Revised Law Triggers Mass Closures in Men’s Aesthetic Industry, Fuels Rise in Underground Sex Businesses

“Operating Men’s Esthetic Businesses in Prohibited Areas” Subject to Stricter Penalties

With the revised Adult Entertainment Law, most of which came into effect on June 28, the gray operational practices of men’s esthetic salons are now on the verge of being completely eliminated. Among those in the men’s esthetic industry, there are widespread concerns that the new legislation will force many shops to shut down, with rumors circulating such as the era of mass closures has begun and a major downsizing of the industry is inevitable.

Under the revised law, penalties have been strengthened for several violations, including romantic solicitation by hosts, kickbacks to street scouts, and notably, unauthorized operations, name-lending, and operating men’s esthetic salons in prohibited areas. The inclusion of men’s esthetic salons under stricter penalties came as a shocking and unexpected development, shaking the industry to its core.

Penalties for operating in prohibited zones have been drastically increased: imprisonment has been raised from a maximum of 2 years to 5 years, and fines have jumped from a maximum of 2 million yen (for individuals and corporations) to up to 10 million yen for individuals and an extraordinary 300 million yen for corporations—a 150-fold increase for the latter. Such drastic changes go beyond simple regulatory tightening and are seen as a de facto death sentence for the industry.

Until now, even if a men’s esthetic salon was busted, it was common for operations to resume under a new name or manager, since a violation of the law didn’t legally prohibit continued business. These name changes were often done to avoid harsher penalties in case of repeat offenses, which could lead to prosecution and imprisonment.

However, under the revised law, a single bust could now lead to total business collapse due to the overwhelming financial penalties, making it virtually impossible to continue operations. The loophole of just change the shop name will no longer be viable. Moreover, the new legislation explicitly mentions men’s esthetic, which tightens the criteria for being categorized as an adult entertainment business—making future crackdowns even more likely than before.

Gray-zone business no longer allowed

Men’s esthetic salons are not officially classified as sex-related businesses. Therefore, providing sexual services is, by definition, illegal. Nevertheless, many establishments continue to operate illegally—simply because without offering such services, they cannot attract enough customers to stay in business.

As a result, a large number of these shops operate under the facade of massage while actually providing sexual services. Even salons that start out with legitimate practices soon lose customers to those offering more explicit services. Reluctantly, they begin hiring women willing to provide such services, and as male clients flock to those workers, the women who were originally working properly are gradually pushed out. Neither the management nor the staff can survive on legitimate massage services alone. This is a textbook case of bad money drives out good and honesty gets you nowhere.

For over a decade, the entire industry has operated in this kind of gray zone. The appeal of affordable prices with a hint of the illicit was said to resonate with men’s sense of adventure. Even if everyone knew it was illegal, police forces lacked the manpower, budget, and time to crack down on all the establishments at once. As a result, most salons were able to continue operating under vague and ambiguous conditions.

However, going forward, the risk-reward structure will change fundamentally. Most operators will no longer be able to bear the risk and will be effectively driven out of the market voluntarily. The logic of “if everyone runs the red light, it’s not scary” will no longer hold.

Mainstream room-based business to be destroyed?

he recent tightening of regulations focuses on men’s esthetic salons that operate without the required notification under the Adult Entertainment Law. Establishments most likely to be cracked down on are those where “the shop itself instructs therapists to perform unlicensed sexual services” or where “inadequate employee training leads workers to engage in illegal acts on their own.”

Additionally, shops that imply the possibility of sexual services are also at risk. This includes cases where “the advertising is sexually suggestive,” “hints are dropped about sexual options being available,” or “images of therapists in seductive outfits or showing cleavage are posted on websites and social media.”

Especially vulnerable are room-based operations, which “operate out of apartments or condos” and “are likely to be reported by property managers or neighbors.” The article notes that “it’s becoming more difficult to survive in the gray zone.”

Regarding what comes next for these room-based men’s esthetic salons, the article predicts: “In the early stages after the new law takes effect on June 28, many existing stores will probably adopt a wait-and-see attitude. But once a few are made examples of with arrests or shutdowns, the tide will quickly turn.”

It further states: “Some salons may attempt to pivot and operate as completely legal massage establishments. But most will not survive. Once sexual services are removed, customers stop coming. A shop that can’t earn money can’t stay in business.”

Finally, the article concludes: “That’s the dilemma for men’s esthetic salons. Legal operations and profitability don’t go hand in hand. Only a few exceptional stores might endure, but many will face serious financial trouble.”

Are some stores becoming backstreet sex clubs?

As a result of being unable to sustain operations as legitimate businesses, some establishments have shifted to “outcall” services. This is currently a widespread model and, due to its ease of transition, is considered the most realistic option. Since these businesses do not have physical locations, the risk of being busted is lower. However, as they are not classified as adult entertainment businesses, providing grey-area services would constitute a violation of the Adult Entertainment Business Act (unauthorized operations).

Subsequently, as outcall men’s esthetic services become more extreme and begin to face crackdowns, some operators are expected to convert into dispatch-type adult esthetic services. If they register as a delivery health (outcall sex service) business, providing sexual services is no longer an issue. However, they will face fierce competition for customers, and without adequate business resources, turning a profit will be difficult. This route is likely limited to operators with sufficient capital and human resources. Most businesses are expected to continue operating discreetly to avoid detection.

On the other hand, there is also the likelihood of the emergence of underground shops and independent women offering services. These establishments may intentionally provide excessive services without registration, aiming to make as much money as possible in a short period before disappearing. Police typically conduct undercover investigations for six months to a year before making arrests, so this is a strategy to profit within that window. This is what is referred to as “underground sex work.” Additionally, women who are reluctant to work at licensed adult businesses but still want to earn money as they did before may turn to freelance work using platforms like social media.

It is also expected that therapists and customers will shift toward adult esthetic services that are properly registered under the Adult Entertainment Business Act, whether they are storefront or outcall types, as well as to establishments like soaplands, health services, and delivery health services that offer esthetic courses. In other words, adult entertainment businesses that offer esthetic services are also likely to thrive.

Some industry insiders believe that 99% of current men’s esthetic salons could be interpreted as violating the Adult Entertainment Business Act. It is not necessarily true that they won’t be busted as long as they don’t provide sexual release. In fact, in March 2019, a men’s esthetic salon in Himeji City was raided because a therapist massaged a customer’s inner thigh area.

One reason for the proliferation of men’s esthetic salons operating in such a gray zone is likely because they are inconspicuous and thus difficult to crack down on. When located inside apartment buildings, it’s not immediately apparent they are businesses. During the COVID-19 pandemic, these salons gained popularity compared to other industries because they offered discreet entertainment that wouldn’t draw criticism from so-called self-restraint police. Additionally, since these salons are spread out rather than concentrated in red-light districts or areas like traditional “short-stay” neighborhoods, they aren’t easily wiped out by cleanup campaigns.

However, as the prevalence of these gray-area operations has become excessive, stricter and more effective regulations have now been introduced. This tightening of penalties is likely one reason behind the current move toward a restructuring of the men’s esthetic industry.