Is the "Arcade-ification" of Convenience Stores Legal? — Issues Raised by the Introduction of Crane Games: Entertainment Business Law, Prize Regulations, and the "10% Rule"

1. What is Happening Now: From "Place to Buy" to "Place of Experience"

Japanese convenience stores have traditionally developed as "life infrastructure." However, in recent years, they have shifted their strategy to not only rely on "necessary shopping" as a reason for visiting but also to incorporate fandom activities, experiential consumption, and inbound demand.
A symbol of this shift is the installation of crane games and capsule toys inside the stores.

For example, reports have indicated that FamilyMart plans to install crane games in approximately 5,000 stores.TBS NEWS DIG+1
Similarly, Lawson has expanded its stores with crane games to about 1,300 locations, as confirmed by announcements regarding prize offerings.Press Release Distribution No.1 | PR TIMES+1

The "arcade-ization of convenience stores" offers stores the potential for

• new visits driven by purpose shopping (targeting prizes)

• increased dwell time

• spillover to existing products (impulse buying)
  .

On the other hand, legally, it's not just "place it and it's okay." This is because, in Japan, "operating a business that allows customers to play on gaming equipment" falls under the scope of the Entertainment Business Law.Fukushima Prefectural Police+1

2. Key Point: The Entertainment Business Law is Not Just for Arcades

For overseas readers, this might be surprising.
Japan's Entertainment Business Law targets not only so-called nightlife businesses but also "amusement facility operations" like game centers (focusing on "businesses with gaming equipment... that allow customers to play" in terms of legal classification).Fukushima Prefectural Police+1

Importantly, the interpretation and operational standards of the National Police Agency clearly state that "stores established for business purposes, such as retail, are included in the 'stores' in this category." In other words, even retail stores like convenience stores, if equipped with gaming equipment, will generally face issues under the Entertainment Business Law.Fukushima Prefectural Police

A common misunderstanding is

• "It's okay because the main business is convenience stores"

• "It's not an arcade, so it's unrelated"
  .
  In reality, it's judged more by "what equipment is placed, how it's used for play, and what prizes are offered" than by "what type of business it is."

3. What is the "10% Rule"? An Exception Often Key to Convenience Store Implementation

In legal discussions about in-store gaming machines, the so-called "10% rule" frequently appears.
This operational standard states that if the "floor area used for gaming for customers" does not exceed 10% of the "floor area available for customer use on one floor of the store," then, for the time being, it is treated as not requiring a permit for entertainment business.Fukushima Prefectural Police

There are three key points.

(1) The unique way of "counting" the area

The floor area "used for gaming" is not simply the installation area of the machine.
According to the standard, it is calculated as approximately three times the area directly occupied by the gaming equipment, and if less than 1.5 square meters per unit, it is calculated as 1.5 square meters.Fukushima Prefectural Police

This means that even if there is "just one machine" near the entrance of a convenience store, the area can surprisingly expand in calculations. Conversely, it suggests that when chains design installations, they likely fine-tune layouts based on this calculation method.

(2) The scope of "one floor" is limited

In a multi-tenant floor of a mixed-use building, it refers to "within the store in question" rather than the entire floor.Fukushima Prefectural Police
Since convenience stores have limited store space, this interpretation directly applies.

(3) "No permit required" does not mean "free to do anything"

The standard wording is "treated as not requiring a permit," which is an operational handling.Fukushima Prefectural Police
As discussed in the next chapter, issues such as prize provision, cash conversion, and late-night operations remain as separate pitfalls.

4. Why are Crane Game Prizes Problematic? The Boundary of "Prize Provision"

The danger of crane games is that, despite appearing as "children's entertainment," they can easily lean towards "stimulating gambling-like expectations" legally.

In the world of the Entertainment Business Law, providing prizes based on game results is generally strictly regulated.
However, the interpretation and operational standards of the National Police Agency indicate that for items obtained by lifting with a crane, if the retail price is approximately 1,000 yen or less, it is treated as not being "prize provision" under certain conditions.National Police Agency+1

This "1,000 yen line" was previously an 800 yen guideline, but it has been reported that it was revised to 1,000 yen following a change in notification.Lawyer 4 Legal Affairs
Industry groups also caution that the range recognized as a prize game is "approximately 1,000 yen or less in retail price."JAIA

Practical Pitfalls

• Prizes exceeded 1,000 yen in "actual market price"(limited edition, resale market price increase)

• Using number tags or exchange tickets to swap for high-value prizes(operation leaning towards prize provision)

• Stores buying back prizes (essentially cash conversion)

• Prizes "bundled in multiples" to effectively increase value

These aspects can easily lean towards the illegal side with visual tricks. Many convenience stores operate 24/7 with minimal staff, so any operational discrepancies can quickly manifest risks.

5. The Temptation of "Cash Conversion": Why Secondary Exchange and Buybacks are Dangerous

Japan's gambling regulations differ in philosophy from typical overseas casino laws, being extremely wary of "mechanisms that allow cash conversion."

A typical issue with crane games is

• Stores buying back prizes within the store

• Nearby stores assuming prize buybacks

• Accumulating medals or points to exchange for valuable items (issuing recording media, etc.)
  as "essentially cash conversion."

The interpretation and operational standards (notifications) of the National Police Agency also indicate that issuing or providing media that record scores or quantities electromagnetically can be a violation.National Police Agency
If convenience stores pursue ideas like "linking prize exchanges with point cards," it becomes easy for game operations to connect with financial value, necessitating a halt at the design stage.

6. Late-Night Operations and Handling of Minors: The "Poor Compatibility" of Convenience Stores and Regulations

24-hour operations are not uncommon for convenience stores. However, in the world of the Entertainment Business Law, there are statutory restrictions on late-night operations (generally from midnight to 6 a.m.), with exceptions defined by ordinances.e-Gov Law Search

If a store is judged to be in a "form that requires a permit," aligning with the operating hours of the convenience store itself becomes an issue.

Therefore, chains realistically aim to keep within the aforementioned "10% rule" range, designing to avoid (or not approach) a state requiring a permit.Fukushima Prefectural Police
However, since this involves the operational sense of local governments and local police stations, it is unlikely to be "the same nationwide."

7. Is "Impossible Settings" Illegal? The Perspective of Fraud, Display, and Consumer Trouble

While the Entertainment Business Law takes precedence in legal discussions, what often leads to public backlash or crackdowns is rather the setting that "makes it look like players have a chance to win, but it's almost impossible in reality."

In Japan, as the value standards for crane game prizes have become clearer, the emphasis on vigilance against illegal operations has been repeatedly pointed out.Lawyer 4 Legal Affairs+1

Practically,

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