democratic Party member, told Reuters. "I think the bill will be crushed."

Abe has made legalising casino gambling, already hugely popular in Asian centers Macau and Singapore, a pillar of his plan to revive economic growth through tourism.

Pro-casino lawmakers have aimed to pass the "integrated resort" bill by the end of the year so they can submit a second bill next year which would address specifics such as regulations.

But legislation has already been carried over from a previous session of parliament. It could also struggle to pass in the ordinary session from early 2015, which will be dominated by major bills such as the national budget.

That would make it nearly impossible for any casinos to be built in time for the Olympics.

In an effort to set the legislative process in motion, pro-casino lawmakers last week agreed to revise the bill by mentioning the need for limits on Japanese nationals' entry to casinos, bowing to pressure from opponents.

Proponents of the bill said the revision did not mean Japanese nationals would be banned, but casino operators have been wary of any move that could limit entry.

While Abe has said casinos will attract tourists, market researchers say Japan's 128 million people would likely account for most of the revenue and casino operators have said foreigner-only resorts could struggle to make a profit.