NAVIGATING JAPAN’S GAMBLING LAWS: REGULATIONS, ESPORTS, ONLINE GAMES, AND INTEGRATED RESORTS

1. Overview

In Japan, gambling and the sale of lottery tickets are criminal activities under the Penal Code,¹Articles 185 to 187 of the Penal Code. and only licensed forms of public gambling (horse racing, bicycle racing, boat racing and auto racing)²Pachinko, a popular form of amusement in Japan, is not considered gambling. and lotteries may be legally conducted. Also, gambling, including online forms thereof, is widely punishable by law if it involves the acquisition or loss of economic value by means of chance and probability. It should therefore be noted that, for example, random-type sales (where the value of the goods or services purchased by the purchaser is randomly determined to be higher or lower than the paid amount) may be considered gambling under the Penal Code.

In addition, the Act against Unjustifiable Premiums and Misleading Representations (the “AUPMR”) regulates the provision of certain economic benefits as “premiums” if such benefits are provided incidentally to any transactions for products or services, and the value of these premiums must not exceed a certain threshold. While these are essentially consumer protection regulations, they play a similar role to gambling-specific regulations.

In this article, we discuss (i) esports and (ii) online games as major venues where criminal gambling activity has increased and where regulations on premiums have recently been tightened in Japan. We also explain the present status of integrated resort (“IR”) policy planning, as IRs are currently being considered for introduction in Japan.

2. Major gambling-related laws and regulations

2.1. Penal Code (Crime of gambling)

In Japan, the crime of gambling is punishable by a fine of up to JPY 500,000 or a petty fine.³Article 185 of the Penal Code. A “petty fine” is a fine of at least JPY 1,000 to 10,000 (Article 17 of the Penal Code). Any person who habitually gambles may be punished by imprisonment for up to three years (Article 186(1) of the Penal Code). The same does not apply to gambling occasionally for recreation (e.g., if the players wager immediately consumable items, such as food, drinks or cigarettes), but this exemption is rarely applied.

In order to constitute “gambling” as referred to in the crime of gambling, “property” must be wagered and the “acquisition or loss” of that property must “be contested” in conditions involving “chance.” Here, “chance” means a state that cannot be predicted or controlled by a party at that party’s discretion, and thus it remains subjectively uncertain for the party. “Property” is not necessarily limited to money or any other tangible objects but refers to economic benefits in a broad sense. “Contesting the acquisition or loss” of property means that there is a winner who gains and a loser who loses the property.

Even if not engaging in gambling themselves, any person who, for the purpose of profit, runs a place for gambling or organizes a group of habitual gamblers shall be punished by imprisonment for at least three months to five years.⁴Article 186(2) of the Penal Code. Therefore, it should be noted that the act of providing gambling services for users may also be punishable under the Penal Code.

Recently, the police have been cracking down aggressively on online gambling, and the number of those who were arrested for engaging in gambling online or running an online platform for gambling has increased in recent years. It is noteworthy that the number of arrests increased dramatically from 59 in 2022 and 107 in 2023 to 279 in 2024.⁵https://www.npa.go.jp/bureau/safetylife/hoan/onlinecasino/onlinecasino.html (in Japanese only) The Ministry of Internal Affairs and Communications is considering regulations for online casinos and plans to compile a holistic summary of issues by the end of 2025. Regulation methods being considered include blocking access to sites, filtering of devices to prevent the viewing of sites, and displaying warning messages. Additionally, in May, 2025, the Financial Services Agency requested financial service providers (the Japanese Bankers Association, etc., the Japan Payment Service Association and the Japan Virtual and Crypto assets Exchange Association) to take necessary measures (including suspending payments when service providers detect that a user is attempting to make payments at online casinos in Japan or overseas) to prevent customers from participating in online casinos.⁶https://www.fsa.go.jp/news/r6/sonota/20250515/20250515.html (in Japanese only)

Furthermore, the amendment to the Basic Act on Countermeasures Against Gambling Addiction has passed the Diet on Jun 18th, 2025 and the amended act is scheduled to become effective in autumn of the same year. Under the amended act, for the public in Japan, the provision of websites and programs that offer online gambling via the Internet, as well as the online distribution of information redirecting to online gambling are going to be prohibited, although penalties for violation is not stipulated.

