International edition
June 20, 2021

As Japanese law stands today, casinos and most forms of gambling are illegal

Japanese lawmakers may consider casino gambling

(Japan).- Japanese lawmakers may consider legalizing casino gambling next year, and the country could be the next major gambling market. Public agencies now operate pari-mutuel betting and lotteries in Japan, and the game of pachinko is legal because it pays out tokens.

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In order for this country to develop energetically in the future, then I think the casino industry has potential worth exploring," said Shozo Azuma, a lawmaker from the Democratic Party of Japan.

In April, more than 100 Japanese lawmakers from a broad range of political parties got together to form what they called the "league of Diet members for the promotion of the international tourism industry." This cross-party grouping now convenes once a week to explore what kind of legislative reforms are needed to make the first Japanese casino a reality.

While it seems unrealistic to suppose they will hit their stated goal of drafting a "casino law" by autumn, it does seem likely that, when it is ready — probably in spring 2011 — their law will be passed. When that happens, the door will open onto what one commentator described to The Japan Times as "the last major untapped market" for the casino business.

As Japanese law stands today, casinos and most forms of gambling are illegal. Article 185 of the Penal Code states that "a person who gambles shall be punished by a fine of not more than us$ 5,637." Article 186 makes it a crime to "run a place of gambling."

There are six legislated exceptions to the prohibition: the parimutuel betting on horse racing, bicycle racing, motorcycle racing, motorboat racing and also the Toto and Takarakuji lotteries — all of which are operated, exclusively, by public agencies.

The wildly popular game of pachinko — generally played in large, cacophonous "pachinko parlors" housing hundreds of machines — has no exemption from the laws banning gambling. Both this slot-machine game that's like vertical pinball, and its electronic cousins known as pachislot, are permitted because, as far as the law is concerned, they're not used for gambling.

The trick is that a pachinko parlor only makes "payouts" in the form of tokens. If you want to exchange those for cash (and research suggests that 95 % of players do), then you need to take them to "exchange centers" which are invariably located nearby. It's the separation of the game parlors from the exchange centers that allows pachinko to circumvent Japan's no-gambling laws.

In 2003, Tokyo Governor Shintaro Ishihara floated the idea of running a casino whose payouts would be effected in the same narrow legal space as pachinko. It didn't work. Ishihara couldn't get the National Police Agency and the Justice Ministry to agree to a system whereby "prizes" won at the casino could be recouped for cash.

Since then, it has been the generally accepted wisdom that any attempt to build a casino in Japan must be preceded by legislative reform. Shozo Azuma, a lawmaker member of the ruling Democratic Party of Japan and a member of the pro-casino Diet league, outlined his reasoning in a speech last week. "What this country needs is a way of stimulating the economy that won't use tax money. The only way left to do that is casinos," he said. "In order for this country to develop energetically in the future, then I think the casino industry has potential worth exploring."

Of course, it's not just the central government that stands to gain through tax revenues from casinos. Regional governments, which are suffering from drastically reduced revenues as their residents age and decrease in number, are desperate to host what they see as potential gold mines.

According to a study by the Tokyo Metropolitan Government that was completed in 2002, a combined casino, hotel and entertainment facility that attracted 2.25 million people each year would generate us$ 642.6 million in earnings, resulting in a total tax yield of us$ 156 million (including local and national taxes on the operator, as well as income tax levied on the earnings of the projected 4,095 employees).

The list of other prefectures that have expressed interest in hosting a casino is long — according to some counts, longer than the list of prefectures that haven't. In the last six months alone, prominent claims have been made by and on behalf of Okinawa, Nagasaki (the plan is to build one at the Huis Ten Bosch amusement park), Osaka, Wakayama, Kanagawa, Chiba, Miyagi, Akita and Hokkaido.

Toru Mihara, a professor at Osaka University of Commerce, is one of Japan's leading authorities on gambling law and casinos. He is not only advising the current league of Diet members, but also advised a similar group in 2006/'07, when the Liberal Democratic Party was in power.

As was the case back then, the current group of pro-casino lawmakers is comprised primarily of members of the two largest political parties, the LDP and the DPJ. Participation is on a voluntary basis, and the goal is that a casino law will be sponsored by Diet members — as opposed to being sponsored by one or more political parties.

"Political parties can't sponsor this kind of bill, because there will always be division within their own ranks," Mihara said. "But because we have been through this once when the LDP was in power, and now we're doing it with the DPJ in power, the chances of a Diet member-sponsored bill being passed are high."

Also, as the issue is not linked to a single political party, Mihara explained that the outcome of the Upper House election on July 11 is unlikely to affect the debate.

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