How Japan's JeSU pro license works and why prize money depends on it

A player who wins a big tournament expects to be paid. In Japan, for a long time, that simple expectation ran into a law that has nothing to do with games: the rules that limit the prizes a company may hand out to attract customers. When the company running the tournament is also the one selling the game, a large cash prize can look, in law, like a sales promotion, and promotions have ceilings.

The Japan Esports Union, known as JeSU, built its professional license around that problem. Its own page on the license system, first published on December 2, 2019 and last updated on June 16, 2023, says the license exists so that a player's prize money can be treated as payment for work rather than as a premium. It also describes a junior license for younger players, and a second route the Consumer Affairs Agency, the government body that applies the law, accepted for tournaments without licensed players.

This guide explains how that system fits together for readers who want to compete in Japan or work around its tournaments: what the law counts as a premium, the exception for remuneration for work, what the JeSU license is meant to do, how players come to hold one, which games it covers, what changed for junior players in 2023, the route that does not need a license, and the cases where the law does not bite at all. It describes the general rules as JeSU and the Japanese authorities state them. How they apply to a particular tournament or player depends on the case.

Japan Esports Union, pro license system page (updated June 16, 2023): totals from JeSU's founding to the end of fiscal 2022.

Why prize money needed a license in Japan

The law at the center of the question is the Act against Unjustifiable Premiums and Misleading Representations, known in Japan by its short name, the Keihin Hyoji Ho. Among other things, it limits the gifts, prizes and other benefits a business can offer to win customers, which the law calls premiums.

JeSU's page sets out the problem in its own terms. Before the union was founded, it says, there was no settled standard for deciding when a tournament prize could count as payment for work, the category that falls outside the limits on premiums. The page frames the question a game company faces in one line: whether a company holding a tournament on a paid game title of its own can offer prize money above ¥100,000 without coming under the Act.

That framing explains why the issue concerns publishers in particular. A tournament run by a company with no stake in sales of the game is in a different position from one run by the company that sells it. JeSU's beginner's manual on the law, version 1.0, published in May 2021, describes the Act as a rule that keeps consumers from being drawn by large prizes into buying poor or overpriced products. It says the Act can cap prize amounts when the game is paid, or when it is free to play but paying makes a player stronger. Its own example is a company that sells a paid game and holds a tournament with a winner's prize of ¥10 million: depending on how the tournament is built, the manual says, that can breach the Act.

What counts as a premium, and what does not

The definition comes from a notice first issued by the Japan Fair Trade Commission on June 30, 1962, as Notice No. 3, and last revised on August 28, 2009. It names what counts as a premium under the Act: an economic benefit that a business offers to the other party in connection with a transaction in its own goods or services, as a means of attracting customers, whatever the method.

The notice lists the forms such a benefit can take. They include goods and property, cash and its equivalents such as gift certificates, securities and vouchers, entertainment such as invitations to films, sports or travel, and services or conveniences. It leaves out discounts and after-sales service that are normal commercial practice, and benefits that normal practice treats as part of the product itself.

The Consumer Affairs Agency's operating standards for that notice, first set out on April 1, 1977 and last revised on April 18, 2024, explain the phrase in connection with a transaction. Under Section 4(1), a benefit offered on condition that a transaction takes place is offered in connection with it.

The same operating standards give the way out. Section 5(3) says that even when an economic benefit goes to a party to a transaction, money or goods recognized as remuneration for work are not premiums. The example the standards give has nothing to do with games: a company that recruits monitors from among the buyers of its products, and pays them a fee that corresponds to the work, is paying for work, not handing out a premium.

The esports question is how to show that a tournament prize is pay for work in the same sense. That is the gap JeSU's page says its license was created to fill, by making a player's activity clearly a job.

JeSU's manual draws the line in the same place. Even on a paid game, it says, prize money that professional players or personalities receive as remuneration for the work of raising a tournament's competitive level and entertainment value has no upper limit. It also separates two roles a game company can play. A company that only licenses the use of its title for someone else's tournament raises no issue under the Act, but a company that puts up the prize money for a third party's tournament has to take the Act into account.

What the JeSU license sets out to do

JeSU's page says its certified pro license is issued to foster players who can compete in Japan and abroad and to raise their standing. Its central purpose, the page says, is to make clear that a licensed player's activity is a job, so that the prize money they win in certified tournaments is paid as remuneration for work.

The page lists three aims for the system. The first is to ensure the legal soundness of prize tournaments in a way that third parties can easily check. The second is to establish professional players as a profession and make it easier for sponsors to support them. The third is to manage the rules and the running of license-based prize tournaments, to prevent unfair operation and build trust.

The license works together with two other parts of JeSU's system. Prizes under its license regulations are offered only in tournaments on JeSU-certified titles, and JeSU says it guarantees the entertainment value of tournaments held with those titles. The license, the certified title and the certified tournament form one package: the pro license does not stand on its own outside that framework.

How players come to hold a license

JeSU's page leaves the conditions of issue to its pro license regulations, a separate document. Its May 2021 manual describes how the license is meant to be used in practice by a game company that wants to offer a large prize on its own title.

The manual presents two other ways to tie a prize to work: inviting players whose skill is clearly high, such as past champions, well-known personalities or streamers, and signing individual contracts with the competitors. JeSU says it strongly recommends issuing pro licenses, limiting a prize event to invited players or using individual contracts, so that the prize is clearly connected to work. Its stated reason is to prevent excessive prizes in games where a competitive scene has not yet taken shape.

The exact criteria for a license, any fee and how long a license stays valid are matters for JeSU's pro license regulations, which the page names as the document that governs prizes under the system.

