Japan’s Illegal Gambling Market Tops ¥6.45 Trillion Ahead of First Casino Opening

Gambling in Japan is currently restricted to a tightly controlled framework, limited to state-managed options such as the lottery, the sports lottery known as “toto,” and parimutuel betting on horse racing and motorsports. This longstanding restriction, however, is poised to shift in the near future as MGM Resorts prepares to open MGM Osaka, the country’s first legal, land-based casino resort.

Despite these limits, unlawful gambling is flourishing. According to a newly released report from Japan’s Council of Sports Ecosystem Promotion, approximately ¥6.45 trillion (US$45 billion) was wagered by Japanese bettors on unregulated and illegal gambling websites throughout 2024. The Council conducted the study with support from Japan’s National Police Agency, utilizing arrest data related to illegal gambling and publicly available statistics from international iGaming and sportsbook operators regulated abroad.

Japan’s legal sports betting landscape is highly unique compared to most international models. Whereas many other countries permit private operators to run licensed sportsbooks, Japan retains a government monopoly. The “toto” sports lottery is operated exclusively by the national government, with proceeds going to the Sports Promotion Fund. But its betting structure restricts how much a person can stake, thereby limiting potential winnings and losses.

As a result, a growing number of Japanese gamblers are turning to offshore platforms offering more attractive odds, fewer limitations on betting amounts, and aggressive promotions. These platforms, often licensed in international jurisdictions such as the Philippines, Malta, Curacao, the Isle of Man, Anjouan, and Ukraine, offer a wide range of betting options to Japanese consumers, even though doing so violates Japanese law.

The Council’s report highlights the extent of the issue. While around 3.37 million Japanese gamblers are estimated to have accessed illegal offshore online casinos in 2024, wagering roughly ¥1.2 trillion, the figure for unregulated online sports betting is far greater. The report dubs this expansive market the “Freeride Market” and estimates that a staggering ¥4.9 trillion in illegal sports wagers were placed online in 2024 alone. Of that total, soccer accounted for more than half, with an estimated ¥2.9 trillion wagered on the sport.

“The investigation revealed that some overseas sports betting websites accessible from Japan provide services in a manner that may infringe upon copyrights, likeness rights, publicity rights, and other rights,” the Council wrote in its report. “The overseas sports betting operators providing services in the manner described above are providing illegal services to residents of Japan.”

The report also notes that many individuals caught participating in illegal betting activities claimed ignorance of the fact that their actions were unlawful. While such platforms are operating legally in their respective licensing jurisdictions, critics argue that they offer minimal consumer protection, citing inadequate guarantees around fair gameplay, limited oversight, and questionable practices regarding payouts.

One of the more peculiar aspects of Japan’s gambling ecosystem is the status of pachinko, the ubiquitous, slot-like amusement game found in thousands of parlors across the country. Officially, Japan does not classify pachinko as gambling, since players are awarded prizes rather than cash, in a format similar to an arcade. However, a workaround has long existed: pachinko parlors are commonly located adjacent to redemption facilities, often operated by the same owners, where players can exchange their tickets or tokens for cash. This longstanding practice remains a widely accepted—if legally ambiguous—feature of Japan’s gaming culture.

With Japan on the cusp of welcoming its first legal casino at MGM Osaka, the government now faces mounting pressure to address the vast and growing illegal gambling market, particularly online. The new data from the Council of Sports Ecosystem Promotion sheds light on the scale of the issue and may influence future regulatory policy as Japan attempts to balance revenue goals with social and legal concerns.

By fLEXI tEAM