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Japan - online gambling regulations

Published by Niki | July 16, 2020

Online gambling regulations, laws and taxes in Japan

More and more countries are opening their doors to the gambling industry, especially the online gambling market. The main reason behind this is that this extremely lucrative market has the potential to bring in billions in revenue yearly.

In some countries, it was considered only a matter of time before online gambling was legalised but in others legalizing even just one form of gambling is a historic event. Japan is one such country that has over the years remained stubborn and unwilling to change its ways. In many aspects, Japan is considered to be extremely conservative and remains consistent in sticking to its traditions.

Over the past few years, many changes have taken place in the online casino industry but also in Japan itself. History was made in 2016, and it’s a matter of time before Japan will fully open its doors towards all types of gambling. After all, Japan is one of the countries with a great deal of potential for growth and for collecting revenue when it comes to both online and land-based gambling.

In this guide, we take a look at the history and laws of gambling within Japan, the new changes and the legality of online gambling. The purpose is to set players at ease by making them fully aware of the current online gambling laws and regulations.

Online gambling regulations in Japan

History and laws of gambling in Japan

When it comes to gambling, Japan is one of the few countries which have had laws in place regarding this activity since the early 19th Century. From the early years of gambling, Japanese residents have only been allowed to take part in forms of gambling that have been approved by the authorities. In the early years, these included only horse racing and bicycle racing. Later other races were added, including boat races and motorcycle races, and of course, the National Lottery had been legal for centuries before that.

The National Lottery was instituted in the 17th century but was disbanded for a while in 1842 before being reinstated. The lottery was the only other form of betting considered legal, apart from the races. The strict regulations rendering other forms of gambling illegal have not kept residents from pursuing the games of their choice. These residents have refused to step back and instead, have opted to find gaming entertainment at foreign online casinos that were willing to accept them.

New beginnings and history in the making

Many believed that the Japanese authorities would never change their stance but thankfully because more and more residents sought gaming entertainment at foreign sites, the authorities were forced to reconsider. Of course, politics was heavily involved, and while the process to legalize gambling started in 2013, it was only by the end of 2016 that the Japanese parliament passed the current more liberal law. This was big news, not just in Japan but across the globe.

The story made headlines everywhere because the legalization of gambling meant a 15-year-old political argument had been put to rest. With the legalization of gambling came heaps of lucrative opportunities and many plans were formed in an attempt to combine hotels, shopping and even conference spaces with high-stakes gambling. Unfortunately, for excited Japanese residents, the first online casinos will only be operational in 2022 or 2023.

The main reason for this is that new legislation needs to be written which will determine important factors such as the tax rates, regulations, and of course, how organized crime and problem gambling can be prevented. This being said, Japan is certainly a country to keep an eye on, as there are those who predict that with its legalization of gambling, Japan will be home to the third-largest gambling market in the world.

Are online gambling winnings taxable in Japan?

All forms of gambling considered legal up to this point have been subjected to tax through the years. Residents who play the lottery are free from paying taxes. Those who participate in sports betting are legally required to report any winnings with their income tax returns.

When it comes to online gambling, this is still a grey area because it hasn’t yet been fully legalised. And without laws and regulations to control it, there are no taxes applying to any winnings made online. Thus, if you are a Japanese resident taking part in online gambling on foreign sites, you get to keep all winnings without having to worry about taxes.

With gambling in the process of being legalised, it is yet to be determined how much tax players will have to pay, and whether they will have to pay tax on any winnings obtained from new casinos. Talks have however begun regarding the tax rates that will need to be paid by the casinos, and predictions are it might be as much as 22% of their annual income.

Is online gambling legal in Japan?

Much as in Sweden, online gambling hasn’t been legalized in Japan but residents can’t be prosecuted for playing on foreign sites based outside the country’s borders. There is hope that the recent changes in legislation regarding gambling itself might spark a fire and bring the country to legalise online gambling next. The possibility is there, but so far there has been no talk regarding this, and it’s safe to say that players might have to wait a little while longer before they can expect any legislation to be brought in for online gambling.

Luckily there are many online casinos that are eager to welcome players from Japan. As a new player especially, it can be quite daunting to try and choose the right online casino, seeing that there are so many to choose from. If you need help in finding the right online casino, take a look at our guide on how to find the best online casino for you.

Once you are more familiar with all that an online casino can offer, you can browse through the list of top international online casinos. These casinos have all been vetted and approved by our team of researchers. Each of the casinos listed brings you the best in bonuses, a secure gambling experience and superb service. It’s always best to play at an online casino that carries some form of an online gambling licence, to ensure you are playing at a legitimate site.

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