The Japanese government may have increased its threats toward illegal online casinos and their players, but one Japanese gaming executive says there’s little evidence of actual enforcement to date.
During a Budget Committee meeting on June 1, Japanese Prime Minister Fumio Kishida pledged to crack down on online casinos targeting Japanese citizens, reiterating it is a “gambling crime.”
Joji Kokuryo, managing director of Bay City Ventures, said that multiple ministries and agencies within the government are tasked with cracking down on illegal online casinos.
This further escalated in late October after Japan’s National Police Agency (NPA) issued a public warning declaring the use of online gaming sites a crime.
According to the NPA notice, a person charged with “habitual gambling” can face a maximum fine of 500,000 yen ($3,754.43) and a maximum prison term of three years.
The stepped up rhetoric sent ripples of concern through the industry. Many European online firms are actively targeting Japan, which is seen as one of the most promising markets in Asia.
Major market potential
According to research and consultancy firm, the IMARC Group, the online gambling market was worth about $6.7 billion in 2021 and is expected to reach $10.1 billion by 2027 at a growth rate of 6.95 percent. These figures include both casino and sports betting-related bets placed on the internet.
However, Kokuryo said that warnings such as these may be more bark than bite for now.
He notes that Kishida’s comments made in June are “nothing new.”
“The law hasn’t changed at all. It’s just that they’re working really hard to publicise situations where illegal gambling is going on.”
It is understood that between 2019 and 2021, there have been only 50 arrests made for gambling crimes relating to online casinos.
Kokuryo said that while some may have noticed an increase in local media coverage of “online casino” arrests in recent times — this is more likely the result of Japanese media’s misunderstanding of what an “online casino” is.
“The news you hear about people being arrested for ‘online casinos’ is actually for ‘in-casinos,” which is a Japanese-English term that describes a “casino cafe.”
Japan’s casino cafes
These casino cafes allow players to play on PCs via the internet and usually handle cash for bets and paybacks on the spot, Kokuryo explained, agreeing it has similarities to the Philippines’ regulated e-games parlors.
“So when you see on the news such as ‘An online casino in Chiba…’ it’s not really a traditional online casino that the international gaming industry knows.”
In Japan, citizens can be charged with gambling crimes if they are caught playing in an illegal online casino or an “in-casino.”
Kokuryo said it’s unclear whether the rate of arrests has increased since the June comments from Kishida, but he hasn’t noticed any arrests of online casino players in the media.
“I think right now, it’s kind of like a grace period right where they’re making sure that people know what’s going on.”
Kokuryo says there still exists a great deal of confusion among the Japanese population, many of whom believe that as long as an online casino is licensed in a country in Europe or Asia, it would be legal for them to play.
The Japanese gaming executive also noted that while a future crackdown may look like “all bad news for the online industry,” it’s actually a good sign for the long term.
Long-term regulation likely
“Quite honestly, in the long run, it could turn into good news as the next step after this crackdown is looking into regulation,” said Kokuryo.
“It’s not good news for people doing business now because they’re obviously going to be blacklisted. But as an industry as a whole, like gaming, I think it would move towards a healthier environment if it’s regulated,” he added.
Kokuryo speculates that there are “definitely” people currently studying online gaming and potential regulation in Japan, but it’s likely still in the research stage for now.
“So think of it more as they’re doing their due diligence. It’s more to understand instead of regulating right now.”
Japan continues to move forward with plans to open its first set of integrated resorts – albeit slowly – with one in Osaka, to be developed by MGM Resorts and Orix Corp, and one in Nagasaki, promoted by Casinos Austria and a consortium of financial partners.
During a conference in July, Kokuryo said he didn’t expect either to open for the next five-six years.