Covid hit prompts Japan to rethink rules on sports gambling

Japan’s government has begun internal discussions to legalise gambling on football and baseball in a move that would create a combined sports betting market estimated at more than $65bn a year.

The secret discussions, which were described to the Financial Times by two people with direct knowledge of the situation, means that betting on Nippon Professional League baseball could be deregulated as soon as 2024.

Fuller deregulation of betting on football’s top-tier J-League, which is already partially legalised through a pools-style lottery system, could come in the same year.

The discussions break a longstanding taboo against opening up opportunities for the Japanese public to bet freely on the nation’s two most popular sports.

While political sensitivity around sports betting remains high, people familiar with the talks said that resistance to the idea had been significantly lowered by Covid-19 and the economic damage it had caused to professional sport.

In the first six months of 2020, the Japanese professional sports industry suffered a loss of $2.5bn owing to the cancellation of games and absence of spectators, according to an estimate by Kansai University.

Japan permits betting on only four sports: horseracing, cycling, and motorboat and motorcycle racing. In 2019, combined betting revenues of all four stood at about ¥6tn ($55bn), with betting on horseracing increasing significantly as mobile betting apps came online.

Japan’s biggest form of gambling is pachinko. Annual turnover from the vertical pinball game is falling but remains at about $200bn a year. Its business model depends on a legal loophole.

People involved in online gambling sites said that Japan’s appetite for betting on its domestic baseball and football leagues was potentially huge. Many Japanese already use foreign-issued credit cards to bet illicitly on sports and in online casinos via sites hosted offshore, creating a market that senior figures in the industry said probably created turnover of about $40bn a year. 

“For years, both Japan and the outside world have been looking at the possibilities around deregulation of baseball and football betting as the Holy Grail,” said one person familiar with the discussions.

“It’s probably too soon to say when it will actually happen, but what has happened to sport in the last year has moved the government a long way forward.”

Representatives of the baseball and football industries, along with corporations such as Rakuten, CyberAgent and Mixi involved in providing legal online betting, have tried for years to persuade the government that those potential betting revenues should remain in Japan. 

In a signal that attitudes had shifted significantly during the pandemic, the government last summer asked the advertising and market research company Dentsu to investigate the environment around potentially deregulating betting on baseball and football. Internal government discussions began after Dentsu’s presentation was made in September, said people familiar with the situation. 

Dentsu said it had not been able to immediately confirm the existence of its presentation.

Apart from the pressures created by the pandemic, lobbyists pointed to the government’s enthusiastic efforts in 2016 to push through laws legalising casinos in Japan. 

In December, Japan Association of New Economy, a business lobbying group created by Hiroshi Mikitani, founder of ecommerce group Rakuten, called for a ban on sports betting to be lifted. It was part of a series of emergency proposals the group made to the government to revive Japan’s tourism industry. 

Two months earlier, internet group CyberAgent estimated that Japan’s sports-betting market could generate as much as ¥7tn in annual revenue if more popular sports were added to the current line-up. 

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“If the ban on sports betting is fully lifted in the future, we believe it will lead to new sources of revenue for athletes, their organisations and the sports industry,” CyberAgent, which already operates an online platform for wagers on horse and motorcycle races, said in an emailed statement. 

Mobile game developer Mixi also said it had participated in various committees and study groups to discuss the promotion of sports business, including sports betting.

“If regulations on betting in other sports are relaxed, new sources of revenue for the growth of Japan’s sport industry can be strongly expected, and we would like to contribute to this area,” the company said.