Japan is an island nation in the Pacific Ocean, east of Russia, South Korea, and China. Colloquially referred to as the Land of the Rising Sun, it covers approximately 145,000 square miles and has around 126.5 million inhabitants, making it one of the world’s most densely populated countries.
The country lacks a well-developed gambling industry, largely because its government prohibits most betting activities, with very few exceptions. The situation has become more favorable in recent years, after the government enacted two laws that paved the way for legal integrated casino resorts on Japanese soil.
Interactive gambling is also prohibited under Japan’s laws, although Japanese gamblers are rarely prosecuted for wagering on offshore licensed websites. The country’s authorities do not restrict access to the products of foreign online operators that accept Japanese customers.
Japan Gambling Laws
For a long time, all privately operated gambling activities, both land-based and online, were considered criminal offenses under the Japanese Penal Code. Wagering on horse, bicycle, powerboat, and motorcycle races is permitted as long as the services are operated by the local government or a municipal entity.
Pachinko is another form of legal gambling in Japan. This combination of pinball and a slot machine is not expressly prohibited under the Penal Code for cultural, financial, and historical reasons. The game enjoys immense popularity, with the Japanese reportedly spending roughly $200 billion per year on it.
All forms of casino gaming were expressly prohibited in Japan, but things changed recently thanks to the efforts of the Liberal Democratic Party (LDP). The legislature eventually approved a bill that officially allowed integrated casino resorts on Japanese soil. Before we delve into that, let’s examine the legality of gambling, in general, under the Japanese Penal Code.
Gambling under the Penal Code of Japan
Act on the Promotion of Development of Specified Integrated Resort Districts
Act on the Development of Specified Integrated Resort Districts
Gambling under the Penal Code of Japan
The Penal Code of Japan is strict when it comes to participating in and operating illegal gambling activities. Chapter 23 of the Code deals exclusively with such matters. According to Article 185, an individual who participates in unauthorized gambling can be fined up to ¥500,000.
The punishment is even harsher for those who gamble habitually. Habitual gamblers face up to three years of imprisonment with punitive labor under Article 186 (1). Meanwhile, those found guilty of distributing and operating illegal gambling risk imprisonment with punitive labor for a term of three months to five years.
Article 187 of the Japanese Penal Code contains several provisions pertaining to lotteries. In Japan, only municipal authorities are permitted to distribute lottery tickets, either at land-based points of sale or over the Internet.
Accordingly, individuals caught selling unauthorized lottery tickets are subject to penalties of up to two years in prison, accompanied by punitive labor, or fines of up to ¥1.5 million.
The punishment is milder for intermediaries in the sale process. They face no more than a year in prison with punitive labor and fines of up to ¥1 million. Those who receive illegally distributed lottery tickets are fined up to ¥200,000 under Article 187 (3) of Japan’s Penal Code.
Act on the Promotion of Development of Specified Integrated Resort Districts
The Act on the Promotion of Development of Specified Integrated Resort Districts is regarded as a milestone in Japanese gambling legislation. This piece of legislation was approved by the Japanese Diet at the very end of December 2016, and it was officially enacted in the summer of the following year. The primary purpose of its introduction was to boost the country’s appeal as a travel destination and attract wealthy tourists.
Additionally, the legislation outlines the basic principles for constructing these resorts. It also paved the way for drafting a regulatory framework that will govern integrated resorts once construction is complete. With that said, the first venues of this type are expected to open no earlier than 2021.
Article 2 of Chapter 1 of the Act defines what constitutes an integrated casino resort. These resorts will include designated casino gambling areas along with hotel accommodations, conference, exhibition, and recreation facilities. Furthermore, the Act allows private companies to build and operate such facilities.
The Act also specifies who will regulate the gambling activities offered in these integrated casino resorts. A special regulatory body, known as the Casino Administration Committee, was established for this purpose.
Operators must demonstrate full compliance with various measures aimed at eliminating the negative effects of gambling on society. They must also ensure the fairness of all gambling-related activities that take place on the resorts’ premises.
The bill further called for regulations determining who may access the gambling facilities and services provided there. This is to ensure minors and “members of anti-social forces” are prohibited from entering the casinos. It also empowers local governments to adopt rules concerning the collection of fees upon visitors’ entry into the casino facilities.
