Miraima users initially make bets using points earned from setting up an account, watching adverts or playing in-app games. When players win a wager, they earn points which can be used for more bets, converted into digital rewards like Amazon gift cards, or used for payments on PayPay and Rakuten.

"I saw prediction markets exploding in the US and immediately thought there was huge potential for this in Japan," said Miraima founder Keita Adachi, a 27-year-old tech entrepreneur who previously founded blockchain startup Masentic with backing from Japanese soccer star Keisuke Honda. "Since real-money gambling isn't possible, we built the platform around Japan's strong gaming and point-collecting culture."

The apps' popularity underscores the country's reputation as one of the world's most potentially attractive markets for gaming, with a deep-seated betting culture and high levels of household wealth. To curb illegal, black-market gambling, the government has long limited the pastime to outlets including pachinko and local lotteries. Pachinko parlors circumvent gambling bans by awarding winners tokens, which are traded for cash at a separate store down the block.

Japan's state backs betting on horse racing, speed boating and keirin bicycle racing, but these operations have recently seen action move online. Pachinko has also been falling out of favor with younger generations who prefer scrolling online at home over sitting in front of machines. But even in a decline, the pachinko industry was still worth over $100 billion in 2024 — more than Las Vegas and Macau combined.

Most popular among men in their 20s, Miraima's growth was boosted by Japan's lower house election in February, a key political moment that users promptly turned into a national guessing game. Many were galvanized by the rise of Prime Minister Sanae Takaichi, whose assertive style and projection of economic security and national strength resonated with young male voters and translated into engagement on the platform. In recent months, however, the most active wagers on the platform have been sports-related.

Miraima's Adachi says it's now in the black thanks to commissions earned when users watch advertisements or download apps, although its margins are still razor thin compared with global, cryptocurrency-based prediction market providers that generate millions of dollars in revenue through transaction and settlement fees.

Polymarket and Kalshi currently block or discourage users in Japan from betting on their platforms and have not conducted any official marketing in the country. Habitual gambling is punishable in Japan by up to three years in prison, a law that deters most would-be users from attempting to use a VPN to access the sites.

Seeing long-term possibilities, Polymarket recently appointed a local representative to spearhead a lobbying campaign for government approval, according to people familiar with the matter. Polymarket declined to comment on its activities in Japan but said it has seen growing interest in the country and across Asia. Kalshi declined to comment.

"Japan still has an arcade market where people are willing to spend enormous amounts of money," said Masa Suganuma, a gaming analyst and former manager at videogame firm Konami. "Foreign companies know that Japanese consumers love this kind of thing, and they definitely see the potential."

Because no real money or cryptocurrency changes hands on apps like Miraima and Poyp, the risk of losing significant sums is much lower than on global platforms that allow betting with cash and its equivalents. However, the gamified pursuit of these point-to-voucher rewards can still be considered addictive, and some lawyers say they could yet face scrutiny under Japan's regulations covering sweepstakes. For now, the app founders say they're on solid footing."Our logic is that we don't fall under cash-gambling restrictions because users don't risk losing any assets with actual value," said Takanori Shirasaka, the 28-year-old founder of Poyp, which launched in March.

Long term, both Shirasaka and Miraima's Adachi harbor ambitions to monetize via real-money prediction markets, if they're approved in Japan. Shirasaka said he plans to join Polymarket's lobbying efforts.

Lawyers say it won't be easy, and warn that the platforms could attract a crackdown at the slightest negative publicity. While Japan legalized casino resorts in 2018 to attract tourists and is set to open its first-ever casino resort in Osaka in 2030, it will come with tight restrictions, including steep entrance fees designed to prevent players from getting hooked. Officials tightened restrictions around online casinos last year following a string of scandals involving celebrities and athletes.

The potential involvement of minors further complicates the legal outlook. While Polymarket and Kalshi require users to be at least 18 years old, Japanese point-based services currently do not impose age restrictions. "The presence of minors on these platforms would increase both the legal risk profile and the likelihood of regulatory intervention," said Shinichiro Mori, a managing partner at Tokyo-based law firm Mori & Partners.

Already, some lawmakers are calling for a closer look at real-money prediction markets. The opposition Democratic Party for the People called for a regulatory discussion on the industry in parliament in April.Many of Japan's Asian neighbors have moved more quickly to restrict the platforms. South Korea's media regulator said last month that it had opened a formal review into whether Polymarket hosts illegal gambling content. India has asked internet providers to block access to Polymarket, Kalshi and other similar sites, while Indonesia banned Polymarket in May due to gambling concerns. While China hasn't explicitly outlawed prediction markets, its strict, comprehensive ban on gambling is seen as covering platforms like Polymarket.Even in the US, where Donald Trump's administration has largely been supportive of the platforms, with the president's son advising both Polymarket and Kalshi, the companies have become the focus of growing concerns about insider trading and several other related issues. Some states have said they should come under local gambling laws — and be prohibited — but the federal Commodity Futures Trading Commission has argued that it has exclusive jurisdiction over the companies.In Japan, no government body has claimed responsibility for oversight.

A representative for Japan's justice ministry declined to comment on the legality of prediction markets but said that individual cases will be examined in light of the country's Penal Code, which broadly outlaws gambling. Japan's Securities and Exchange Surveillance Commission, which oversees issues like insider trading and market manipulation, declined to comment.

Hiromi Yamaji, CEO of Tokyo Stock Exchange operator Japan Exchange Group Inc., said that operating real-money prediction markets in Japan will be difficult because "betting on future events is broadly seen as gambling." Identifying insider trading and figuring out how to monitor it would also be a challenge, he said in an interview with Bloomberg.

Regulatory clarity will likely take years of "dialogue and legal development," as was the case with pachinko, said Kohei Tsuji, a lawyer at Ushijima & Partners.

Either way, Toyotaka Sakai, a professor of economics at Keio University, said prediction markets need to be regulated rather than ignored."This isn't just a fad, it's a serious discussion, and the question of how to introduce prediction markets healthily in Japan is not going to go away," he said.

--With assistance from Akemi Terukina, Taiga Uranaka, Yasutaka Tamura, Haruka Iwai and Emily Nicolle.

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