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.
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 rather severe 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 is penalized with a fine that can reach up to ¥500,000.
The punishment is even harsher for those who partake in such activities habitually. Habitual gamblers face up to three years of imprisonment with punitive labor under Article 186 (1). Meanwhile, those who are found guilty of distributing and operating illegal gambling risk imprisonment with punitive labor for a period ranging from three months to a maximum of five years.
Article 187 of the Japanese Penal Code covers several provisions that pertain to lotteries. In Japan, only municipal authorities are permitted to distribute lottery tickets, either to landbased points of sale or over the Internet.
Respectively, individuals who are caught red-handed 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 those who assume the role of 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 with 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 considered a milestone when it comes to gambling legislation in Japan. This piece of legislation was approved by the Japanese Diet toward the very end of December 2016. The law was officially enacted in the summer of the following year. The primary purpose of the bill’s introduction was to boost the country’s appeal as a travel destination and attract the attention of wealthy tourists.
Other than that, the legislation outlines the basic principles concerning the building of said resorts. The bill also paved the way for the drafting of a regulatory framework that is to govern the operations of said integrated resorts when their construction ends. With that said, the first venues of this type are expected to open their doors to customers no sooner than 2021.
Article 2 of Chapter 1 of the act defines what constitutes an integrated casino resort in the first place. Said resorts will comprise designated casino gambling areas along with hotel accommodations, conference, exhibition and recreation facilities. Furthermore, this Act allows private companies to build and operate such facilities.
The Act also states who is to 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.
The operators of these facilities must demonstrate full compliance with a variety of measures that aim 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 also called for the introduction of regulations on who is to be granted access to the gambling facilities and the services conducted there. This is to ensure minors and “members of anti-social forces” are prohibited from entering the casinos. The bill also enables the local government to draft regulations that have to do with 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 landbased casino gaming in the Land of the Rising Sun. It simply allowed for the drafting of regulations that would adequately govern the planned integrated casino resorts.
Perhaps more important is the bill that followed next. The Promotion Act gave the Japanese government a timeframe of one year, following its passage, to set forth an adequate regulatory framework for the resorts. This officially happened in July 2018 when the Japanese Diet passed the Act on the Development of Specified Integrated Resort Districts.
This Act laid down all the specific regulations for gambling activities run by private entities in the country. It also outlines the licensing procedure and the conditions said entities must meet in order to receive authorization for operation. Some articles of the Act dealt with the measures for addiction prevention while others tackled entrance restrictions.
Under the provisions of this bill, gambling services can be offered on the designated premises of three integrated casino resorts. However, this number can be reviewed and increased seven years counting from the day of the license issuance.
Each integrated resort has the right to operate no more than one casino area. The resorts must first receive official authorization from the Japanese Ministry of Land, Infrastructure, and Transport.
Of course, a certification is also necessary for this purpose but such permits are issued only to integrated resorts. That is to say stand-alone gambling venues do not qualify for license applications. The 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 close at the end of July of the same year. During this period, the Japanese municipalities and prefecture authorities will welcome the proposal of interested integrated resort operators. The applicants must be associated with local Japanese businesses.
Some of the largest casino operators in the global industry are already forming consortiums with local partners. Some of these include MGM Resorts (interested in opening a resort in Osaka), Galaxy Entertainment, the Genting Group, Wynn Resorts, Hard Rock International, and Melco Resorts. Other Japanese prefectures interested in winning 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, 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.
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. With that said, students who are 20 years old or older are disallowed from lawful gambling under Japanese law. The gaming floor’s personnel must check and verify the age of each customer upon entry by requesting them to present documents for identification. The time and date of entrance are also taken into account. Shortly you will find out why.
Members of organized criminal groups are restricted from accessing the gambling premises. This rule applies to people who had belonged to a crime group within the past five years as well. Another mention-worthy rule has to do with restrictions on the number of entries per visitor.
Entry Number Restrictions
These are listed in Chapter 7 of the Development Act. Foreigners who are not permanently domiciled in the country can enter the gaming premises as many times as they wish. However, this is not the case for Japanese nationals and permanent residents whose access is restricted to three visits per week plus ten visits within 28 days. Under Article 70 of the Act, special number cards are given to customers to verify the number of times they have entered the premises.
Entry Fees and Payment Method Restrictions
When the planned integrated resorts officially open doors to customers, patrons will be required to pay fees upon entering the casinos’ premises. Half of those fees will go toward the Japanese government under the provisions laid out in Chapter 7, Article 176 of the Act.
It stipulates that visitors have to pay a governmental admission fee amounting to ¥3,000 (roughly $28 according to the exchange rates at the moment of writing) upon entering the gaming area. This sum covers repeated entries within a timeframe of 24 hours.
If a given customer extends their stay beyond this period, they will have to repay the admission fee. 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, which makes for a total of ¥6,000 for admission. The gambling operators must collect those fees on behalf of the government and the prefectures and pay them out each month.
As for payments and fraud prevention, authorized gaming operators are expected to comply strictly with the Know Your Customer (KYC) procedures. They must record and track all money transfers for the purposes of anti-money laundering. If a given payment is suspected to be from an illegal source or for the purpose of criminal proceeds, the operator should immediately alert the Japanese authorities.
Once chips are purchased in exchange for cash, the customer is prohibited from taking them outside the casino’s premises. In fact, there is a requirement for the operators to display clear notifications that this practice is disallowed.
To prevent the spread of gambling addiction among the locals, only foreigners without a permanent residence are allowed to buy casino chips with credit cards. For this very purpose, it is also prohibited to install ATMs on the premises of the casinos. As for gambling on credit, the practice is generally disallowed because it, too, can accelerate gambling addiction.
Exceptions are made for non-residents of Japan and customers who can prove they have the financial capabilities to repay their credit. The operators are required to regularly check their patrons’ credit size 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 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.