Act on the Development of Specified Integrated Resort Districts
The Act on the Promotion of Development of Specified Integrated Resort Districts was only the first step toward the introduction of legal land-based casino gaming in the Land of the Rising Sun. It merely allowed the drafting of regulations that would govern the planned integrated casino resorts.
More important was the bill that followed. The Promotion Act gave the Japanese government one year after its passage to establish an adequate regulatory framework for the resorts. This goal was achieved in July 2018, when the Japanese Diet passed the Act on the Development of Specified Integrated Resort Districts.
This Act set out specific regulations for gambling activities run by private entities in the country. It also outlines the licensing procedure and the conditions these entities must meet to receive operational authorization. Some articles address addiction prevention, while others cover entrance restrictions.
Under the Act, gambling services may be offered at three integrated casino resorts. However, this number can be reviewed and increased seven years from the date of license issuance.
Each integrated resort may operate no more than one casino area. The resorts must first obtain authorization from the Japanese Ministry of Land, Infrastructure, and Transport.
Certification is also required, but such permits are issued only to integrated resorts, meaning stand-alone gambling venues cannot apply. Approved operators must be incorporated under the Companies Act.
The window for license applications is officially scheduled to open at the beginning of January 2021 and to close at the end of July of the same year. During this period, municipal and prefectural authorities will welcome proposals from interested integrated resort operators. Applicants must be associated with local Japanese businesses.
Several of the world’s largest casino operators are already forming consortiums with local partners. These include MGM Resorts (interested in Osaka), Galaxy Entertainment, the Genting Group, Wynn Resorts, Hard Rock International, and Melco Resorts. Other prefectures seeking casino resort privileges include Tokyo, Yokohama, Wakayama, and Nagasaki.
IR Certifications, Gaming Licenses, and Taxation
The duration of the certifications for each of the three planned integrated resorts in Japan is ten years under Chapter 2, Article 10 (1) of the Development Act. Once that period expires, operators must renew their permits every five years. To obtain a certificate initially, the resorts must first receive the approval of the respective prefectures. Authorization from the municipalities is also required for renewals.
A license granted by the Japanese Casino Administration Commission is also necessary. When applying, interested operators must provide the regulator with information about the names and addresses of the owners, the types of gambling activities to be conducted on the premises, the location and size of the facility, and the specifications of the gaming equipment to be used.
A number of other requirements must be met as well. The applicants must be individuals of good social standing and reputation. Persons under the age of 20, along with those who have been sentenced to imprisonment within the last five years, are not eligible to apply. The same restriction applies to individuals who suffer from alcohol or substance addiction.
Chapter 3, Section 1, Article 43 (1) of the Development Act specifies that each casino license granted by the Japanese regulatory commission remains valid for three years, with the option for renewal upon expiration. Licenses are renewed only on the condition that the newly established regulator verifies that the operators have maintained their integrity.
Note that if a company loses its integrated-resort certification for any reason, its casino gambling permit is revoked automatically. The casino operators must also pay a compulsory floating national tax amounting to 15% of their gross gaming revenue (GGR) in addition to a 15% municipal tax, also based on the GGR. A fixed tax is paid to cover the administrative expenses of the Casino Administration Committee. All three taxes must be paid monthly by the operators.
Entry Restrictions, Entrance Fees, and Payment Restrictions
Under Japanese law, certified integrated resorts must comply with specific restrictions regarding who may enter the gambling premises. The entry requirements are outlined in Chapter 3, Article 69, which states that individuals under 20 years old have no access to the casino premises or the services offered there.
Persons Prohibited from Entry
Entry Number Restrictions
Entry Fees and Payment Method Restrictions
Persons Prohibited from Entry
This is the legal gambling age in Japan. However, students who are 20 years old or older are still prohibited from lawful gambling under Japanese law. Gaming floor personnel must verify the age of each customer upon entry by requesting identification documents. The time and date of entrance are also recorded, as explained below.
Members of organized criminal groups are barred from accessing the gambling premises, and the restriction also applies to anyone who belonged to such a group within the past five years. Another noteworthy rule concerns the limits on the number of entries each visitor may make.
Entry Number Restrictions
These limits are laid out in Chapter 7 of the Development Act. Foreigners who are not permanently domiciled in the country may enter the gaming premises as often as they wish. Japanese nationals and permanent residents, however, are limited to three visits per week and ten visits within a 28-day period. Under Article 70 of the Act, customers receive special number cards to track the number of entries.
