If there is one inevitability that has been highlighted by the COVID-19 pandemic it is that the world is increasingly going online. The gambling industry is no different. Sports betting is already among the big movers in this space, particularly in the United States after the US Supreme Court struck down a federal ban on single-game wagering in 2018. Will Japan follow suit or maintain its seclusion on this front? IAG takes a look at the possibilities regarding this issue going forward.
Itaru Kobayashi, Professor at Obirin University, last year contributed an article to a Nikkei publication called “The Future of Sports Business 2021-2030” in which he made an interesting prediction.
“On a day in September 2030, the 3-time consecutive league champions, Fukuoka Softbank Hawks based at the Paypay Dome in Fukuoka, are playing an official league home game, and the visiting team is the Doosan Bears, based in Seoul Special City (South Korea),” Kobayashi writes.
In the bottom of the 7th the Hawks are on defense, down 2-7. It looks like a lost cause but fans remain glued to their seats. Not only that, they are intently checking out the opposing pitcher and the batting order on their smartphones.
Why? Because a miraculous comeback could see them turn JPY100 into JPY100,000. This is the true charm of sports betting. Kobayashi, who actually played for Fukuoka Softbank Hawks, says, “Sports is one of the growing industries in Japan and sports betting the one dormant asset yet to be activated in the industry. The question is when?”
The dream of Japan one day embracing sports betting isn’t so far-fetched. In May 2019 I spent time at Caesar’s Palace in Las Vegas, where sports betting lounges have long been popular with their vast array of live sports and betting options – everything from Major League Baseball to the NBA, tennis, horse racing and more filling the screens.
Given Japan’s love of sport, and known affiliation with American cultural norms, US-style sports betting could well be seen as a more palatable option than some other types of gambling moving forward – especially if tax revenues are understood to be contributing to education and welfare, or being put back into sports promotion.
The opportunity seems even more compelling when you consider the impact of the COVID-19 pandemic and recent natural disasters, which promise to pose many more challenges for Japan in the future.
Like many other jurisdictions around the world, Japan’s professional sporting leagues were last year postponed and then forced to return without spectators due to the pandemic. Yet sports betting stands as a potential savior should a similar scenario arise again. While the pachinko and pachislot industry faces increasing headwinds over its long-term viability, online betting has no such concerns: betting on horse racing last year totaled JPY2.9 trillion (US$26.5 billion), representing a 3.5% increase over 2019 sales.
You can’t stop times from changing, says Professor Kobayashi.
“Like it or not, digital transformation can’t be stopped, even in the sports industry,” he explains. “Cyber space is borderless and without the natural ocean as a fortress, Japan can no longer pretend to be unaffected by the rest of the world’s changing tides.
“For example, if you subscribe to Major League Baseball’s online service, you can stream all games and enjoy highlights in your own time. We’re living in an age where the consumer can select products from anywhere in the world. So there is an opportunity here for Japan to do the same and sell its own sports content to the world.”
A key moment in the increasing digitization of global sporting leagues came in 2018, when the US Supreme Court struck down a federal ban on single-game wagering and opened the door for individual states to make their own decisions around sports betting legislation. Since then, 21 states have launched live, legal sports betting, four more have passed legislation and another 17 have legislation filed and pending.
“It’s hard to believe, but Russia’s underground ping pong league brings in JPY50 billion (US$460 million) a year,” Kobayashi adds. “That’s more than the USPGA. Once betting is allowed, interest in video and stats skyrockets, giving value to this content. This is what has happened with Japan’s national racing.”
The buds have already started to peek out of the ground in Japan. In May 2019, the first Japanese company to join the Fantasy Sports & Gaming Association, Neo Sports, put together “FANTASY ONE on ONE” for the B. League Championship, allowing users to create their fantasy teams and awarding prizes such as Amazon gift certificates.
In July of that year, a similar fantasy sports contest was created for the 87th Japan PGA Championship, one of the oldest professional tournaments in Japan.
Last year Neo Sports joined with Yomiuri Shimbun to set up Inning King, a fantasy sports option for Yomiuri Giants games.
Meanwhile, Jungle X, the only Japanese company to obtain a betting license in the UK, started the 3×3. EXE PREMIER powered by INNOVATION LEAGUE tournament under the Japan Sports Agency on 14 March.
Just as fantasy sports have helped boost viewership and connectivity between fans and the sports they follow globally, they could also serve as a means of blowing fresh air into Japan’s own sports industry.
As an expert in sports betting, Osaka University of Commerce President Ichiro Tanioka comments, “It’s hard to tell how long it would take with the speed of Japan’s legal system. However, I believe the pandemic will mark a turning point.
“Government-controlled competitive sports, such as the JRA (Japan Racing Association) increased sales with the full implementation of online betting. On the other hand, illegal gambling has also increased as have crackdowns [on illegal activities]. The trend throughout the world is to control gambling, rather than restrict it.”
Asked specifically about the potential introduction of sports betting into Japan, Tanioka responded, “In Japan’s case, the only option may be to rely on IR operators. It will probably start in the form of contests at sporting events. If it really is to be implemented, baseball would be best. When games are weekly or daily, there is a lot to think about, but perhaps live betting, where you have to decide in an instant what will happen next, is more suitable to these times.
“In any case, 53% of the world’s bets are related to sports like baseball and soccer. Sooner or later it will be necessary in Japan as well.”