The bill will be submitted to parliament on April 27, said Chikako Ikeda, an official at the LDP's political affairs committee. A senior LDP lawmaker confirmed the timeline.

Japan legalised casinos in late 2016 and still needs fresh legislation to lay out how sites for the "integrated" resorts - projects hosting casinos, retail and conference areas - will be chosen, how operators will be selected and how much space will be allocated to casinos.

In a shift from a coalition agreement reached earlier this month, the latest draft bill seen by Reuters shows an upper limit on casino floor space will be set by the government. It was not clear at what level, or when, the cap will be set.

The ruling Liberal Democratic Party (LDP) and its coalition partner had earlier this month agreed on an upper limit of 3 percent of total area of the resorts. The cap will likely influence the size of investment by casino operators.

Other key points in the draft bill were in line with those agreed by the coalition, including a 30 percent tax on casino revenue, an entry fee of 6,000 yen ($55.92) for residents of Japan and an initial cap of three casino sites nationwide.

Analysts said the decision to set the floor space cap later would likely be a positive for a host of global casino operators looking to enter Japan, such as U.S.-based Las Vegas Sands Corp and Macau's Melco Resorts & Entertainment Ltd .

Any lifting of the cap would make investment in smaller potential sites in Japan's hinterland such as Hokkaido in the north and Nagasaki in the south more viable for major operators, said Jay Defibaugh, an analyst at CLSA.

"The floor space restriction of 3 percent ... is a burden for anything but a very large integrated resort," he said.

Still, the coalition faces a tough task in passing the bill during the current session of parliament that runs to June 20, given a packed legislative agenda, political sources have said.

Also, Prime Minister Shinzo Abe, who is battling a suspected cronyism scandal, is seen as unlikely to push for an extension of the session for the casino bill that remains unpopular with the public.

The premier's political crisis has deepened after polls showed the scandal pushing his support to record lows, while a popular predecessor said Abe would probably resign in June.

(Reporting by Ami Miyazaki and Thomas Wilson; Editing by Himani Sarkar)

By Ami Miyazaki and Thomas Wilson