Are Oripa Illegal? Legal Regulation of Online Original Card Packs: Gambling, the Premiums and Representations Act and the Payment Services Act

Hello, I'm Noriaki Asato, Representative Attorney at LegalAgent.

A user buys points online, draws a pack on the screen, and the win or loss of a trading card is displayed on the spot. The user can apply to have the card shipped and receive it, or, without receiving it, exchange it for in-site points and draw the next lottery. The label "online oripa" does not by itself determine the legal treatment. Legality can only be judged by applying the provisions of existing laws to the actual design of the service, and at the center of that analysis is the crime of gambling under the Penal Code.

Businesses that want to consult lawyers on an ongoing basis about the legality of new services or the drafting of terms of use can see our legal outsourcing, in which lawyers with corporate legal experience handle that work continuously.

An Overview of the Relevant Laws and Issues

"Oripa" is short for "original pack," a product in which a business such as a card shop combines secondhand cards and the like on its own, conceals the contents and sells them by the draw. In the online model, the typical approach is to include a small number of high-value cards and a large number of inexpensive cards, and to sell the packs while posting the total number of draws and the contents of the winning cards.

Multiple laws apply to this business, but there is an order of priority among them. Whether the business model itself is permissible is determined by the Penal Code (the crimes of gambling and lotteries). If the business constitutes gambling or a similar crime, complying only with other administrative regulations cannot make the business as a whole lawful. On that foundation, the Premiums and Representations Act governs advertising and on-screen representations, and the Secondhand Articles Dealer Act and the Act on Specified Commercial Transactions govern procurement and sales procedures. In addition, the Payment Services Act sets conditions for in-site points, and the Civil Code and the Consumer Contract Act set conditions regarding minors and terms of use. Even if no problem is found on one issue, that does not guarantee the legality of the service as a whole.

Elements of the Crime of Gambling (Article 185 of the Penal Code)

Article 185 of the Penal Code provides that "a person who gambles shall be punished by a fine of not more than 500,000 yen or a petty fine; provided, however, that this shall not apply to a person who has merely bet a thing provided for momentary entertainment." For the individuals who operate the service, the issue is the crime of running a gambling place for profit (Article 186, paragraph 2; imprisonment for not less than three months but not more than five years), under which a person seeks profit by having customers gamble, and the statutory penalty for that crime is heavier.

The provision contains no direct definition of "gambling," but it is understood to mean contending over the gain or loss of property or a pecuniary benefit by a chance outcome. First, "chance" means that the parties cannot foresee or control the result with certainty, and it is understood to be sufficient if an element of chance remains even when skill or knowledge affects the outcome. This is why mahjong and golf, which test skill, are treated as gambling when money is wagered.

Next, "contending over gain or loss" means that both parties mutually bear the risk of losing property. A relationship in which only one side bears risk and the other side cannot lose does not amount to "contending." Whether both sides bear risk is an important factor in assessing whether something constitutes gambling. Whether a transaction is an ordinary sale of goods or a transaction contending over the gain or loss of property is examined based on the actual circumstances, such as the consideration and the value of the goods and the mechanism for converting them into cash.

Relationship with the Crime of Lotteries (Article 187 of the Penal Code)

Article 187, paragraph 1 of the Penal Code provides that "a person who sells lottery tickets shall be punished by imprisonment for not more than two years or a fine of not more than 1.5 million yen."

A lottery is understood to mean a scheme in which the seller sells tickets or the like for consideration and distributes unequal financial benefits among the purchasers by drawing or another method of chance. The difference from gambling is explained as being that the purchasers definitively lose the price while the seller bears no risk. Public lotteries have exactly this structure, but they are lawful precisely because the Act on Lottery Tickets (Tosenkin Tsuki Shohyo Ho) prescribes who may sell them and on what conditions. Private businesses without a legal basis are not permitted to operate the same mechanism freely.

