At the end of March 2018, the U.S. Court of Appeals for the Ninth Circuit ruled that “Big Fish Casino”, a social gambling game, constituted illegal online gambling under Washington state law. The Court justified its decision by stating that the virtual chips used for the game were “things of value”, which is one of the requirements of gambling12. This might open up other similar lawsuits against social game companies in the U.S.
In Japan, even though legislation was passed (which is the pre-requisite for building a casino in Japan), playing at online casinos is currently arguably a crime, even if their platforms are lawfully operated in foreign countries (for example the servers are outside of Japan) by foreign companies. So, be alert!
1. Gambling Prohibited in Japanese Penal Code
The Japanese Penal Code criminalizes simple gambling (punishable by a fine of 500,000 yen or less), habitual gambling (punishable by imprisonment of 3 years or fewer), and running a casino or organizing habitual gamblers for pecuniary purposes (punishable by imprisonment of 3 months to 5 years).3
The Supreme Court of Japan states the following reason for criminalization: “to allow people to contend for acquiring properties by mere fortuitous circumstances, not by labor or other legitimate causes, induces bad customs of laziness and wastefulness among citizens and harms good customs of labor which is the foundation of a healthy and cultural society.”4
Gambling is defined as the act of contending for the gain of property or profits by fortuitous winning of a game.
These provisions assume gambling to be conducted in a physical place in Japan. However, the question has recently been raised over whether such provisions govern gambling-related acts in overseas online casinos, especially due to the fact that the Penal Code cannot be applied to acts committed outside the territory of Japan.5 Because of this limitation, it is not criminally prohibited for a Japanese person to play poker in Las Vegas or for a Japanese tourist agency to plan a gambling tour in Macau.
2. Several Arrested and Convicted
2.1. Running a Casino in Japan Using an Overseas Online Platform
There is no question that anyone operating a casino in Japan (where people gamble physically and/or online) will be punished under Article 168 of the Penal Code. Those who participate in the gambling will be penalized, as well. The police have conducted many roundups regarding the use of foreign online gambling platforms.
2.2. Operating an Online Casino Platform in Japan
Additionally, operating an online gambling platform is a crime in Japan.
In 2016, a group running a company that operated an online casino website called “Dream Casino” was arrested and convicted with charges of habitual gambling and assisting others in committing habitual gambling.6 Even though the company was registered in Curacao, Netherlands and used servers located abroad, it was considered a Japanese company because all work was completed in an office in Japan and all of its websites were in Japanese.
It should be noted that this group was not charged for “running a place for gambling.” In another judicial case, defendants who conducted gambling on baseball games via email were eventually found guilty of assisting others in committing habitual gambling, even though the prosecutor also charged them with running a casino.7 They did not even have an online platform, much less a physical place to bet.
2.3. Gambling in Japan on an Overseas Online Casino Platform
In March 2016, a group of Japanese gamblers was arrested for using an overseas online casino platform called “Smart Live Casino”, which operated lawfully in the UK. On the platform, users could chat in Japanese, and the dealers were Japanese. The users were convicted and fined for 100,000 to 200,000 yen (about $1,000 to $2,000 USD), marking the first time that individuals were arrested and convicted for gambling on an online platform that operated in a foreign country.
In January 2017, a man was arrested for gambling in Japan using a lawful casino platform from a foreign country. According to his attorney’s blog, he was not indicted and was released without charges, though he admitted that his proceedings were much simpler than a typical indictment.8
3. Japan is Moving Toward Building a “Macau” in its Territory
In July 2018, the Upper House (which is equivalent to the Senate in the U.S.) passed and enacted the Integrated Resorts Implementation Act,9 a general law based on the IR Promotion Act. The latter was enacted and came into force in December 2016 to allow the building of Integrated Resort Facilities (“IR”) in Japan. Under the Integrated Resorts Implementation Act, operating a casino with the permission and supervision of the Casino Management Committee (which is non-existent for now) will be permitted.
The overall purpose of this legislation is to attract tourists from around the world to help regional economies thrive and ameliorate the terrible financial situation in Japan.
There is much to do before actually opening such a facility, especially due to the amendments of gambling provisions in the Penal Code. It is unclear whether the criminalization of simple gambling will be abolished or if the provision will include an exception clause for gambling within IR facilities.
It is said that such a facility will commence operation in 2020, at the earliest.
To my knowledge, there have been no cases where a user of an overseas casino game was arrested since the arrest and release case in 2017. This may be a result of the changes in the legislature regarding casinos. There is also a policy argument that it is unfair to punish gamblers when the operators of gambling establishments avoid repercussions. However, the provisions prohibiting gambling still (and will likely continue to) exist. Gamblers should beware that they could get arrested and convicted for playing online casino games in Japan, regardless of the origin of the platform.
- The Washington state law states the definition of gambling as “the staking or risking something of value upon the outcome of a contest of chance or a future contingent event not under the person’s control or influence, upon an agreement or understanding that the person or someone else will receive something of value in the event of a certain outcome.”
- Article 186 of the Penal Code.
- Decision of the Supreme Court of Japan of November 22, 1950, Keishuu Vol. 4, No. 11, p2380.
- Articles 1-3 of the Penal Code. As in most countries, the Penal Code in Japan typically punishes the crimes committed within the territory and there has to be special provisions to punish crimes committed outside of Japan.
- Decision of the District Court of Kyoto of September 14, 2016.
- Decision of the District Court of Fukuoka of October 28, 2015.
- https://ameblo.jp/gamblelaw/entry-12235518621.html (in Japanese)
- You can read a summary of the bill in English here: https://casino-ir-japan.com/?p=19277