The Nikkei Asian Review published an interesting article this week that suggests Japan's relative lack of big-money eSports tournaments is due, at least in part, to a law that blocks large cash prizes for events that are seen to be advertisements for a specific product or service.
According to the Review, the game industry hasn't seen big cash prizes put up by devs/publishers for game tournaments in Japan since last summer, when someone thought to check with Japan's Consumer Affairs Agency to verify that cash prizes in a competitive event planned to promote a specific game wouldn't qualify as a "reward" meant to attract people.
(This is, incidentally, the same regulatory agency that cracked down on "kompu gacha" monetization mechanics in mobile games a few years back.)
The Agency decided that yes, it most definitely would be a reward, and thus reportedly made a very public show of stating that the cash prize pool for such an event could not exceed the legal limit of 100k yen (~$893.7 USD). That, according to former Famitsu editor and reported eSports professional Hirokazu Hamamura, has scared off a lot of potential prize money.
"If it weren't for that law, we could hold as many big-prize events as we like," Hawamura told the Review, though he went on to suggest that the sort of PC games that typically dominate global big-money eSports events (Dota 2, League of Legends, Counter-Strike: GO) aren't as popular in Japan as they are in other regions.
However, NeoGAF users have noted that despit the CAA's public proclamation there have been cases where eSports events have been held in Japan since last summer with prize pools over 100k yen.
The Review also notes that some event organizers have tried to get around the CAA's mandate by using someone else's money to fill their prize pools (event sponsors, for example) Some are considering limiting their events to professional players only (since the CAA's mission is to safeguard average customers); nobody sounds very excited about the prospect of revising the CAA's ruling.
"I don't think esports would be given a special treatment," Japanese attorney Takaaki Someya told the Review. "I would imagine it would be necessary to build a good track record, like holding legal events again and again -- to show the organizers' good intentions -- before lobbying for legal changes."
You can read more comments from these and other sources in the full Review article.