The Reality of Online Oripa and Their Legal Assessment

In online oripa, the purchaser pays the price of one draw or paid points and randomly obtains one of several cards with different market values. Even if the contents are fixed in advance, the purchaser cannot tell what is in which draw, so chance is likely to be recognized. In the typical design, which includes many cards worth less than the sale price, a purchaser who draws a losing pack loses the difference between the amount paid and the value received, and those losses fund the big wins. This structure comes close to an assessment that the purchaser bears the risk of losing property and is contending over gain or loss with the operator or other purchasers. Some argue that "it is not gambling because you always win some card," but if the value of the card received is lower than the amount paid, the purchaser still loses property equal to the difference, and this is not a reason to deny that the scheme constitutes gambling. For several lawyers' views on this issue side by side, see the explanatory article by Toreca Pro Co., Ltd. (in Japanese).

Mechanisms for cashing out and recycling strengthen this assessment further. A design that lets users exchange winning cards for in-site points to use in the next lottery, the operator's buyback of winning cards, and cashing out through partners all work as circumstances showing that the purchaser's goal is to obtain a pecuniary benefit rather than to acquire the card as a product. In addition, the "thing provided for momentary entertainment" in the proviso to Article 185 is understood to mean a trivial item, such as food or drink consumed on the spot, and it would be difficult to rely on this exemption for oripa, where cards that can be converted into cash remain in the purchaser's hands.

In relation to the crime of lotteries, oripa differ from traditional lotteries in that every purchaser receives some card. However, if the cards in the losing draws have only nominal value and the scheme is in substance assessed as redistributing the money collected from purchasers to the winning draws, it invites the lottery-type argument. Adding high-value cards after sales begin and adjusting the timing at which winning cards come out should also be checked for consistency with the inventory and lottery conditions explained in advance. Such changes alone do not allow one to conclude that a crime has been committed, but they are material for examining whether the reality is one of collecting and redistributing money, and whether there is a discrepancy with what was represented.

The METI Report and Rethinking Product Design

Among public materials, the Sports DX Report (Japanese) published by the Ministry of Economy, Trade and Industry (METI) in December 2022 is a useful reference. Regarding the sale of NFTs in random packs, the report set out the view that there is room to interpret that the crime of gambling is not established even if a secondary market is operated alongside, provided that (1) the economic value of the NFTs can be clearly calculated, (2) no NFT worth less than the sale price is sold, and (3) the seller itself does not buy back NFTs at a price lower than the sale price. This view is also cited on page 52 of METI's materials on developing the Web3.0 business environment (Japanese). It is an interpretation of specific NFT transactions, including the conditions for pricing and buybacks, and it has no binding effect on the courts. Because it differs from a view that directly addresses physical trading cards, it cannot be used as is as a safety standard, but it serves as a starting point for the analysis.

Three Design Options in Light of the Risks

The following three options can be considered for rethinking product design while weighing the risks. None of them guarantees legality as is, and each requires examination of the specific transaction terms.

The first direction is to make the objective product value of each pack equal to or greater than the sale price. To explain that the purchaser does not bear the risk of losing property, the business needs to prepare support for its pricing method and actual sales terms. Preparing actual sale prices from multiple markets and criteria for suspending sales when market prices fluctuate are practical measures for that purpose. The user's payments and the value received should be assessed across the transaction as a whole, including buybacks, re-exchange into points and cashing out at partners. METI's view does not mean that every form of secondary distribution or point exchange is prohibited. Legality is not determined merely by whether such functions exist.

The second direction is a model that attaches premiums to a fixed product. The business sells, in the ordinary way, a product with fixed contents that is worth the sale price, and separately provides lottery-based bonuses at the operator's expense. If the value of the fixed product the purchaser receives can be substantiated, that is material for explaining the transaction as an ordinary sale of goods. However, bonuses conditioned on purchase are "premiums" under the Premiums and Representations Act and are subject to the value limits discussed in the next chapter. Care is also needed because if the fixed product becomes nominal, the arrangement in substance reverts to a relationship of entry fees and prize money.

