Could Japan Lean Into Next Legal Sports Betting Expansion?

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Japan sports betting

Could Japan be next into the legal sports betting fray on global games?

Much of the world co-existed with sports betting before the U.S. did when the Supreme Court struck down the Professional and Amateur Sports Protection Act three years ago last month.

A number of countries including Canada are rethinking their situations, and now Japan has taken to looking at whether they should regulate sports betting. Canada has moved forward with long-stalled plans to allow for single-game wagering.

Japan’s government has begun to look at legalizing betting on soccer and baseball to generate revenue for the country coming out of the coronavirus pandemic.

Current market for sports betting in Japan

The current market for sports betting in Japan is similar to that which currently exists in Canada. That means there is betting, but it is limited and does not exist in the form that bettors want most.

Currently, wagering is limited to racing events. Horse racing is the most popular event to bet on, but the country also allows wagering on bicycle races, motorcycle racing, and motorboat racing. There is, however, also a pools wagering option for wagering on the J-league, as well as a few other professional soccer leagues around the world.

The markets are controlled and operated by the government.

Why is sports betting so limited?

Japanese law has long banned gambling. It was only recently that laws began to be liberalized to embrace limited forms of gambling. Most of Japan’s legalization of gambling has occurred within the last decade.

Casinos were legalized in 2018, but the expansion of other types of gambling has been slow. Like the prohibition in the United States, this has not stopped gambling, but it has instead driven the wagering to unregulated markets.

No plans to legalize gambling – what?

As recently as March 2021, it was reported that the Chair of the National Public Safety Commission denied that there were plans in place to legalize online wagering.

Interest appeared to mount through the pandemic as one tracking company noted that the most visited gambling site by users in Japan saw a jump from about 650,000 visits in December 2018 to 77.5 million visits in the peak of the COVID-19 pandemic in January 2020.

Sports betting is a different animal?

It appears that a month might have changed things. According to a story in the Financial Times from April 2021, Japan’s government has begun discussions on legalizing wagering on some of the country’s most popular sports.

The article notes that a legalized sports betting market in Japan could be worth $65 billion annually.

Hard times

The pandemic has hit Japanese sports particularly hard. One estimate cited a loss as high as $2.5 billion for the sports industry for the first six months of 2020.

Sports betting in Japan is being viewed as a way to soften some of those losses.

Despite relatively limited offerings, the regulated gambling industry in Japan generated a reported $55 billion in “revenues” in 2019 for the four sports on which wagering is allowed. An expansion of those offerings is projected to more than double those numbers.

Different country, similar challenges

Like the United States, which has seen regulated operators continue to face challenges competing with unregulated offshore sites, the same problem is likely to face Japan.

Many bettors in Japan are already wagering online at sites offshore that are more than willing to accept their wagers while a prohibition is in place.

The push for change, according to the Financial Times, has been driven by some of the country’s biggest industry groups including a lobbying group backed by the founder of Rakuten.

The effort to legalize betting on the country’s two most popular sports, however, is reported to still be at least three years away, with a potential launch date in 2024.

Details to come on Japan sports betting

The details of what sports betting in Japan might look like remain unclear. The launch remains years away, but for sports betting fans, there is reason to be excited.

While Canada might make a more apt comparison than the United States for what is taking place in Japan, given the limited regulated offerings that the two countries currently have, the possibility of single-game wagering will undoubtedly be of interest to some American gambling stakeholders.

What could this mean?

It remains premature to speculate too much on what a legal sports betting market in Japan could look like. However, given the strict government controls in place over the larger gambling industry, it would appear unlikely that a free-market model like that of New Jersey would be the likely model to expect.

Despite the uncertainty in the coming months (and likely years,) one could reasonably expect increased momentum to push for legalization of sports betting in Japan in coming months, especially now that the rumored discussions are public.

One area to watch is what the major American and European sports betting entities decide to do and whether they attempt to shape the scope of the conversation, or sit on the sidelines and see what plays out.