Entry Fees and Payment Method Restrictions
When the planned integrated resorts officially open their doors to customers, patrons will be required to pay fees upon entering the casino premises. Half of those fees will go to the Japanese government under the provisions laid out in Chapter 7, Article 176 of the Act.
This article stipulates that visitors must pay a governmental admission fee of ¥3,000 (roughly $28 at the current exchange rate) when entering the gaming area. The payment covers repeated entries within a 24-hour period.
If a customer stays beyond this period, they must pay the admission fee again. These charges do not apply to foreign casino visitors who do not reside permanently in the country.
Each IR-certified Japanese prefecture also collects ¥3,000 in entry fees per customer, bringing the total admission cost to ¥6,000. Gambling operators must collect these fees on behalf of the government and the prefectures and remit them each month.
Regarding payments and fraud prevention, authorized gaming operators are expected to comply strictly with Know Your Customer (KYC) procedures. They must record and track all money transfers for anti-money-laundering purposes. If a payment is suspected to originate from an illegal source or to involve criminal proceeds, the operator should immediately alert the Japanese authorities.
Once chips are purchased for cash, customers are prohibited from taking them outside the casino premises. Operators are required to display clear notices stating that this practice is disallowed.
To curb gambling addiction among locals, only foreigners without permanent residence are allowed to buy casino chips with credit cards. To support this rule, ATMs may not be installed on casino premises. Gambling on credit is generally disallowed because it can also exacerbate gambling addiction.
Exceptions are made for non-residents of Japan and for customers who can prove they have the financial capacity to repay their credit. Operators are required to regularly monitor patrons’ credit limits and enforce caps on the amounts they lend to each customer.
The Casino Administration Committee
The Japanese Casino Administration Committee (CAC) was established in July 2019 by the country’s government. It officially commenced operations on January 7, 2020. Article 196 in Chapter 10 of the Development Act states that this entity was founded specifically for the purpose of auditing the services of integrated casino resort operators.
If necessary, the Committee can also request that operators supply any documentation and reports for reference. Additionally, the entity is granted the power to issue licenses to approved operators, as well as suspend or revoke them upon violations.
Another remit of the Committee is to closely observe whether the operators remain compliant with the responsible gambling policies outlined in the Development Act. The regulator also ensures compliance with the country’s anti-fraud and anti-money laundering policies.
The structure of the Committee is also outlined in the newly approved legislation. It consists of a Chairman (at present, this position is held by Mr. Michio Kitamura, who previously worked at the Japanese Ministry of Defense) along with four other committee members.
Some of them have held high positions at the Nagoya National Taxation Bureau. One of the members, Michiko Watari, is a psychiatrist. Another member was previously employed as a police inspector. All in all, the regulatory body comprises a secretariat of 95 employees.
The CAC held its first official meeting on January 10, 2020. Although it has no direct say in the choice of approved integrated resort operators, it will play a role in establishing the selection criteria. As a reminder, no more than three prefectures will receive authorization for integrated casino resorts. Some prefectures, like Chiba and Hokkaido, have already withdrawn from the certification contest.
Legal Status of Online Gambling in Japan
So far, we have discussed bills that introduced lawful casino gaming at designated land-based locations within integrated resorts. Stand-alone gambling venues remain illegal in Japan at the time of writing.
As for online gambling, it too is illegal under Japanese law, with very few exceptions. Online betting on certain races and sporting competitions is legal as long as these services are operated by the prefectures’ authorities or the Japanese government. In fact, the same applies to the land-based format of such services. Online bingo is disallowed as well. Lotteries are permitted under the same conditions that apply to online sports and race wagering.
There are no laws that expressly prohibit or regulate social and skill games, online or at land-based venues. Online wagering on so-called fantasy sports is also unlawful in the country. Many foreign websites accept players from the Land of the Rising Sun under licenses issued in foreign jurisdictions.
Japanese law does not expressly state whether it is lawful for the country’s nationals to engage in gambling activities offered by offshore online casinos. As for prosecution for such practices, it is not very common, although it has occurred on several occasions in the past.
One example is from 2016, when several citizens who played at offshore web-based casinos were arrested and charged with unlawful gambling. A separate case occurred in 2017, when a Japanese citizen had their home searched by officers of the law for the same reason. However, the person was not formally prosecuted in this instance.