The games the license covers

The license applies only to JeSU-certified titles. The union's page lists 18 of them as of May 27, 2024, in Japanese syllabary order.

The certified titles are UNDER NIGHT IN-BIRTH II Sys:Celes, eFootball, GUILTY GEAR -STRIVE-, Granblue Fantasy Versus, Granblue Fantasy Versus -Rising-, Street Fighter 6, DNF Duel, TEKKEN 8, DEAD OR ALIVE 6, TEPPEN, Virtua Fighter esports, Puzzle & Dragons, the Puyo Puyo series, BLAZBLUE CENTRALFICTION, BLAZBLUE CROSS TAG BATTLE, Monster Strike, Real-Time Battle Shogi and Rainbow Six Siege.

The list matters because the license does not travel. A pro license gives its holder the framework for prizes in certified tournaments on certified titles; a game that is not on the list sits outside the license system, and a tournament on it has to rely on one of the other routes described below.

Junior players and the 2023 change

JeSU also issues the Japan eSports Junior License, for players aged 13 to 15 who have not finished compulsory education. Under the original regulations, junior license holders had to waive in advance their right to receive prize money. They could compete, but not be paid.

That changed in June 2023. JeSU's page says it revised the pro license regulations so that junior license holders may receive prize money, but only within a reasonable range. The page gives three reasons: to encourage younger players to take part in tournaments, to let prizes help young players fund their practice environment, and to raise Japan's competitiveness in international events.

Prize money without a license

JeSU did not want the license to be the only door. Its page says the union set out to widen the room for prize tournaments beyond the license system, and filed a no-action letter with the Consumer Affairs Agency, a formal request asking the authority how it would apply the law to a described practice. According to the page, first published in December 2019, JeSU submitted the request dated August 5 and received the agency's reply dated September 3.

By JeSU's account of the reply, two kinds of tournament can award high prizes as remuneration for work. One is a tournament that limits prize recipients to pro license holders. The other is a tournament that first limits its participants by a set method, then awards prizes according to results: in that case, players without a license can receive high prizes too, and the Act is not considered to apply. JeSU's page gives preliminary rankings, past results and set ability criteria as examples of such methods.

Open-entry tournaments are the harder case. JeSU's page says tournaments run by game companies that anyone can enter may face exposure under the law, so the prize amounts need care, and that open-entry tournaments certified by JeSU run under its approval.

When the Act does not apply at all

The license and the restricted-entry route answer one situation: a company offering a prize on a game it sells. JeSU's manual lists the situations in which no cap on prize amounts applies in the first place.

The first is a tournament in which the game company is not involved, with exceptions, for example when the organizer makes a purchase a condition of entry. The second is a game that is free and in which paying does not affect a player's strength. The third, a prize paid as remuneration for a skilled player's work, is the ground the license and the agency's reply cover.

Entry fees and the gambling rule

Prize money can raise a second legal question in Japan, separate from the rules on premiums: the offense of gambling under the Penal Code. JeSU's manual says that paying prizes out of the entry fees collected from participants can be judged to be gambling, and sets out two conditions to keep a tournament on the right side of that line.

The first is that the entry fees go entirely to the costs of running the event. The second is that prizes come from sponsors unrelated to the entry fees, not from the participants' money. The manual adds that if prizes in substance come from entry fees, for example when the organizer's own parent company acts as the sponsor, the arrangement can be judged to be gambling.

The manual compares this with professional sports such as golf and tennis, where tournaments that collect entry fees pay their prizes to players from sponsors. The manual also says that a tournament can still turn a profit through sponsorship, ticket sales for spectators and merchandise, not only through entry fees.

Venues and the amusement business law

A third law concerns where a tournament is held. The Act on Control and Improvement of Amusement Business, which the manual calls the Futekiho, covers businesses that install video game machines, such as game centers, and an esports venue that installs game machines may fall under it too. A business covered by it needs a permit, may not hand out prizes based on the results of play, may not operate near schools and must use compliant machines.

JeSU says it confirmed with the National Police Agency that a tournament whose entry fee stays at or below the cost of setting it up divided by the maximum number of participants does not fall under that law, a point it published in a release in September 2020. The manual says the confirmation assumes an offline tournament held in a venue with home consoles or similar machines, and that a tournament held entirely online does not need the entry fee condition. General-purpose devices such as computers and smartphones are not game machines under that law when their other functions are actually usable, the manual adds, while venues that install home or arcade consoles need particular care, and home consoles also need the permission of their makers.

The manual presents all of this as JeSU's general view of the law, not a legal judgment on any individual case, and recommends consulting professionals and checking guidelines and releases for a particular event.

What the system means for a career

For a player who wants to make a living from competition in Japan, the license is part of the legal ground that prize money stands on. It sets out, in JeSU's words, that the player's activity is a job and that prizes are its pay. The page also links the license to sponsorship, one of its three stated aims, by making professional status clearer to the companies that might back a player.

In Japan, the question is not only how much a tournament pays. It is whether the law sees the prize as pay at all.

JeSU's figures give a sense of the scale reached under that framework. From the union's founding to the end of fiscal 2022, the page says, more than 100 certified tournaments were held, with about 5 million participations counted cumulatively, and more than ¥350 million in prize money was paid to professional players.

The system is also specific to Japan and to its consumer law. The license answers a question raised by the Act against Unjustifiable Premiums and Misleading Representations, and nothing in it carries over to tournaments in other countries, whose prize rules belong to their own law. Within Japan, which route fits a given tournament, and whether a given prize is pay for work, depends on who holds the event, on which game, with which entry conditions, and on the terms of JeSU's regulations and the authorities' texts in force at the time.

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