According to estimates by the NPA, Japanese users spend a total of 1.24 trillion yen (around $8.6 billion) annually on gambling operator websites. This amounts to approximately $2,552 per active player.

Market analysis shows that the 40 largest online casinos and sportsbooks operating in Japan are licensed offshore and are registered in corresponding offshore jurisdictions. As a result, the police have little leverage to apply pressure on them.

This information was shared by representatives of the NPA during the first meeting of the expert group on combating illegal gambling, established by Japan’s Ministry of Internal Affairs and Communications.

In turn, experts at the meeting concluded that one of the best methods to combat illegal gambling operator websites is blocking them. However, they immediately added that for this to happen, internet service providers would need to track which sites users visit. This contradicts the Constitution of Japan, and pushing such changes at the state level would be difficult.

Overview of the Illegal Gambling Market in Japan

Gambling in Japan, like in many countries, is subject to strict legal controls. However, in recent years, issues related to illegal operators have become increasingly relevant. According to data from Japan’s National Police Agency (NPA), approximately 3.37 million residents of the country are involved in illegal gambling. This figure not only highlights the scale of the problem but also indicates the high level of interest in online casinos and sports betting among Japanese citizens, despite strict legislation prohibiting participation in such activities.

Japanese users spend 1.24 trillion yen (approximately 8.6 billion USD) annually on gambling. The average player spends around 2,552 dollars per year, which is a significant sum considering the overall economy of the country. These figures suggest that, despite existing prohibitions, gambling remains an important part of leisure for a large number of Japanese people.

However, despite the widespread involvement of players, the Japanese government faces the challenge of effectively controlling this sector. Most major online casinos and sportsbook operators operating in the Japanese market are registered in offshore jurisdictions. This creates a challenge in regulation and legal enforcement, as Japanese authorities have no direct control over these operators. They can only restrict access to such sites, which, as research shows, is not always effective.

Unfortunately, not all Japanese citizens realize the illegal nature of their participation in gambling. For many Japanese, gambling remains an unawareness space where they do not perceive the risks as real. For instance, according to representatives of the NPA, many players only find out that online casinos are illegal in Japan when they face legal consequences. This increases the risk of getting involved in debt traps and worsening financial situations, which, in turn, contributes to the rise in criminal cases related to gambling.

The situation with illegal gambling is also complicated by the fact that combating such operators requires not only international cooperation but also the implementation of new technologies. Currently, the main proposal to combat illegal sites is their blocking. However, for this to happen, internet service providers would need to track which sites users visit, which, as experts point out, contradicts Japan’s Constitution. This issue requires lengthy legal and public debates, and it will be difficult to achieve changes in legislation in the short term.

The Problem of Regulating Online Casinos and Blocking Websites

One of the key challenges in combating illegal gambling in Japan is regulating online casinos and sportsbook operators operating within the country. Currently, most of the major gambling operators providing their services to Japanese citizens are registered in offshore jurisdictions such as Curaçao, Malta, and others. This means that they operate under foreign licenses, which significantly limits the ability of Japanese authorities to exert control over them. This status allows these operators to operate in Japan without direct legal oversight from local authorities.

This legal gap creates problems for law enforcement, as they cannot directly prosecute or impose fines on these companies, as would be possible with operators based within Japan. Moreover, even if these websites are blocked at the level of internet service providers, users can easily find ways to bypass these blocks using VPNs or proxy servers, further complicating efforts to tackle illegal operators.

In light of this situation, representatives of the National Police Agency of Japan have proposed a solution that involves blocking the websites of illegal operators. However, for this to be implemented, internet providers would need to monitor which sites users visit, which, as mentioned earlier, contradicts the Constitution of Japan, which protects citizens’ right to privacy and data confidentiality. This legal constraint presents significant obstacles to implementing the proposed measure.

Additionally, it is important to note that blocking websites is a temporary measure. As shown by examples from other countries, such actions may be effective in the short term, but in the long term, they do not resolve the issue. Alongside blocking, a comprehensive approach is required, including stricter penalties for participants in gambling, improving legal awareness among citizens, and developing effective control mechanisms for operators.

Another crucial point is that tackling illegal gambling requires international cooperation, as many operators are registered abroad. To achieve meaningful change, it is necessary to align policies with other countries and international organizations involved in gambling regulation.

Laws and Penalties for Gambling Participation in Japan

In Japan, participation in gambling, including online casinos, is a criminal offense, making the country one of the strictest in terms of gambling regulation. Japanese legislation prohibits both participation in gambling and organizing gambling activities, reflecting the government’s firm stance on this form of leisure.

Japanese citizens who engage in gambling face penalties in the form of fines or imprisonment. The most common penalty is a fine of up to 500,000 yen (around 3,300 USD); however, in the case of repeated offenses or involvement in large-scale gambling, the penalty can be much more severe. For particularly avid players, referred to as “ludomaniacs” in Japan, imprisonment for up to 3 years is possible. This punitive legislation aims not only to curb demand for illegal gambling but also to prevent the growth of gambling addiction among the population.

