The 21-year-old, having admitted visiting a casino six times and gambling away around 6,200 US dollars, was removed by the Nippon Badminton Association from the name list for Rio after an emergency meeting, reports Xinhua.
His team-mate Kenichi Tago, also found guilty of placing illegal bets, was forbidden to play. Tago, who became the first to win Japan's national championship six times in 2013, was de-registered indefinitely by the association.
Momota was the first Japanese player who won the Super Series Masters Finals in Dubai last December. He was an Olympic medal hopeful and his absence in Rio will be a blow to Japan's medals pursuit.
"I went to a casino for the first time in a country where it's legal, and the thrill of it gradually took over my senses," Momota was quoted as saying by Japan Times.
According to Momota's club team NTT East Corporation, the star shuttler gambled at casinos about six times from October 2014 to January 2015 at Tago's invitation. Tago was a frequent gambler, losing around $92,000 in about 60 trips to gambling establishments from October 2014 to January this year.