The third direction is a free lottery separated from purchases. If there is no act of wagering property, the crime of gambling is not established. However, if payment and the lottery are substantively linked, such as where the number of lottery draws increases with the amount of paid points purchased, the arrangement is assessed based on the transaction as a whole even if it is called free. If the bonus accompanies a purchase or a store visit, the premium regulations must also be checked separately.

In any model, keeping records of facts such as fixing the inventory before sale, materials supporting the valuation and records of allocations helps explain the reality of the transaction. It cannot be said that there is a system under which keeping specific records alone results in an immediate finding of legality, and the matter is judged individually according to the reality of the transaction. Further, if there are facts such as high-value cards that were advertised but never existed, or winning draws allocated to specific related persons, then in addition to gambling and similar crimes, one must also examine whether the crime of fraud (Article 246 of the Penal Code) is established on the basis that purchasers were deceived into paying.

The Premiums and Representations Act: Whether Cards Are "Premiums"

Article 2, paragraph 3 of the Premiums and Representations Act defines "premiums" as goods, money or other economic benefits that a business provides, as a means of inducing customers, incidentally to transactions in its own goods or services. If cards or bonuses constitute premiums and are subject to the regulations on general sweepstakes, the maximum value of a premium is capped at 20 times the transaction value (JPY 100,000 where the transaction value is JPY 5,000 or more), and the total value of premiums is also limited to 2% of the total expected sales. For premiums given to everyone without a lottery or other sweepstakes, the cap is 20% of the transaction value (JPY 200 where the transaction value is less than JPY 1,000).

So, do the cards obtained through oripa themselves constitute premiums? In a 2012 notice concerning "complete gacha" in online games, the Consumer Affairs Agency set out the interpretation that items users obtain through paid gacha are "the subject matter of the transaction itself" and are not premiums provided incidentally to a transaction. This approach is said to apply to any similar mechanism, regardless of the name of the service.

The Consumer Affairs Agency's Q&A on paid lotteries (Japanese) also explains that prizes that, in light of normal business practices, can be regarded as the original content of the transaction are not premiums incidental to the transaction. When dealing with oripa as well, one distinguishes, based on the reality, whether the card is the subject matter of the transaction itself or an additional bonus. For example, a "Last One Prize" given to the person who draws the final pack, or additional bonuses won by lottery, are assessed as either general sweepstakes or premiums for all depending on how they are provided, if they constitute premiums. Referral rewards also do not all constitute premiums. A general referral reward that does not limit referrers to the company's purchasers lacks the incidental connection to transactions, but where referrers are limited to purchasers, the reward is usually subject to the regulations on premiums for all.

Another point that is easy to overlook is the complete prohibition on "card matching." The Notification on Restrictions on Premiums by Sweepstakes prohibits providing premiums by having customers collect a specific combination of different types of tokens, regardless of the amount. The simultaneous abolition of complete gacha in 2012 was due precisely to this regulation. Simply selling cards at random does not trigger this regulation, but running a campaign that gives additional cards or points to purchasers who collect specific different cards steps into the same illegal structure as complete gacha. When putting together an oripa plan, it is important to design it so that it does not cross this line.

The Premiums and Representations Act: Representations of Return Rates, Pack Ratios and Remaining Draws

Article 5 of the Premiums and Representations Act prohibits representations that indicate the content of goods, such as their quality or specifications, to be significantly better than they actually are (item 1: misleading representations of superiority), and representations that mislead customers into believing that transaction terms, including price, are significantly more favorable than they actually are (item 2: misleading representations of advantage). Attention must also be paid to the regulation on unsubstantiated advertising for representations of effects or performance. If the Consumer Affairs Agency requests reasonable supporting materials and the business does not submit them within the deadline, or the materials submitted are not recognized as a reasonable basis, the representation is deemed to be a misleading representation of superiority for purposes of a cease-and-desist order (Article 7, paragraph 2) and presumed to be one for purposes of a surcharge payment order (Article 8, paragraph 3).

