This October, a 15-year-old boy from Sendai, a major Japanese city near the capital Tokyo, was arrested for allegedly swindling a man in his 30s out of ¥1.34 million, around £6,500, in a so-called romance scam, in which victims are lured into romantic relationships via social media and defrauded.
The idea came from a manual entitled: ‘How to earn ¥500,000 a month.’
“I wanted to have a lot of money so I could keep gambling in online casinos,” the boy, who cannot be named for legal reasons, told investigators at the Metropolitan Police Department.
He had begun iGaming in his first year of junior high school at just 12-years-old.
Addiction
Investigators discovered that he had defrauded dozens of men to fund his addiction, posing as a female university student in online chatrooms and dating apps.
And it’s suspected that he spent several million yen on online gambling with money earned through these romance scams.
Scenes like this are becoming all too common in Japan’s fast-growing illicit iGaming nexus. There are over three million Japanese users of illegal iGaming sites. And an estimated five percent of players are children aged between 10- and 19-years.
Despite tight nation-wide gambling restrictions, iGaming has exploded in Japan since the Covid-19 pandemic. It is a digital Pandora’s box, with estimates placing its value at the equivalent of £6.18 billion (US$8.1bn) a year.
This sprawling market exists within a highly restrictive and regulated political context.
Pachinko
Most forms of gambling are illegal in Japan, with the exception of sports betting, Pachinko and, until very recently, casinos.
But despite overseas online casinos remaining manifestly illegal, a rapidly expanding digital infrastructure and a long-standing gaming culture make Japan perhaps the easiest place in the world to find customers.
And consequently, Problem Gambling, (PG) or Gambling Disorder, has become a major public health concern in Japan.
Academics have named it one of the countries with the highest prevalence of severe gambling problems in the world. In recent years, online casinos have been at the centre of the debate.
Debt
According to a National Police Agency survey, some 60 percent of online casino users in Japan have a gambling addiction – with more than 40 percent of these users finding themselves in debt.
Children cannot legally take on debt. But their addictions still demand to be fed.
So where is the money coming from?
And what happens when the stakes escalate beyond a smartphone screen?
Romance scams are perhaps the gentler end of the spectrum.
Grooming
Police and social workers describe a darker pattern emerging: children slipping into theft, coercion, even situations involving violence or grooming, all to feed burgeoning addiction. It is a trajectory that is becoming disturbingly familiar, with little sign of slowing.
Gacha games are hugely popular globally, but particularly amongst Japanese Youth. It is a cultural passage that by middle school many Japanese children will regularly play or at the very least have been exposed to these online games.
These free-to-play games with a lottery-like system, where the user pays with in-game currency to enter a draw in order to obtain characters and items, dominate the mobile game market.
Gacha Gotcha
Nearly all of Japan’s top-grossing mobile games incorporate Gacha mechanics.
Experts have warned of the inherent addictive, gambling-like nature of such games “as the randomness of the gacha triggers the same dopamine hit when a person is gambling” and they caution that Gacha serves as a gateway for children to use iGaming platforms, with offshore casinos deliberately replicating Gacha user interfaces, swamping their games with familiar characters and bright colours.
Japan’s gambling legislation was written long before the internet blurred borders. And it shows.
Offshore iGaming platforms operate entirely outside Japanese jurisdiction, consequently slipping through the proverbial cracks, with companies registered in more lenient markets, like Malta or Curaçao, the use of foreign servers, and users hiding behind VPNs and crypto payment systems.
Illegal Operators
Even when authorities identify illegal operators, enforcement is slow and often symbolic; shutting down a site in one country simply sees it reappear in another.
But the government is finally taking a more coordinated response.
In June, Japan’s parliament passed a bill to specifically ban both promotional content and advertising that directs users to overseas online casinos. This may be a first crucial step in transforming this addictive landscape. President of The Society Concerned About Gambling Addiction, Noriko Tanaka, stressed just how easily accessible igaming platforms are, with ads littered across the internet, including popular sites like YouTube.
Regulators are also pushing for mandatory age-verification tools, quicker takedowns of illegal platforms, and more cooperation with foreign agencies.
But whether these measures can keep pace with this murky illicit industry remains an open question.
Danger
Offshore digital casinos are private, seemingly innocuous and permanently available. And as noted by psychiatrist Toshiaki Tsuneoka, because these platforms are so easily accessible via smartphones, there’s a real danger of children becoming addicted before their families even notice.
Beyond legal penalties and legislative changes, experts like Tsuneoka from the University of Showa, are calling for a more rigorous approach that emphasises early intervention, rehabilitation and support from schools and families to tackle the fallout from this highly addictive online ecosystem.
It would appear that Pandora’s box has indeed already been opened, and stories of Japanese youth swiping, spending, and even stealing to fuel their habit, have sprung to life and reality.
Japan can still act. But only if the people who wield the power—regulators, platforms, and health services—choose to collaborate, confront and control the demon that has escaped.
Part One: Japan Special Report: https://igamingfuture.com/dream-island-and-the-future-of-japanese-gaming/
