In Review: Licensing and Taxation of Gambling Activities in Japan

All the questions

Legal and regulatory framework

Under current Japanese law, gambling, in general, is prohibited under Article 185 of the Penal Code, with the exception of betting on something for momentary entertainment or on specific events or sports. authorized by special laws, which are:

  1. the four public sports – horse racing, bicycle racing, motorboat racing and motorcycle racing – all of which are run by local governments or state corporations;
  2. the public lottery; and
  3. Japanese soccer pools.

Licenses are required to operate these forms of gambling activities, which under current legislation are only granted to local governments or state-related entities.

In this context, Section 185 of the Penal Code provides that a person who gambles shall be punished with a fine or a small fine not exceeding ¥500,000, unless the object placed on the bet is temporary entertainment. The term ‘gambling’ is understood as ‘an act by which more than two persons bet on the outcome of a contest of chance to compete for a prize in the form of property or credit’.3

“Result of a contest of chance” means a result that is something unpredictable or beyond the control of the contestants. The former Supreme Court case of November 13, 1911 held that if the result of a contest depends on any degree of chance, the result will fall under the ‘result of a contest of chance’, even if this result depends on certain skills. candidates (except where the outcome is evident in advance based on any gap in the skills of the candidates).

As a result, Japanese judicial precedents have concluded that the results of “igo” games,4 mah jong5 and Japanese chess (shogi)6 all fall under the category of “results of a contest of chance”.

“Betting to compete for a prize in the form of property or assets” means the winner wins and the loser loses a prize in the form of property or assets. If one of the contestants does not lose any property, that is, he is not at risk of losing his property, the contestants do not compete for a prize in the form of property or assets.7

Article 186, section 2 of the Penal Code further provides that a person who, for profit, operates a gambling place or organizes a group of habitual players shall be punished with a term of imprisonment of not less than three months but not more than five years. . The term “operating a gambling venue” means the provision, as a host, of a certain gambling venue which is under the control of the host.8 In this context, “certain place of play” means that a physical place or an actual gathering of players at such a place is not necessary.9

The crime of running a gambling venue also requires running a gambling venue and “getting profit”ten and the term “to obtain a profit” means the intention to obtain an illegal financial advantage (in the form of fees, commissions or otherwise) in return.

The Penal Code has a certain exception stating that gambling will not constitute a violation of the Penal Code, if “the item which is placed on the wager is that of momentary entertainment”. This term is understood as something of very low value that will not unduly stimulate a person’s passion for gambling. the definition of “temporary entertainment”.

Thus, legally permitted gaming under current Japanese law is limited to gaming facilitated by licensed public entities, and interpretations of gaming and gaming regulations to date have been generally consistent with this general rule. .

The passage of the law opens the door to gambling establishments operated by private entities in Japan, which is the latest development in a long-running debate over whether to legalize and license casinos in Japan. designated areas of the country.

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