In oripa advertising, representations of quality such as "guaranteed PSA 10 graded cards" or "only mint-condition cards included" can raise issues of misleading representations of superiority, and representations of transaction terms such as "return rate over 100%" or "only 3 jackpot draws left" can raise issues of misleading representations of advantage. The two questions here are whether the content of the representation matches the reality, and whether materials that can objectively prove that match remain on hand.

If a return rate is represented, the starting point is the definition of the numerator and denominator. The figure changes greatly depending on whether the numerator is the actual market sale price of the cards, a reference price set by the operator or the exchange value in in-site points. A return rate calculated by mixing points usable only on the same site with cash value cannot be called a substantiated representation. Representations of the number of remaining winning cards and the total number of draws must also accurately match the actual inventory and the status of cards drawn. Representations that make winning cards that have already been drawn appear to remain, and adding to the total number of draws after the fact depending on sales, can constitute misleading representations where the prior representations or explanations and the reality diverge.

When asking influencers to stream pack-opening videos and the like, compliance with the stealth marketing notification that took effect in October 2023 is also required. Posts whose content the business was involved in determining are treated as the business's own representations, so representations that ordinary consumers cannot recognize as advertising are prohibited. The party that bears the obligation under this regulation is the operator as the advertiser. In addition, Article 22 (formerly Article 26) of the Premiums and Representations Act as amended in 2023 requires businesses to establish systems for properly managing representations, and in substance this means keeping procurement records for each individual card and the basis for price valuations, and maintaining a state in which the figures stated in advertising can be recalculated later.

Procedural Requirements under the Secondhand Articles Dealer Act and the Act on Specified Commercial Transactions

A business that buys and sells secondhand trading cards is a secondhand articles dealer under the Secondhand Articles Dealer Act and must obtain a license from the prefectural public safety commission with jurisdiction over the location of its principal place of business. When buying users' cards online, the business decides whether identity verification is needed and how to perform it, after checking the statutory exceptions for transactions under JPY 10,000 and the like. For non-face-to-face transactions requiring identity verification, the Tokyo Metropolitan Police Department lists methods such as eKYC, public personal authentication using an Individual Number Card, and restricted-delivery mail that can only be received by the addressee in person, and states explicitly that merely receiving a copy of a driver's license is not sufficient. For oripa sites that also offer buybacks, it is important to put in place verification procedures that fit the actual buyback flow.

In addition, selling oripa on the web constitutes mail-order sales under the Act on Specified Commercial Transactions, and the advertising screen must show items such as the sale price, shipping fees, the timing and method of payment, the delivery timing and the business's name, address and telephone number (Article 11 and the Enforcement Regulations). Further, Article 12-6 of the Act, which took effect in 2022, requires the final confirmation screen immediately before an order is placed to show the quantity, price, payment and delivery terms, application period and any special return terms, and prohibits representations that mislead users about the fact that they are placing an order or about the transaction terms. Where a business violates the statutory representation obligations or the like and a consumer is misled and places an order as a result, the consumer may rescind the contract (Article 15-4). A screen on which a charge is finalized by a button that says only "Next," or a screen that does not show the minimum conditions required for shipping until after the order is finalized, can squarely conflict with this regulation. On screens where purchasing points and drawing oripa follow one another, it is important to design them so that users can clearly tell which operation forms which contract.

As for returns, there is no statutory cooling-off system for mail-order sales, but if special return terms are not properly displayed in the advertising and on the order screen, the consumer may withdraw the order or cancel the contract within eight days of delivery of the goods, in which case the consumer bears the cost of returning them (Article 15-3). A special term making random products non-returnable can itself be validly established. However, even with such a term, the business is not relieved of liability for non-conformity, such as where a card different from the one represented arrives or where a card is counterfeit, so it is appropriate to design the terms of use so that dissatisfaction with lottery results and responses to product defects or operational incidents are handled separately.

