How Billions of Dollars Are Leaking Out of Japan’s Market: Lessons from the Underground Gambling Industry

In Japan, gambling is taboo. Online gambling is prohibited—no licenses, no official platforms. But demand hasn't vanished. It simply moved offshore, along with billions of dollars. This paradox holds a valuable lesson for anyone planning to launch an online venture: if demand exists but supply doesn't, the market will create itself.

Real Numbers: How Much Japan Is Losing

According to the Council for the Promotion of the Sports Ecosystem (CSEP), in 2024 Japanese players placed bets amounting to:

• $3.7 billion on baseball — the national sport and the top driver of gambling interest.
• $2.3 billion on soccer — the second most popular betting category.
• The total volume of offshore betting reaches several billion dollars annually.

The research methodology included analysis of ISP traffic and consultations with international iGaming companies. This isn't guesswork—it’s high-confidence data. Key point: None of this money flows through Japan’s official economy. No taxes, no oversight, no player protections. Just a constant outflow of capital abroad.

Why Japanese Gamblers Go Offshore

The law strictly prohibits online casinos. So strict, in fact, that well-known baseball players have been prosecuted for participating in online betting. Society disapproves, and the government threatens further sanctions. Yet tens of thousands of Japanese citizens continue to gamble. Why?

• No legal alternatives. Only offline formats are permitted in Japan: lotteries, horse racing, pachinko.
• Advanced offshore platforms. Many are localized for the Japanese market, offering translation, support, and tailored interfaces.
• Workarounds. VPNs, cryptocurrencies, and digital wallets help users bypass restrictions.

Unlike in countries where players are protected by licensing and state regulation, Japanese gamers face the risks alone. But they still play. Demand outweighs fear.

MGM Osaka and the Double Standard of Regulation

On one hand, the government cracks down on online gambling. On the other, it invests in legal casino resorts. The flagship project is MGM Osaka, an $8.8 billion resort set to open by 2030. Two other projects are in the planning phase. The concept is simple: attract tourists, not encourage local play. But is this effective if Japanese users are already deeply engaged in online gambling? While the state bets on offline, technology and offshore operators are winning the race for real money.

Business and Startup Lessons

Japan’s gambling landscape is a model for any high-demand, low-availability market. The question isn't whether it's banned. The real question: can you offer a solution that works?

1. Law is a factor, not a barrier If you're researching this field, you must understand the international context. Licenses in Malta, Curaçao, or the Philippines provide legal status and the ability to operate in multiple countries—including those with direct restrictions.
2. UX is the key to winning The platforms pulling in billions aren’t just websites—they're full-fledged products. With great design, mobile support, and convenient payment methods. If you're buying an online casino, look beyond price and licensing—focus on localization readiness.
3. Demand drives the market It’s not about “gambling.” It’s about strong unmet needs. People will find ways to get what they want. That means business must find legal, efficient ways to deliver it.

An industry doesn’t vanish when banned. It just changes shape. Whoever defines that new shape will come out on top.

Opportunities You Can’t Ignore

With such high user engagement, developing an online casino is no longer a trend—it’s a strategic move. Especially if you:

• understand the regulatory landscape;
• can build user trust through product quality;
• aim to enter global markets with flexible licensing models.

You don’t need to be a casino operator. You can be a platform provider, a technical contractor, or a marketing agency focused on specific regions. The Japanese online gambling market is more than just about risk—it's:

• a global case study in scarcity and monetization,
• an example of how tech outpaces regulation, and
• a clear signal to entrepreneurs: if people are bypassing the system, real demand exists.

Online gambling is just the form. The essence lies in spotting unmet needs—and being the first to deliver a solution people trust.