In Japan, the government has not published any official guidelines regarding gambling. However, organizations across various industries have expressed certain thoughts about this topic, as explained in section 3 below, which may be helpful for business operators when considering whether their services are punishable as gambling.

2.2. Regulations on premiums

In Japan, when a business operator offers economic benefits to consumers as a means of inducing them to purchase goods or services that the business operator itself supplies, such economic benefits are deemed to be “premiums” that are subject to regulations under the AUPMR. The regulations set the maximum value to prevent the inducement of customers to make purchases based on unjustifiable premiums. Specifically, the AUPMR distinguishes between two methods of offering premiums, each with a different maximum:

(i)General Prizes – When a premium is offered by chance, such as in a raffle, by the superiority of a specific act, or the like (e.g., by participation in a lottery, athletic event or game)

(ii)Premiums Offered to All – When a premium is offered to general consumers without a general prize (e.g., by registering for a service)

Business operators that violate these restrictions are subject to guidance and cease-and-desist orders from the relevant administrative agencies. Although these measures themselves are not criminal penalties, any person (not legal entities) who violates a cease-and-desist order will be punished by imprisonment for up to two years or a fine of up to JPY 3 million, and the employer will also be punished by a fine of up to JPY 300 million.⁷Articles 46(1) and 49(1) of the AUPMR.

3. Major recent topics for gambling laws and regulations in Japan

3.1. Prize money in esports

(a) Gambling and the JeSU Report

Where participants pay an entry fee to take part in an esports tournament to receive prizes (including money), the question arises whether the conduct of the participants and the operation of the tournament by the organizer fall under gambling and running a place for gambling respectively, as the participants are contesting the “acquisition” of the prize money or the “loss” of their entry fee. In this regard, according to the “Report on the Status of Efforts to Address Legal Issues Related to E-sports” (the “JeSU Report”)⁸https://jesu.or.jp/contents/news/news_0912/ (in Japanese only) published by the Japan esports Union (“JeSU”) in September 2019, JeSU concludes that it is permissible to conduct competitions by collecting participation fees from participants in cases where:

(i) the prize money and/or prize(s) are provided by a third party (such as a sponsor) other than the participants or the organizer; or

(ii) (even if the organizer offers prize money) the participation fee is used solely to cover the costs of running the competition, such as venue expenses and staff activities, and not for the prize money/ prizes itself/themselves.

This conclusion is based on the assumption that if the winnings are not funded out of the participation fee, the participants are not considered to be contesting the “acquisition or loss” of the prize money/prizes among themselves.

(b) Premiums

If the prize money in an esports competition is awarded on the basis of certain transactions (e.g., if the game is offered for a fee or if the amount charged affects the performance of the player), it may qualify as a provision of “premiums” by means of general prizes under the AUPMR. In such case, the prize money must be offered within the limits described in section 2.2 above. However, according to paragraph 5(3) of the “Implementation Standards for Public Notice on Designation of Premiums, Etc.” (the “Implementation Standards”) published by the Consumer Affairs Agency, “the provision of money or goods that are recognized as compensation for work” does not constitute the provision of “premiums.” Thus, for example, if prize money is offered to participants selected by a certain method as compensation for their attractive performance to enhance the competitiveness and entertainment value of a competition, it is reasonable to consider that the provision of such prize money constitutes the provision of “compensation for work” above (and, therefore, the prize money is not a “premium”). The JeSU Report also expresses a similar opinion.

3.2. “Gacha” in online games

(a) Gambling

In Japan, offering so-called “gacha” (random in-game items, a.k.a. loot boxes or mystery boxes in other jurisdictions) in online games has generally been considered not to be gambling if those items cannot be redeemed for money. However, in the play-to-earn blockchain games that have emerged in recent years, users are allowed to sell NFTs (non-fungible tokens) obtained through gacha services (“Gacha NFTs”) to third parties through in-game or external marketplaces and convert them into cryptoassets and/or money. The question arises whether such schemes are considered gambling due to the apparent “acquisition or loss” of the property being contested between NFT game providers and users, or among the users themselves.