Design of In-Site Points and the Payment Services Act

In-site points that are issued for consideration, whose amount or quantity is recorded and that can be used to pay for goods constitute prepaid payment instruments under Article 3, paragraph 1 of the Payment Services Act. Points usable only on the company's own site are the "own-business type" (paragraph 4 of the same Article) and do not require registration before issuance, but if the unused balance exceeds JPY 10 million as of the record dates of March 31 and September 30 each year, the issuer must, among other things, notify the Local Finance Bureau within two months of the first record date on which the balance exceeded that amount and deposit security for issuance equal to at least one half of the unused balance (Articles 5 and 14). Points that can be used only within six months of issuance are excluded from application (Article 4, item 2 and Article 4, paragraph 2 of the Enforcement Order).

Issuers of prepaid payment instruments subject to regulation are also subject to the general prohibition on refunds (Article 20, paragraph 5). After checking the refund procedures upon discontinuation of business and the statutory exceptions for small amounts and the like, the business should not treat the free conversion of points into cash as something it can offer as an ordinary service. The "third-party type," which can also be used at third-party stores and the like, in principle requires registration before issuance regardless of the balance. If functions equivalent to remittance or holding funds are provided, other regulations, starting with those on funds transfer business, must also be examined. It is also important not to confuse refunds resulting from rescission or cancellation of contracts with cashing out point balances.

Another practical issue is segregated management of points. Points granted free of charge in campaigns lack consideration and do not constitute prepaid payment instruments, but if paid and free points are managed in a way that does not distinguish them, it becomes necessary to include the whole in the scope of regulation when calculating the balance. Points granted as consideration for declining to receive a card are issued in exchange for value derived from payment, so they are likely to be unable to be treated as free. Ledger management by source, and consistency between the terms of use and on-screen representations regarding the order of expiration and refunds, are prerequisites for calculating the balance as of each record date.

Issues shared with in-game currency and random paid items are also discussed in Game Monetization and Gacha: Prepaid Payment Instruments and Probability Disclosure. With oripa, the market value and convertibility of physical cards are added on top of this, so the Payment Services Act and the Penal Code must be examined at the same time.

Payments by Minors and the Limits of Terms of Use

Under Article 5 of the Civil Code, a contract entered into by a minor under 18 without the consent of a statutory representative can in principle be rescinded. However, acts that merely acquire a right and acts within the scope of property the minor has been permitted to dispose of are exceptions. Article 6, which applies where a minor has been permitted to carry on a business, and Article 21, which applies where the minor used fraudulent means to make the other party believe the minor had capacity, should also be checked.

Pages 15–18 of the Consumer Affairs Agency's manual for responding to consultations on online games (Japanese) explain that whether fraudulent means were used is judged by considering the age-verification screen, warning displays, the minor's understanding and the intent behind the input, and other factors as a whole. A minor does not automatically lose the right of rescission merely by pressing "Yes" to "Are you an adult?" Even if a false date of birth was entered, that alone does not decide the outcome.

Trading cards are popular among minors, so rather than relying on a clause in the terms of use stating that "parental consent shall be deemed to have been obtained," the business should prepare on the side of screen design and operations, such as date-of-birth entry, age-based spending limits, verification of the name on the payment method and re-authentication for high-value use. If rescission is granted, the operator must refund the price while facing the difficult task of settling points already consumed and cards already shipped, so it should prepare checks before use and procedures for responding after rescission. Because a minor's obligation to return benefits is limited to the extent of the benefit currently retained (Article 121-2, paragraph 3), the operator cannot necessarily demand full repayment for points already consumed.

