Gambling rules will not harm Japan esports: Legal experts

Japan’s rapidly growing esports industry is still negotiating a complicated legal environment, where gambling rules, tournament models and business regulations influence how events are run. A recent analysis by Nishimura & Asahi, Japan’s largest and a leading international law firm, shows that multiple rules remain in place, even though recent changes have relaxed prize limits and allowed larger tournaments to take place.

Speaking exclusively to SiGMA World, the law firm’s attorneys, Yuki Matsumoto and Kazuki Ebihara, said that recent enforcement actions on illegal online gambling and money games are not expected to disrupt esports tournaments in Japan. They stated, “From our perspective, the recent trend toward stricter regulation of ‘money games’ and online gambling is not expected to have any materially negative impact on the legality of esports tournament structures in Japan.”

However, the firm explained that compliance still depends on how prize money is funded. If organisers use entry fees to pay winners, tournaments risk being treated as gambling under the Japanese Penal Code. The guidance remains clear: “To avoid being classified as gambling under the Japanese Penal Code, it is essential that prize money not be funded directly or indirectly from participants’ entry fees. A widely used structure is to allocate all entry fees solely to operating costs and have an independent third-party sponsor provide the entire prize pool.”

They also warned that sponsorship can still create risk if the sponsor and organiser are too closely linked. “Even when prizes are funded by a sponsor, the risk of gambling classification may still arise if, in substance, the sponsor’s funding is effectively equivalent to using participants’ fees. For example, issues may arise when the sponsor is the parent company of the event organiser or otherwise part of the same economic group.”

The lawyers further added, “Rather than the regulation itself, our main concern is that the legal concept of ‘gambling’ is not distinguished in concrete under the Japanese Penal Code and would be interpreted broadly. We will continue working to provide clearer guidance and distinctions between lawful tournament structures and those that could fall within illegal gambling.”

Gambling law shapes tournament structures

Under Japanese law, gambling is broadly prohibited. There are only limited exceptions, such as government-authorised horse racing and land-based casinos. The first integrated resort with a casino is expected to open in Osaka in 2030, and the government plans to start a second round of applications. Online casinos remain banned.

Esports events fall under the gambling conversation because they combine prize money, risk and elements of skill. This is why organisers must carefully structure their events.

Prize limits eased as esports gains recognition

Historically, prize pools in Japan were restricted by the Unjustifiable Premiums and Misleading Representations (Premiums Act). Publisher-funded prizes were treated as promotional premiums and capped at JPY 100,000 (approx. US$638). This limit prevented large tournaments from operating.

Regulators and Japan Esports Union (JESU) now regard prize money for players as compensation for services rendered when it provides entertainment for viewers. This change allows higher prize pools. JESU encourages organisers to maintain this classification by issuing professional licences, limiting events to invited players, and signing individual agreements.

Open qualifiers can still win high prize money

In their exclusive statement to SiGMA World, the attorneys confirmed that high prize money can also be given to players who qualify through open tournaments. They said, “First of all, under Japanese law, participants who advance from open qualifiers may receive high-value prize money. In practice, certain esports titles in Japan use a domestic ‘esports licence’ system to help clarify which individuals are eligible to receive large prizes; game publisher provide the license to participants who just won open qualifiers (such as Capcom pro tour).”

The lawyers explained that entertainment value determines the legal treatment. “The Japanese government has publicly stated that prize money can be legally treated as ‘compensation for services rendered’ if the gameplay provides entertainment value to viewers. In most cases, having participants from open qualifiers does not diminish the entertainment value of the tournament, and therefore publishers may lawfully award high prize money to such participants.”

They also provided further details about how the prize cap is avoided. “When a publisher hosts a tournament, avoiding the JPY 100,000 prize cap under the Premiums Act requires maintaining the characterisation of prize money as compensation for professional services. For tournaments with entertainment value, such as those held before a live audience or streamed to a large, unspecified number of viewers, the act of demonstrating skill sufficient to earn prize money is regarded as part of the participant’s work. Accordingly, even individuals who qualify through open qualifiers without holding a professional license may still receive high-value prize money.”

They also advised organisers to take a practical step for compliance. “It is advisable for organisers to consider measures such as granting professional licenses to the top performers in the open qualifiers before the final prize-bearing stage of the tournament. This helps ensure consistency with the professional-services framework and reduces regulatory risk.”

Entry fees allowed if they only cover costs

Large events such as EVO Japan once required police approval because they involved fee-based gaming under the Amusement Business Act. This made tournaments difficult to run.

Guidelines introduced in 2020, after negotiations between JESU and law enforcement authorities, now allow entry fees if they only cover operating costs, such as venue hire and equipment. Major tournaments can now charge fees without being classified as amusement businesses.

Copyright & broadcasting rights

Tournament organisers must secure licences to use game software, visuals, music and performer rights. Streaming or broadcasting without permission would breach copyright law. Publishers sometimes provide public guidelines or terms, and organisers must comply with them.

Visa delays remain major risk for foreign players

Another critical area is immigration. Japan has no specific esports visa category. Players often rely on entertainer or athlete visas. Documents take time to prepare, and some players have missed events due to delays.

The attorneys highlighted this issue: “One commonly overlooked issue concerning overseas participants is the visa application process for foreign players. Visa applications take considerable time to prepare in Japan, including the collection and submission of supporting documentation, so organisers should begin the process as early as possible.”

They cited a recent example and said that there have been multiple past cases where overseas players were unable to participate because their visas were not issued in time for the tournament. Stating that some players were unable to compete, they said, “In a previous Japan-based VALORANT event (Masters Tokyo 2023), a Russian player was unable to enter Japan in time and had to forfeit participation due to delays in the visa process.”

As Japan prepares to host its next major international esports events, the lawyers highlighted that advance planning will be critical. “For major upcoming competitions such as the 2026 Asian Games, we understand that the relevant authorities and organisers are making significant efforts to ensure that such issues do not arise, but early preparation remains essential for all international events.”

Data protection obligations

Japan’s Act on the Protection of Personal Information applies to esports. Player names and gamer tags may be treated as personal information if they can identify individuals. Organisers must tell players how data will be used and protect it through privacy policies, security measures and internal controls.

Complex legal frameworks, but positive outlook

Gambling is broadly prohibited in Japan, except for a limited number of activities such as horse racing and licensed land-based casinos. The first integrated resort with a casino will open in Osaka in 2030 and a second round of applications is expected. Online casinos remain banned.

Despite these restrictions, the esports sector continues to expand. Prize limits have eased. Entry fee rules have been clarified. Large events now operate with clearer guidance.

The lawyers said that early legal consultation remains essential because esports intersects with multiple regimes, including gambling, event permissions, copyright, data protection and visas. The frameworks are still developing, but recent guidance and regulatory changes have made it possible to host larger and more professional esports tournaments in Japan.

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