In conclusion, since there is no specific law regarding online casinos in Japan, their legal status remains unclear and is generally referred to as a “gray zone,” where many online casino operators target the Japanese market as well.
On this page, as a former online casino manager, I provide a detailed explanation of why this gray area exists and the legal challenges involved in operating online casinos targeted at the Japanese market. Additionally, I share insights on how to navigate these complexities and operate safely to attract Japanese customers, ensuring compliance with the existing legal framework and adherence to industry best practices.
Is Online Casino Legal or Illegal in Japan
Online casinos have become one of the most popular entertainment activities worldwide.
Gaining traction in Japan as well as in traditional casino strongholds in Europe and the U.S., online casinos are emerging as a new leisure pursuit. Surprisingly, the number of online casino users in Japan reached an estimated 2.88 million in 2021, reflecting a growing interest.
However, when it comes to introducing online casinos in the Japanese market, the issue of their legality becomes a concern. We aim to provide a detailed explanation of this legal aspect, considering both the operator’s and user’s viewpoints. Our focus is to present a clear understanding of how overseas online casinos are regulated and the nature of the services they provide.
Popular Online Casinos in Japan are Operated by Foreign Entities
Information about the operators of online casinos is a crucial aspect in understanding their legal status.
All online casinos accessed by residents in Japan are operated by foreign entities. These companies are registered in countries where gambling, including online casinos, is legal, such as Curacao (a constituent country of the Netherlands) and Malta. They offer online casino services accessible from various countries, including Japan, over the internet.
A key factor to note is that these online casinos are operated by foreign companies and are licensed by their respective governments. While some online casinos operate without a license, the top-tier ones are managed by foreign entities holding government-issued licenses.
Online Casinos Operate Legally Under a Gambling License
Online casinos can legally operate by acquiring an operating license known as a “Casino License,” issued by the government.
These Online Gambling Licenses are granted by the governments of countries where the operation of online casinos is legal. To obtain such a license, online casino operators must pay a significant registration fee and undergo a stringent screening process.
Furthermore, these licenses are subject to unannounced audits to ensure ongoing compliance.
In summary, online casinos that possess a Gambling License are legally operated by reputable companies. On the other hand, those without a license are operating outside the bounds of legality.
Online Casinos are neither Legal nor Illegal in Japan
While online casinos are legal in many countries around the world, there is significant debate regarding their legality when used from within Japan. Under current Japanese law, gambling is generally illegal, except for certain types of public gambling, such as horse racing, bicycle racing, and boat racing. However, online casinos are operated by companies based outside of Japan, which puts them beyond the reach of Japanese law, leaving their legal status unclear.
This ambiguity largely stems from the absence of specific Japanese legislation pertaining to online casinos. These platforms are often licensed and regulated by foreign governments through online gambling licenses.
As a result, online casinos that are legally operated abroad are not subject to Japanese law. This situation has created a gray area in Japan, where the use of online casinos is neither explicitly legal nor illegal.
New Online Gambling Laws in Japan
In Japan, there is currently no specific law addressing online gambling.
It was only in 1995 that the internet started to gain popularity in Japan, and at that time, the concept of gambling on the internet was not foreseen. Given the growing public concern over the legality of online casinos in Japan, it is quite plausible that a new Online Gambling Law could be enacted in the future.
However, Japan has been slower than other countries in developing laws related to the internet, and as a result, there is currently no established system to regulate online casinos.
Arrest Cases of Online Casino in Japan
If you search for “Online Casino Arrest” in Japanese on the Internet, you will find a variety of news.
Although there is no clear law regarding Online Casinos in Japan, unfortunately, there have been several cases where Japanese users of Online Casinos have been arrested as illegal.
Here are some examples of cases where you may be arrested for Online Casino based on the following seizures.
Smart Live Casino – March 2016
The Smart Live Casino is the first case of an Online Casino player being arrested in Japan: in March 2016, three Smart Live Casino users were arrested for gambling offenses. These players allegedly wagered approximately 220,000 yen at the Online Casino. The main reason for the arrests was that the players posted their Online Casino IDs on blogs and social networking sites, which were discovered by the police. The police used these postings as a lead in their investigation and confirmed that the player was actually betting money within the Online Casino.
Smart Live Casino was operated by a British company and operated legally overseas, but the police determined that it had a torso in Japan, and thus the gambling charges were applied. The case highlights the legal risks and precautions involved in playing Online Casino. In particular, it showed that publishing one’s Online Casino playing history on social networking sites and blogs is a risk that can lead to arrest.
Of the three arrested, two accepted summary prosecution and were fined, while one was thoroughly defended through his lawyer and was not prosecuted. This case demonstrates the gray area for Online Casino users in Japan, and the potential legal risks involved in playing in Japan, even for online casinos that are legally operated overseas.
