As the Japanese gambling industry continues to grow, it represents an attractive opportunity for international operators to enter the market.
Gambling is a big part of Japan’s culture.
Visit any town across Japan and you will be sure to find loud and glitzy pachinko parlors, each full of players at these ubiquitous machines, with almost 2.5 million in the country.
Although not generally found outside of it’s homeland, Japan’s pachinko industry generates $200 billion per year, which accounts for 4% of Japan’s annual GDP.
To put it into perspective, the Las Vegas Strip resorts collected a gaming revenue of $18.3 billion in 2020.
Is gambling allowed in Japan?
Although the Japanese enjoy activities that most of us would equate to traditional gambling, the regulations surrounding the Japanese gaming industry have been historically strict, leading to unconventional workarounds.
Recent news emanating from a high-profile fraud case involving government funds being spent with an online casino, twinned with the current election circuit, has put the conversation of igaming back in the spotlight.
Until recently, pachinko remained the only game allowed in Japan for gambling.
Pachinko has a gambling element which is technically illegal, but balls won by players are not exchanged for money on the premises.
Instead, they are swapped on site for special tokens or prizes, so the game can escape the technical classification of gambling.
However, it is common practice for these ‘prizes’ to be exchanged for cash at a 3rd party business (often conveniently located close to the pachinko parlour).
This way, pachinko is seen as an ‘amusement activity’ and remains allowed.
Apart from pachinko, there are a few exceptions to the ban.
The allowed types of gambling in Japan are: the four public sports (horse racing, bicycle racing, powerboat racing, and motorcycle racing), the public lottery (including scratch cards), and toto (Japanese Football Pools).
Land-based casinos in Japan
In 2016, Japan approved the introduction of the Integrated Resorts Implementation Bill, enabling legislation for establishing a domestic casino industry in the country.
Japan sees casinos as a new source of economic growth as well as a way to stimulate tourism to Japan and make it attractive to international gamblers, especially those from China.
In 2019, Japan took another major step forward by introducing its Basic Policy, which sets the criteria for operator selection.
In 2020, the Japan Casino Regulatory Commission was established, a body responsible for granting the licenses necessary to operate a casino.
The body is also responsible for overseeing gambling issues with special attention being paid to problem gambling, money laundering, and preventing relationships with organised criminal groups.
So when will the doors open?
Although the Japanese entertainment industry has seen some great strides forward in the past few years, developments in Japan’s land-based gaming market move at a slow pace.
Actual gambling is unlikely to be allowed before 2026, several analysts have commented.
However, according to estimates, when casino gaming does come to Japan, it may become the second biggest market in the world after Macau.
Online gaming industry in Japan: A big opportunity
The Japanese online gaming market continues to expand, which comes as no surprise given the market’s unparalleled potential.
Japan has a population of 125.8 million people, the highest percentage of adults on earth, the world’s third-largest economy, and some of the world’s best digital infrastructure.
The Japanese video game market is the third largest in the world, after China and the US – and most of video game revenues are generated via mobile games.
Smartphones have become the most popular device for playing games of any kind in Japan, and with mobile gaming is on the rise – this presents online gaming companies with an enormous opportunity to enter the market.
Add to this a strong gambling tradition and the fact that there is no legislative framework for online gambling at time of writing.
The result? The Japanese market attracts an increasing number of overseas operators.
A major complication is that Japan is not an easy market for foreign companies enter without fully understanding the task ahead.
Many western-based gaming companies have made the leap into the market, with different results, some learning costly lessons in the process.
To make a mark in this incredibly unique country requires a thorough analysis, in-depth local knowledge, and patience.
A new approach may be needed to repackage traditionally western products to make it suitable to the customer needs.
Spending big on acquiring players through traditional channels, hiring staff who know the country and it’s customers, signing payment providers, translating (or in some cases, totally redesigning) the customer-facing site are just some of the things that will be needed.
But after all of that, how do you expect them to understand games that have been created for Western audiences?
The gaming experience is the crux of the offering, the vehicle that generates revenue and if they cannot relate to it, why would they spend time and money on it?
By combining deep industry expertise and local knowledge, Yolted is able to deliver excellent localized games for the Japanese market that attracts and keeps customers.
Our Japanese-focused titles are built by skilled video game developers and localization professionals who understand the needs and expectations of the players to deliver trust and excitement.