There are also limits to exemption clauses in terms of use. Article 8 of the Consumer Contract Act invalidates clauses that fully exempt a business from liability for damages due to its nonperformance of obligations, among others. For non-conformity, the exception in paragraph 2 of the same Article concerning obligations to cure, reduce the price and the like should also be checked. Paragraph 3 of the same Article, added by the 2022 amendment and in force since June 2023, invalidates clauses partially exempting liability that do not make clear that they apply only to negligence other than intent or gross negligence. Stating that a clause is limited to slight negligence does not always make it valid, and Article 10 and other provisions should also be examined. Even if a cap clause is invalid, the user must still prove damages, causation and so on. Refunds and redraws in the event of system failures should be governed by procedures set within a range that does not impair users' statutory rights.

Practical Steps Before Launch

Before launch, the business should cross-check the card inventory and valuation materials against the lottery specifications and allocation records. It should also confirm whether the issuance, exchange and expiration of points match the ledger and on-screen representations, and whether the figures in its advertising can be explained from actual records. It is important not to judge by the names used in the contract alone, but to apply the reality of the transaction to the requirements of each law.

At LegalAgent, we provide cross-cutting support for random-sale services, including oripa, from evaluating schemes under the crime of gambling to secondhand dealer licenses, prepaid payment instruments and reviews of terms of use and advertising. When consulting us, if you prepare, in addition to your terms of use, materials such as your card list and price calculation sheet, lottery specifications and point ledger, we can conduct an analysis that goes into the substance of the transactions. For related services, please see Startup Legal and Fundraising Support, FinTech and Payments Legal, Advertising Review, IP and Entertainment Legal and Legal Outsourcing.

Frequently asked questions

Are online oripa illegal?

They are not uniformly illegal based on their name or format alone, but a typical design is likely to carry a high risk of constituting the crime of gambling. The crime of gambling is understood as competing for the gain or loss of property through the outcome of chance, and a scheme that packs in many cards worth less than the selling price and uses the losses on losing draws to fund the big prizes is easily evaluated as making purchasers bear the risk of losing property. Where winning cards can be exchanged back for points or are bought back by the operator, that assessment becomes even stronger.

Is there an oripa design that does not constitute the crime of gambling?

No design guarantees legality, but there are three ways to reduce the risk: making the objective product value of each pack equal to or greater than the selling price; attaching premiums to fixed products whose contents are determined (subject to the value limits under the Premiums and Representations Act); and running a free lottery separate from any purchase. Under any of these designs, whether the crime of gambling or other offenses are established depends on the individual transaction terms, so I think it is necessary to examine the matter including the materials used to calculate prices and the routes for converting items into cash.

Are oripa cards "premiums" under the Premiums and Representations Act?

The cards obtained through oripa are themselves the very object of the transaction that the purchaser acquires by paying the price, and they are generally understood not to be premiums. On the other hand, additional bonuses such as a Last One Prize may constitute premiums. In addition, "card matching," which provides a bonus to purchasers who collect different types of cards, is prohibited regardless of the amount by a notification issued under the Premiums and Representations Act.

Can oripa be refunded or returned?

Whether returns are possible depends on what the special return terms state, but there are cases where statutory cancellation or rescission is permitted. There is no cooling-off for mail-order sales, and a special term making random products non-returnable can validly be set, but if the special return terms are not properly displayed in the advertisement and on the order screen, the purchaser may withdraw the order or cancel the contract within eight days of delivery of the goods. If a card different from what was represented or a counterfeit is delivered, the purchaser can pursue contractual non-conformity liability. Where a minor under 18 makes purchases without the consent of a legal representative, the purchases can, as a rule, be rescinded.

What permits and procedures are required before starting an online oripa business?

You need to obtain a secondhand articles dealer permit, put in place the representations required under the Act on Specified Commercial Transactions, and comply with the Payment Services Act. A secondhand articles dealer permit is required to buy or sell used cards, and for online sales, statutory representations must be displayed in advertisements and on the final confirmation screen. When issuing paid in-site points, no registration is required before issuance if they are for the issuer's own business, usable only on your own site, but if the unused balance as of a record date (March 31 and September 30) exceeds JPY 10 million, a notification and a deposit of issuance security are required.