Arrest warrant requested for online casino user
Dream Casino- June 2016
The Dream Casino operator arrest case occurred in June 2016. In this case, five actual operators were arrested by Kyoto police on charges of habitual gambling for operating an online casino site, Dream Casino, on the Internet and gambling with customers. This is believed to be the first case in Japan where the operators of a non-storefront Online Casino were arrested.
The arrests are alleged to have established an office in Tennoji Ward, Osaka City, and conducted poker betting with an unspecified number of customers on the site on multiple occasions between December 2013 and March 2016. Dream Casino opened in November 2012 and reportedly has approximately 9,500 users, with total bets amounting to approximately 1.926 billion yen.
Dream Casino stated on its website that it was licensed to operate on the Dutch island of Curacao, where casinos are legal, but since support was provided only in Japanese, the prefectural police determined that it was operated in Japan.
The Kyoto District Public Prosecutors Office subsequently indicted two men, including a director of an Internet-related company in Chuo-ku, Osaka City, for habitual gambling, and a company employee in the same ward and two other users for aiding and abetting habitual gambling. In addition, a man from Takaoka City, Toyama Prefecture, was given a suspended indictment on the charge of aiding and abetting gambling.
In September 2016, the convictions against the operators were finalized, and the company officer was sentenced to three years in prison, suspended for four years, and forfeiture of approximately 7.5 million yen, while the employee and two other men were sentenced to one year and six months in prison and three years suspended, respectively.
This case illustrates the main principle that the legal legitimacy of Online Casinos lies in the fact that they are legally licensed and operate legally in foreign countries where their operations are considered legal. In the case of Dream Casino, however, the site listed Curacao as the operator and Cyprus as the settlement company, but the actual operator was in the country and was arrested. This incident had significant implications for the Online Casino industry, as well as for players, who received “guidance” from the police.
Online Casino Operator Arrested, First in Nation…Determined to be Domestic Operation
Online Casino YouTuber – September 2023
The Dream Casino operator arrest took place in June 2016, marking a significant case in Japan. Five people, responsible for running the online casino site Dream Casino, were arrested by Kyoto police on charges of habitual gambling. This incident is notable as the first time in Japan that operators of an online casino without a physical storefront were taken into custody.
The police alleged that these operators set up an office in Tennoji Ward, Osaka City, and conducted poker betting with numerous customers via the site, spanning from December 2013 to March 2016. Dream Casino, launched in November 2012, had around 9,500 users and saw total bets of approximately 1.926 billion yen.
On its website, Dream Casino claimed it was licensed in Curacao, where casinos are legal. However, since the site provided support exclusively in Japanese, the prefectural police concluded it was operated within Japan.
The Kyoto District Public Prosecutors Office charged two men, including an internet company director from Chuo-ku, Osaka City, with habitual gambling. Additionally, a company employee from the same district and two other users were indicted for aiding and abetting habitual gambling. A man from Takaoka City, Toyama Prefecture, received a suspended indictment for a similar charge.
In September 2016, the convictions were finalized: the company officer received a three-year prison sentence suspended for four years and a forfeiture of approximately 7.5 million yen. The employee and two other men were sentenced to one year and six months in prison, suspended for three years.
This case highlights a critical aspect of online casinos: their legal legitimacy often depends on being licensed and operating legally in foreign countries where their activities are considered legal. In Dream Casino’s situation, though it listed Curacao as its operating base and Cyprus for settlements, the actual operation was inside Japan, leading to arrests. This event significantly impacted the online casino industry and served as a cautionary tale for players, who received “guidance” from the police.
Online Casino Operator Arrested, First in Nation…Determined to be Domestic Operation
SumoPay – September 2023
The SumoPay case involved the arrest of seven executives from a group operating SumoPay, an online casino payment service provider. They were charged with aiding and abetting habitual gambling. SumoPay served as a deposit and withdrawal method for users with bank accounts, enabling ATM and online banking access, and allowed payments without the need for registration.
The re-arrested defendant, 42-year-old Yoshiaki Maeda, was charged under the Organized Crime Punishment Law, specifically for suspected concealment of criminal proceeds. He is accused of having SumoPay users transfer money into accounts under false names to obscure the money flow and evade detection. In this re-arrest, Maeda is suspected of hiding about 3 million yen in gambling funds, received through deposit applications from 12 users, totaling 35 transactions.
This case has sent shockwaves through the online casino industry. The re-arrest under the Organized Crime Punishment Law is significant, increasing the maximum imprisonment term from up to three years for a single offense to up to five years for organized crime activities, an additional two years. This case is especially notable as it exposes a payment agent connecting overseas operators with Japanese customers, in a country where the use of online casinos is illegal.
