Could Japan’s new casino industry spell doom for the pachinko parlours?

  • Number of pachinko players dropped by 20 million between 1995 and 2016
  • Japanese parliament is considering regulations to allow establishment of casino resorts

The impending arrival of casino resorts in Japan is set to challenge the dominance of traditional forms of gambling in the country.

Pachinko is the Japanese equivalent of slot machines, and even more popular.
Pachinko is the Japanese equivalent of slot machines, and even more popular.

Last year, the Japanese Diet passed a law making casino gambling legal and lawmakers are set to consider legislation to deal with the practical issues associated with developing casino resorts, with a number of international gaming operators keen to expand into the country. But the arrival of casino gambling could be bad news for those involved in the pachinko industry.

Pachinko – a kind of pinball machine – has always been extremely popular in Japan. Tightly regulated, it is one of the handful of gaming activities that have been permitted, and by far the biggest. But the number of people playing the game has declined dramatically.

Back in 1995, there were 30 million pachinko players, spending around ¥30 ($0.27) trillion on the game, but by last year that customer base had shrunk to 10 million players, while the revenue generated by the nation’s 10,000 pachinko parlors was ¥22 ($0.19) trillion.

Regulatory challenges

The potential arrival of multi-billion dollar casino resorts threatens to add to the pachinko industry’s woes, but parlor owners are also facing other problems.

An ageing population is one factor, with older people less likely to be attracted by the game, but regulatory challenges are a more pressing issue. Concerns about gambling dependency led to the Japanese government introducing a new law that will cut the maximum payout from a pachinko machine from February next year to ¥50,000 ($443).

In addition, it has been reported that the government is also considering abolishing the ‘kankin’ system, in which players exchange their prizes – usually items such as pens or lighters – for cash, and the items are then sold back to the pachinko parlor.

Abolishing the kankin system would effectively push pachinko parlors out of business, and could potentially push pachinko customers towards the new casino resorts.

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