How to start an online casino in Japan in 2023: gambling industry overview
Japan, an economic powerhouse of East Asia with a population of more than 125 million, is well-known for its crowded cities, imperial palaces, national parks, temples, and shrines — but also for its citizens’ well-documented love of gaming and gambling.
Read to the end to learn why so many online casino operators view Japan as a country well worth investing in, despite the country’s strict regulations.
Overview of the gambling industry in Japan
Japan has one of the strongest economies in the world and its people are reputed for their love of gambling and betting, which attracts many operators to the Japanese market.
Just how big is the Japanese gambling market?
According to IMARC Group, a market research firm, the online gambling market was valued at approximately $6.7 billion in 2021 and is expected to reach $10.1 billion by 2027, at an average annual growth rate of 6.95%. These numbers include both online casino and online sports betting.
For a quick idea of Japan’s love of gambling, look at the country’s famous (and beloved) pachinko machines. The game is similar to pinball and runs more slowly than slots, but the winnings are items such as chocolate or cigarettes (so, technically, it's not gambling). The Japanese pachinko industry generates revenues of about $200 billion a year.
Pachinko lets Japanese players scratch a gambling itch without breaking the law: players often receive prizes instead of money, but the prizes can be converted into cash at kiosks around the corner from the pachinko parlor.
Apart from pachinko, Japan’s gambling market is very limited. The only legal options are lotteries and betting on horse, bike, motorcycle and powerboat races, all organized by the national monopoly. Land-based casinos are currently prohibited, but legislation is expected to change in the coming years to allow for casinos.
Because of the limited legal opportunities for gambling in Japan, there remains a huge unsatisfied demand. As is often the case, illicit gambling rings abound, but Japan stands out in terms of scale. The online gray market is huge, with affiliates directing waves of players to offshore platforms that welcome tens of millions of visitors monthly. Japanese players spend about $40 billion each year on foreign sportsbooks, most often betting on soccer and baseball.
Licensing and legislation of Japan
In 2016, Japan passed a bill that provided for the legalization of gambling in the country. This decision was made with the intention of attracting foreign players, thereby replenishing the country's budget.
According to the plan, there will be different rules for foreigners and residents of Japan. Residents will have to pay about 6,000 yen to enter a casino, and will be allowed a maximum of three visits to the gaming centers per week. In addition, a profit tax will be charged on gambling establishments in the amount of 15% of the total income. Slot machines will be able to occupy no more than 3% of the total area of the house.
The issuance of the first gambling licenses in Japan, which was expected in 2020, was postponed because of the pandemic. However, the first land-based casinos are expected to appear in the country by 2025.
At the moment, participation in illegal gambling, as well as the opening of land-based and online casinos, are criminal acts in Japan. Organizers of illicit gambling can be imprisoned for five years, and players can be jailed for up to three years. However, authorities don’t often target players; there have been fewer than 50 actual arrests for this crime in the last five years.
As penalties and fines for playing at online casinos are rarely applied, Japan remains a highly popular market for offshore gaming platforms. There are a number of different offshore jurisdictions that offer international business licensing services. Online casinos registered in jurisdictions such as Curaçao and Gibraltar offer their services in various markets around the world, including Japan. Slotegrator can provide a full range of services for obtaining gaming licenses in different jurisdictions, including advice on business structure, finance and policy compliance.
Japan players’ game preferences
For a successful casino startup, it is essential to adapt the content to local preferences.
Pachinko machines provide a template of the UX that Japanese players expect. Pachinko, integral to Japanese culture, can be described as a cross between pinball and slots. Pachinko parlors are famous for their atmosphere; visitors are greeted by bright lights and striking sound effects, such as jingling bells and whistles.
Online casino users expect a similar environment. While this level of audiovisual simulation is overwhelming for Western players, Japanese players find that the kaleidoscope of lights and symphony of sounds help them achieve a zen-like state of total focus.
Another cultural feature commonly seen on Japanese-oriented platforms is manga. Characters in the style of popular animation appear both as platform mascots and as characters in the plot of the games themselves.
Finding proven suppliers of quality games is a time-consuming and difficult process. After conducting a full and in-depth study of the market, operators engage in negotiations with each game provider — and for a full game portfolio, they need to cooperate with a wide range of them. As each contract includes its own fees, the costs (not to mention the time spent) can quickly add up.
However, you can save a lot of time and money by using a reputable aggregator. Doing so will not only offer a selection of new and innovative games through a single integration, but also regularly update the portfolio of game content.
Japan’s most popular sports to bet one
In Japan, the most popular sports for betting are horse racing, bicycle racing, and motorboat racing. Betting on these sports is controlled by the Japan Racing Association (JRA) and the National Association of Racing (NAR).
Japanese sportsbooks will also feature the country’s signature fusion of modernity and tradition; esports like CS:GO aren’t listed too far away from sumo wrestling. As for team sports, Japanese bettors love soccer, baseball, and basketball, though the most popular betting event is horse racing.
Online casino and sportsbook software
Finding quality software is essential for launching an online casino or sportsbook. The platform should not only be safe, reliable, functional, and user-friendly, but also visually attractive, because the first thing players will see is the design of the site. If they don’t like the aesthetic or if they find it difficult to navigate, chances are slim to none that they’ll bother signing up and playing.
You can start your own online casino project in just a few clicks with our multifunctional gambling software.
Fast, smooth transactions are necessary for success in the gambling industry. The faster and easier it is for players to deposit and withdraw their winnings, the more loyal they will be to your platform. In addition, players need to provide a lot of ways to deposit, such as fiat currencies and e-wallets or cryptocurrencies.
In Japan, the authorities do not block payment systems, but some banks and payment processors can, so even though Visa and Mastercard are the usual solution, players also use e-wallets such as Neteller and Skrill.
They also look for ways to pay with cryptocurrency — another national passion: the country's crypto market is valued at approximately $1 trillion. It’s estimated that 2.31% of the population, nearly 3 million people, have some cryptocurrency. Bitcoin leads the way, as well as Ethereum. Ripple and XEM are also popular, as well as MonaCoin, Japan's own cryptocurrency.
To facilitate the integration of each payment system and reduce the paperwork generated by signing a separate contract with each vendor, you can use an aggregator to integrate all payment methods at once. For example, our Moneygrator solution combines 250 payment systems for different gambling markets in a single integration session.
Responsible gambling in Japan
Japan’s ministry of Health, Labor, and Welfare estimate that 3.6% of Japanese adults, or roughly 3.2 million people, are affected by problem gambling at some point in their lives — a much higher rate than other developed countries where gambling is regulated and problem gambling prevention measures are common.
In Japan, authorities are actively fighting against gaming and gambling addictions, as well as other addictions. Addiction treatment centers can be found In every part of the country. The largest addiction treatment facility in Japan — National Hospital Organization Kurihama Medical and Addiction Center, is located near the city of Yokosuka.
How can Slotegrator help?
If the process of opening an online casino seems very confusing, complicated, and financially costly, that’s because it easily can be. Challenges such as creating a business structure, developing a platform, and dealing with international bureaucracy and regulations are just the beginning.
That is why many operators turn to aggregator companies, such as Slotegrator, to save time and money, avoid paperwork, and eliminate potential mistakes. In addition, instead of constantly negotiating with new game content providers, they can purchase a portfolio of 15,000 games from more than 100 developers in a single agreement.
We also offer turnkey gaming platform development and white label solutions to speed up the process of launching an online casino. In addition, our legal team is always ready to help operators with complex issues related to the licensing process and the regulations of specific jurisdictions.
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