Statistics from recent years confirm an increase in criminal cases related to gambling. In 2024, 279 individuals were charged with violating gambling-related laws, nearly 2.5 times more than in 2023, when only 107 cases were reported. This increase may indicate that authorities are more actively pursuing individuals involved in illegal gambling, which could also be related to growing public pressure and concerns about the negative consequences for citizens.

However, the issue lies in the fact that many citizens are unaware of the legal consequences of their involvement in gambling. A case in point is a 34-year-old Japanese man who only learned after three years that online casinos are illegal in his country. During this time, he accumulated debts amounting to 66,000 USD, which led to a serious financial crisis. This case highlights the importance of raising awareness among citizens to prevent such issues in the future.

Despite the severity of the penalties, the law is not always an effective tool in combating gambling, as many players continue to use online casino and sportsbook sites, especially those located outside of Japan. Blocking such sites or imposing fines on players, as demonstrated by the experience of other countries, does not always lead to a decrease in the number of gambling participants. Gambling addiction remains a serious social issue, and addressing it requires not only stricter legislation but also a focus on education and psychotherapeutic assistance for gamblers.

Economic Impact of Illegal Gambling on Japan’s Economy

Illegal gambling has a significant impact not only on the social sphere of Japan but also on the country’s economy as a whole. Japanese players spend enormous amounts on participating in online casinos and sports betting, leading to a significant outflow of financial resources from the country. According to the National Police Agency (NPA), Japanese users spend around 1.24 trillion yen (approximately 8.6 billion USD) annually on online gambling. This amount represents a considerable capital drain that could otherwise be used to sustain and develop the country’s economy.

One of the main consequences of such financial outflows is the loss of tax revenue, which could have been directed toward the development of public infrastructure, social services, and other important areas. Legal gambling operators operating in Japan are required to pay taxes that go into the national budget. However, most online casinos popular among Japanese players operate without being registered in the country, allowing them to avoid paying taxes. This creates a significant economic burden for the government, depriving it of substantial financial resources.

In addition, the large financial losses incurred by players often lead to increased debt obligations. Many Japanese individuals involved in gambling face the problem of accumulating debts that they are unable to repay. As experience shows, these debt traps become the cause of financial and social problems that affect not only the players themselves but also their families. For example, in the case of a 34-year-old Japanese man who found himself with debts of 66,000 USD, the consequences of his gambling participation were catastrophic, and this is just one of many such examples.

Moreover, gambling addiction can lead to reduced labor productivity, as players often spend significant amounts of time participating in games, affecting their professional activities. Studies show that gambling addiction can lead to job loss, which in turn negatively impacts the economic situation in the region where the player lives.

The economic consequences are not limited to the loss of tax revenue and the personal debts of players. Gambling issues can also affect financial institutions, which face a growing number of loans and debt disputes related to gambling addiction. Bankruptcies and the increase in credit risks negatively affect the financial market, creating additional economic difficulties for both individuals and banking organizations.

The Future of Gambling in Japan: Likely Legislative Changes

The future of gambling in Japan remains uncertain, but there are clear signs that the situation in this sector will gradually evolve. Given the growing interest among citizens in online casinos and sports betting, as well as the significant financial losses incurred by Japanese participants in illegal gambling, the issue of potential legislative changes is becoming increasingly relevant.

One possible step in the future could be the legalization of certain types of gambling within the country. In recent years, Japan has already observed a slight shift in its approach to gambling. For example, in 2018, an amendment was passed allowing the construction of integrated resorts with casinos in several major cities. This initiative was aimed at boosting tourism and economic growth, but it also demonstrates a change in the government’s attitude toward gambling in general. It is possible that, in the future, this practice will be expanded, and the legalization of online casinos will become a logical continuation of this process. This would also pave the way for more structured and transparent regulations to ensure fair practices in the industry.

Legalizing gambling could allow the government to more effectively regulate the market and direct the resulting revenues into the national treasury, which could help offset the economic losses from illegal gambling. This would provide an opportunity for a better allocation of public funds, especially in sectors such as healthcare and education. Additionally, this could serve as a basis for creating safe and regulated platforms that provide players with necessary guarantees and protection against fraud.

However, the process of legalizing and regulating gambling in Japan will require significant effort, including the development of new laws, monitoring of operators, and the implementation of technologies to protect players. One of the key challenges will remain preventing gambling addiction and protecting the most vulnerable segments of the population. In this context, establishing an educational and prevention system will be crucial to help citizens understand the risks and consequences of their participation in gambling. Public awareness campaigns and social programs could play a vital role in reducing the societal impact of gambling addiction.

Regardless of whether Japan moves towards legalization or strengthens its control over illegal operators, one thing is clear: the need for more effective regulation of this sector exists, and the issues of combating illegal gambling will remain at the forefront in the coming years. It is likely that this issue will continue to evolve alongside global trends in gambling regulation, requiring Japan to balance innovation with careful oversight.