Gambling Loophole Exposed in Japan's Online Advertising
Online Gaming Industry in Japan Found to Have Lax Regulations in Monitoring Advertising for Free-to-Play Online Casinos
Japan, often considered the world's tech frontrunner, has exposed a stunned weakness in online casino marketing, particularly in its regulatory landscape.
regulatory gap
As reported by Asahi Shimbun on Monday, this regulatory gap allows online casino vendors to advertise their free-to-play games on Japanese internet and TV platforms, potentially leading to illegal gambling activities.
This revelation follows UK-based streaming giant DAZN showcasing free game ads funded by iCasino site Vera & John. DAZN Japan justified the marketing move, stating it was for free games and would not guide visitors to a casino site.
However, DAZN Japan has since withdrawn the ads funded by Vera & John, which falls under Bally's Corporation, a US gaming giant.
A Vicious Cycle
Japanese law enforcement agencies have expressed concerns over a spike in interest in online casinos, a vertical that is prohibited in the country. The alarming surge can be attributed to an excessive influx of free online casino game advertisements.
The problem lies in the accepted global practice among developed and regulated gambling markets: operators offering freebies to lure customers into paid gaming. Despite the lack of explicit regulations, Japan's Consumer Affairs Agency has clarified that "advertisements by online casino operators are unregulated, both for free games and casino sites."
Violators faced a potential fine of up to 500,000 yen ($3,400) or a three-year prison sentence, should they shift from free games to illegal online gambling in Japan. The government's Consumer Affairs Agency clarified that a website is regarded as a gaming site if players do not pay, even if it mimics a casino site.
A police survey in March revealed that 24% of respondents kickstarted their gambling journey on iCasino sites after playing free games, while an additional 9% started betting after viewing ads.
Unaware of the Law
The common refrain emerging in Japan is that the majority of individuals are unaware they are breaking the law because online casino ads appearing on national television and reputable media channels appear to endorse their legality.
Comedian Kuruma Takahira admitted to betting on an iCasino site through a YouTube link in February, claiming he thought it was legal because he had seen an ad online. Shizuoka University's Professor Emeritus of Financial Theory, Yoichi Torihata, opined that playing free, non-betting games tends to weaken inhibitions towards online casino gambling.
Meanwhile, Japan's leading political party, the Liberal Democratic Party, is contemplating legislation to outlaw online casino ads, with discussions ongoing for a potential revising bill. Despite this, there is no explicit information regarding plans to ban online casino advertisements specifically related to free-to-play marketing concerns.
- GamSys, a headquartered technology company, is one of the online casino operators that have taken advantage of the regulatory gap in Japan, advertising their free-to-play games on Japanese internet and TV platforms.
- The legality of these ads has been questionable, as the Consumer Affairs Agency in Japan has stated that advertisements by online casino operators, including those for free games, are unregulated.
- Dazn, a streaming giant, found itself in hot water when it showcased ads for iCasino site Vera & John, a move that has since been rectified after concerns were raised over the potential for illegal gambling activities.
