Japan is an island nation located in the Pacific Ocean to the east of Russia, South Korea, and China. Colloquially referred to as the Land of the Rising Sun, it occupies a territory of 145,000 square miles and has around 126.5 million citizens, which makes it one of the world’s most densely populated countries.
The country lacks a well-developed gambling industry, largely due to the fact its government prohibits betting activities, with very few exceptions. Things have taken a more favorable turn in recent years after the government enacted two laws that paved the way for the introduction of legal integrated casino resorts on Japanese soil.
Interactive gambling is also disallowed under Japan’s laws although Japanese gamblers are rarely prosecuted by the government for wagering on offshore licensed websites. The country’s authorities do not restrict the 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 landbased and online, were considered as 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 a pinball and a slot machine is not expressly prohibited under the Penal Code due to a variety of cultural, financial, and historical reasons. It enjoys considerable popularity in the country, with the Japanese reportedly spending roughly $200 billion per year on this game.
All forms of casino gaming were expressly prohibited in Japan but things changed recently thanks to the efforts of the Liberal Democratic Party (LDP). Eventually, the country’s legislature approved a piece of legislation that officially okayed integrated casino resorts on Japanese soil. But before we get there, let’s examine the legality of gambling, in general, under the Japanese Penal Code.
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, the operators must renew their permits once every five years. To obtain a certificate in the first place, the resorts must first receive the approval of the respective prefectures. Authorization from the municipalities is also required for the renewals.
A license granted by the Japanese Casino Administration Commission is also necessary. When applying, the interested operators must provide the regulator with information about the names and addresses of the owners, the type 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 credibility. Persons under the age of 20, along with those who have been sentenced to imprisonment within the last five years, are not eligible for application. The same goes for 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 has a validity of three years, with the option for renewal upon expiration. Licenses are renewed only on condition the newly established regulator verifies the operators have maintained their integrity.
Note that if a company loses its integrated-resort certification for one reason or another, 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 certain restrictions on who is allowed entry to the gambling premises and who is not. The entry requirements are outlined in Chapter 3, Article 69, which states that individuals who are under 20 years old shall have no access to the casino premises and the services offered there.
The Casino Administration Committee
The Japanese Casino Administration Committee (CAC) was established in July 2019 by the country’s government. It officially commenced operation on January 7, 2020. Article 196 in Chapter 10 of the Development Act states that this entity was founded specifically for the purposes of auditing the services of integrated casino resort operators.
If necessary, the Committee can also request the operators to supply any documentation and reports to be used for reference. Additionally, the entity is granted the power to issue licenses to approved operators as well as suspend or revoke them upon violation.
Another remit of the Committee is to observe closely 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 (for the time-being, this position is occupied by Mr. Michio Kitamura, who previously worked at the Japanese Ministry of Defence) along with four other Committee members.
Some of them had worked in high positions at the Nagoya National Taxation Bureau. One of the members, Michiko Watari, is a psychiatrist. Another one 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 when it comes to 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
For far, we discussed bills that introduced lawful casino gaming at designated landbased locations within integrated resorts. Stand-alone gambling venues remain illegal in Japan at the moment 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 landbased 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 to expressly prohibit or regulate social and skill games, online or at landbased venues. Online wagering on the so-called fantasy sports is also unlawful in the country. There are many foreign websites that welcome the action of customers from the Land of the Rising Sun under licenses, issued in foreign jurisdictions.
The Japanese law does not expressly state whether or not it is lawful for the country’s nationals to engage in gambling activities offered by offshore online casinos. As for the 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 for 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 legally prosecuted in this instance.