The laws regulating lotteries in Japan are found under Chapter XXIII of Japan's Criminal Code. The code generally covers all forms of gambling, indicating those prohibited and the legal ones. The code also specifies the punishments that punters and gambling operators should be charged if found breaking the law. The penalties include hefty fines, imprisonment, or both.
The penalties for lottery operators can go to a maximum of 1.5 million yen and imprisonment of up to a maximum of two years. Any accomplice who acts as an intermediary in operating lotteries faces a fine of up to one million yen or one-year imprisonment. Understanding the law is thus essential for all punters to ensure they do not break the law.
Something to note is that the Japanese laws focus mostly on lottery providers than punters. Ideally, lottery players have more freedom regarding which lotteries they can play and actions to avoid. For example, Japanese punters can play in whichever lottery they want, including international lotteries from whichever country they please. On the other side, only selected lottery operators can legally provide lotteries in Japan.
Japan holds some of the highest tax rates in the world regarding gambling. Lottery providers have to part with a significant percentage of the revenue generated, which goes to the government. Below is the overview of how the revenue is split.
45% goes to the player prize pool and a whopping 40% to the local government. 12% is usually retained for lottery running expenses such as advertisements, staff payments, and resources. The remaining 3% is traditionally set aside to support special welfare organizations.
Lottery prizes usually amount to more than billions of yen each year. In 2005, the lottery revenue peaked at more than one trillion yen. The 40% that goes to the local government keeps the Japanese government motivated to support lotteries and manage them properly.