Japan Begins Talks Of $65bn Sports Betting Market

According to the Financial Times, Japan’s government has started internal talks about legalising sports betting on football and baseball matches.

According to FT sources with “direct knowledge of the situation,” if betting rules on the two common sports were liberalised, it would generate a market worth about $65 million.

Pachinko, a vertical pinball game, is the most common type of betting currency in Japan, with an annual revenue of around $200 billion, but its annual turnover is allegedly declining.

Sports betting demand potentially massive

According to the paper, demand for sports betting is ‘potentially massive’ in Japan, with many Japanese players using foreign-issued credit cards to bet illegally on sports and online casinos through offshore websites.

This illegal market is estimated to be worth about $40 billion per year, while total betting revenue from horseracing, cycling, and motorboat and motorcycle racing – the only sports that allow wagering – was about $55 billion in 2019.

“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,” one FT source commented.

“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.”

According to the source, government negotiations could result in the deregulation of the Nippon Professional League baseball tournament by 2024, as well as a reform of betting laws on top-flight J-League football – which is already partially legalised through a pool betting scheme – in the same year.

International betting companies have taken notice of Japanese basketball, as shown by the recent data collection and distribution deal between Genius Sports and Japan’s B.League.

In 2018, Japan’s Diet authorised the extraction of land-based gambling laws from the Penal Code in order for them to be legislatively reclassified under the Japan Tourism Committee’s supervision.

Furthermore, further deregulation could serve as a continuation of the Japanese gaming market’s liberalisation in 2019, which saw Prime Minister Shinzo Abe approve plans for the construction of gambling resorts across the country, with one in Osaka possibly opening in 2024.

Motivated by economic consequences

The government’s internal debates about sports betting seem to be primarily motivated by the economic consequences of the COVID-19 pandemic.

According to Kansai University, Japan’s professional sports industry lost about $2.5 billion in the first six months of 2020 due to a shortage of paying fans and game cancellations.

Meanwhile, the forthcoming Tokyo Olympic Games have accrued debts of up to $1.9 billion, making them the most expensive edition of the tournament to date.

Despite the fact that betting on football and baseball, Japan’s two most famous sports, has been a “longstanding taboo” and is still “politically sensitive,” sources told the Financial Times that resistance to deregulation has been “significantly lowered” by COVID-19.

Mir, a mobile games maker, said in an email to the Financial Times: “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.”

Lobbying by baseball and football players, as well as companies like CyberAgent and Rakuten, helped persuade the government to consider deregulating sports betting.

CyberAgent wrote to the Financial Times in a separate email: “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.”