In this regard, the Council for Sports Ecosystem Promotion published the “Guidelines for the Establishment of an NFT Package and Secondary Distribution Market for NFTs Using Sports Content”⁹https://csep.goleadgrid.com/api/documents/share/0caa404d1591139d6a0a0875d8e37c15 (in Japanese only) regarding services that combine packaged NFT sales and secondary distribution in September 2022, and the Blockchain Collaborative Consortium published the “Guidelines for Random-type Sales of NFTs” with four other organizations (collectively, “BCCC, et al.”)¹⁰https://bccc.global/wp/wp-content/uploads/2022/10/NFT-guidelines.pdf (in Japanese only) in October 2022. Additionally, the Computer Entertainment Supplier’s Association (CESA) published the “Guidelines for Blockchain Games” with two other organizations (collectively, “CESA, et al.”)¹¹https://www.cesa.or.jp/assets/pdf/information/blockchain_guideline20240710.pdf (in Japanese only) in July 2024. According to these sets of guidelines, regarding the relationship between the seller (a gacha service provider) and the user, in principle, it can be interpreted that the service provider will receive money or other consideration (property) equivalent to the actual sales price and the user will receive an NFT (property) whose value is equivalent to the actual amount paid. Therefore, it can be said that there is no “acquisition or loss” of property (unless the possible gacha result includes so-called “drawing a blank” (e.g., no NFTs are delivered)).¹²However, when a separate sales price is set in the primary distribution market, it is possible that a relationship of “acquisition or loss” of property between the seller and the user can be conceived. CESA, et al. also explain their idea that the transaction prices between users in the secondary distribution market are usually determined based on different factors from those of the transaction prices between the seller (a gacha service provider) and the user, so the existence of the secondary market and the difference between the transaction prices above do not create a relationship of “acquisition or loss” of property in principle.

These interpretations are all attempts to explain that the “acquisition or loss” of property does not arise in gacha services based on the assumption that the user always obtains a Gacha NFT of a value equivalent to the money they paid for the gacha service itself. However, it is not sufficient for NFT game providers to simply make such assertions. For example, if part of a Gacha NFT is sold at a lower price than the price of using the gacha service, the users who obtained the Gacha NFT through the service may be considered to have incurred a “loss” of property equivalent to the difference in price.

(b) Premiums

If Gacha NFTs are considered to be “premiums” by means of general prizes under the AUPMR, they must be offered within the limits of premiums described in section 2.2 above. However, according to paragraph 4(4) of the Implementation Standards, “transaction incidentality,” which is one of the requirements for “premiums,” is repudiated when a source of economic gain that would ordinarily constitute the essence of a transaction in light of general commercial customs is provided. Therefore, if users will purchase gacha services for the purpose of obtaining Gacha NFTs, the Gacha NFTs would be regarded as a source of economic gain that would, in light of general commercial customs, ordinarily constitute the essence of transactions comprising the conduct of the purchased gacha services, and thus it would be possible to understand that Gacha NFTs are not incidental to any of the transactions.

4. IRs

In December 2016, Japan enacted the Act on Development of Specified Integrated Resort Districts (the “IR Act”) for the establishment of IRs. An IR is a group of facilities envisioned to consist of an international convention center, exhibition hall, hotels, restaurants, shopping malls, entertainment facilities, casinos, etc. to be established and operated by private business operators. Under the IR Act, a certified facilities operator may, when it has received a license from the Japan Casino Regulatory Commission, legally conduct licensed types of casino business and provide casino gaming methods in the licensed area.¹³Article 39 of the IR Act. According to publicly available information, however, Japan’s first IR is not expected to open until autumn 2030 at the earliest.

5. Conclusion

Although gambling-related regulations may be concerning for broad service providers that randomly provide goods and services for a fee, they are quite general and abstract. Therefore, stakeholders must conduct individual analyses based on the specific circumstances to determine whether such random-type sales violate the Penal Code or the AUPMR. In conducting that research, it is essential to review the most recent standards and guidelines published by both the government and industry organizations because valuable reference materials in these areas have been frequently made available to the public.