Online Casino Operator Caught for the First Time; Over 70,000 Members and Users “Guided” by Advertisements Also Charged with Crime?
Dora Mahjong – February 2024
Seven company employees in their 20s to 40s were reportedly arrested by the Kyoto Prefectural Police for operating an Online Casino in Japan that offered betting Mahjong on the Internet. This is the first time in Japan that anyone has been arrested for providing an Online Casino venue in Japan. The arrested people are suspected of operating a betting Mah-jongg site called “DORA Mah-jongg,” and from March to December last year, they allowed customers to play Mah-jongg over the Internet and earned commissions. The alleged operators collected 10% to 15% of the profits as commissions from the customers, and from 2011, when the site was launched, to December last year, the alleged operators had illegally obtained more than 2 billion yen. Online Casino operators are usually based overseas, where gambling is legal, but he was arrested on suspicion of gambling graft for providing a casino venue in Japan. Although the site claimed that there was nothing illegal about it, it is illegal to bet money at Online Casinos in Japan, and the police are investigating the customers on suspicion of gambling.
Online Casino Operator Caught for the First Time; Over 70,000 Members and Users “Guided” by Advertisements Also Charged with Crime?
YouTuber – February 2024
Ibaraki Prefectural Police arrested Shoichi Fujino, 49, a YouTuber known as “Stomach,” on suspicion of accessing the online casino site “Eldor Casino” from within Japan and engaging in gambling activities. Fujino is suspected of participating in 41 baccarat games at his parents’ house in Tokyo in November 2022. He live-streamed his gambling on his YouTube channel. Prefectural police warn that Online Casino use is illegal.
YouTuber Arrested on Suspicion of Gambling at Online Casino
These cases show the various legal risks that individuals and entities involved in Online Casinos may encounter.
From 2020 to 2022, the number of arrests and arrestees related to Online Casinos by the police remained at 16 cases (121 arrests), 16 cases (127 arrests), and 10 cases (59 arrests), respectively.
How to Operate Online Casino Legally in Japan
In conclusion, since there is no special law regarding Online Casinos in Japan, their legal status remains unclear and is generally referred to as a “gray zone.
However, there are several ways to legally operate an Online Casino in the Japanese market.
Display the License
To legally operate an online casino, obtaining a “license” is the first crucial step.
Online casinos provided by overseas companies should be licensed by a country where online casinos are legal. This means that operating an online casino without a license constitutes an illegal activity.
It is important to transparently display corporate and license information in the terms of service or at the bottom of the official website. This practice not only adheres to legal standards but also builds trust with users and avoid the police attention.
Place the server overseas
A server is a computer that processes information, stores files, and provides content. It’s often thought of as the physical location where a website exists.
Online casinos legally operating overseas need to have their servers located outside of Japan. If an online casino is operated through a server within Japan, it’s considered as operating an online casino in Japan, which is illegal.
In Japan, the charge of “gambling place opening and graft” applies to online casinos that offer a place for gambling within Japan. Gamblers using these services can also be charged with the crime of “Gambling.”
To ensure compliance, it’s important to verify that the servers are located outside Japan.
Do not operate in Japan.
It’s crucial to determine whether the online casino is operated from a foreign country. Legally operating online casinos in foreign countries are, without exception, managed by companies based outside Japan.
If the online casino operated by a Japanese company, it is illegal. This holds true even if the servers are located overseas; if the operating company or team are in Japan, the casino is not legal.
In fact, there was a notable incident in June 2016 where a person connected to an operator that provided online casino services in Japan was arrested. In this case, the operating company was based in Japan, highlighting the importance of this distinction.
Don’t place a obvious ads or promote publicly
- Instead of using prominent advertising methods like press releases or influencers, utilize affiliates who own websites. There are many affiliates operating online casino media in Japanese, making them a viable option for promotion.
- Avoid specifying that the online casino or article content is aimed at residents of Japan. Clearly state that it’s intended for Japanese speakers residing outside Japan, which can help in mitigating legal risks.
- To further reduce risk, bypass the use of payment processing services and, where possible, facilitate deposits and withdrawals using cryptocurrencies. Cryptocurrencies are trending in Japan and have a substantial user base, making this a practical approach.
Summary
In conclusion, since there is no specific law regarding online casinos in Japan, their legal status remains unclear and is generally referred to as a “gray zone,” where many online casino operators target the Japanese market as well.
In Japan, an estimated Online Casino user population of 2.88 million, indicating a market poised for growth. It is crucial to have a correct understanding of the legal regulations and operate your online casino within these guidelines.
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