Sports betting was a losing proposition in Japan after proceeds peaked during the 1990s as some racing event operators even cashed in their chips.

But the odds seem to be again in favor of publicly operated sports betting thanks to expanding online services.

In fiscal 2020, proceeds from all four sports events--horse racing, bicycle racing, motorcycle racing and speedboat racing--totaled 6.8 trillion yen ($62 billion), up 17 percent from the previous year.

Even under the novel coronavirus pandemic, races have been held without spectators.

In particular, proceeds have grown year on year for seven years in a row for bicycle racing and for nine consecutive years for locally organized horse racing events.

Information technology companies have started services that allow users to place bets on smartphones and personal computers to win over young people previously uninterested in publicly operated sports betting.

“Publicly operated sports betting presents a large market, except that its fans are aging,” said Koki Kimura, president of Mixi Inc., which started the Tipstar service in 2020. “We thought it would be reinvigorated as a form of entertainment for the younger generations if they were able to take part in it online for fun.”

Still, experts have raised concerns that easier access could spread gambling addiction because information technology businesses have the know-how for reaching out to young people.

BUSINESSES TAPPED TO REVITALIZE INDUSTRY

Publicly operated sports betting was legalized after World War II to help finance local governments and promote industry. Races are operated by “special corporations” with a semi-governmental status and by local authorities.

More than 70 percent of the proceeds are refunded to bettors. Part of the rest is spent on the expenses for organizing the races and for other purposes, and the remainder goes into local government coffers.

Since the early 2000s, operators have enabled customers to buy betting tickets on the internet. In bicycle racing, online sales have accounted for more than half of the proceeds since fiscal 2019.

Since 2002, the laws governing publicly operated sports betting have been amended, allowing private businesses to undertake such operations as the sale of betting tickets and public relations. The revisions were aimed at tapping into private-sector know-how for revitalizing the industry.

Contractors must clear certain conditions. In bicycle racing, approval is required on the level of a national industry council.

ONLINE SERVICES TARGET YOUNG BETTORS

Mixi’s Tipstar service covered bicycle racing when it started in June 2020 and was expanded earlier this year to include motorcycle racing.

Tipstar not only distributes video images of races held across Japan but also broadcasts live handicapping programs that feature entertainers.

“It’s second from the top in popularity, so I think it’s well worth it,” one entertainer was seen saying on a recent program.

“I’m buying 1,500 yen’s worth. Look!” said another.

A Mixi group company has signed agreements with parties including bicycle racing stadiums to sell betting tickets on consignment. The company receives not only commissions but also part of the proceeds from betting tickets.

Mixi does not disclose the number of Tipstar users, but officials said primary customers are in their 20s and 30s as the company hoped they would.

Tipstar users are required to produce driver’s licenses or other identification to prove they are 20 or older. Those under 20 are not allowed to purchase betting tickets under the Bicycle Racing Law and other legislation.

CyberAgent Inc., another information technology company, started the WinTicket service for bicycle racing in April 2019. It also opened a bicycle racing channel on AbemaTV, an internet TV station, at the same time.

The coverage was expanded to include motorcycle racing in May 2020.

“We hope to have young people, who have had few opportunities to watch bicycle racing, know how exciting it is,” a CyberAgent official said.

WinTicket’s transactions totaled 31.9 billion yen between January and March, a nine-fold increase from the same period the previous year.

GAMBLING ADDICTION REMAINS A CONCERN

Kimura, the Mixi president, dismissed concerns about negative consequences of easier access that young people have to publicly operated sports betting.

He said an online platform allows users or those around them to retrospectively check the amount of money that has been wagered or suspend accounts when they notice that users are spending too much.

“Going online improves traceability,” Kimura said.

However, he said that no functions are currently available for setting an upper limit on the amount of money that an individual can wager.

Naoko Takiguchi, a professor of sociology with Otani University who is well-versed in gambling addiction, disagreed.

She believes problems are likely to emerge as publicly operated sports betting becomes more accessible through online services.

“The ease of access to gambling from a smartphone will make problems less visible,” Takiguchi said. “That could make it more unlikely for people around users, including their family members, to notice that they are addicted until the problem becomes serious.”

She pointed out that local governments and businesses involved in publicly operated sports betting should take measures to minimize the risks.

“An arrangement could be made to make it obligatory to set upper limits on the amount of money and the hours you can spend on the services,” Takiguchi said. “An independent body could also be assigned to monitor the circumstances of use and issue a warning when there are signs of addiction.”

(This article was written by Emi Hirai and Yoshikatsu Nakajima.)