Here’s a quick question: which country’s people spend more on gaming machines than any other country in the world? You might be tempted to say the United States spends the most on gaming machines, because of its huge slot machine industry.

Informed readers might think of Australia, because Aussies spend more per capita on poker machines or “pokies” than any other set of gamblers. But that statistics’ key phrase is “per capital”.

The answer is Japan, even before its ever opened a legal land-based casinos. Japanese residents spend $200 billion a year on pachinko, a gaming machine which seems to cross pinball machines with video games.

The pachinko industry is shrouded in mystery in Japan, due to many common misconceptions. An underlying bias against pachinko caused an underlying bias against gambling in general among Japanese voters. That disdain for gambling had an effect on the recent IR Bill passed by the Japanese parliament.

Japanese Pachinko Industry

That’s right. Japanese pachinko parlors generate 30 times the annual gaming revenue than Las Vegas generates on all forms of gambling. Even if you added in all the slot machine revenues in the commercial casinos, tribal casinos, racinos, and video lottery terminals across the United States, it still would not equal Japan’s pachinko industry.

If you added in the electronic roulette and blackjack studios, the legal 8-liner stores, and the virtual sports betting that goes on in the USA, that would not total the amount pachinko players pay. The sheer amount of interest Japanese have in gambling is remarkable.

How Pachinko Works?

Pachinko requires players to drop as many silver balls through a hole in the bottom of the screen by manipulating a single wheel which shoots the balls into the panchinko field. From afar, the game looks a bit like a pinball machine, if lots of pinballs were active in the game at once.

The gaming revenue from Japan’s 10,600 pachinko parlors exists in a gray area in the law. It is illegal to gamble in Japan — even technically illegal to bet on pachinko. Well, it is techically illegal to spend real money on pachinko and receive cash in return. Players are paid in silver pachinko balls.

The catch is the vendor stations near every one of the ten thousand pachinko parlors. Once you step outside the parlor, you can take your bucket of balls to a vending station, which looks like a ticket station at your local state fair. The vendors exchange the balls for real cash, thus circumventing the Japanese anti-gambling laws.

Pachinko Parlor Economics Explained

Min Jin Lee, who wrote Pachinko, a popular historical fiction book in Japan, explained to Business Insider recently, “Every single ball is equal to a certain amount of points and those points get redeemed at the prizes counter.

“Let’s say you’ll get a bar of soap, or you get a Hermes bag, depending on how much you win. But then maybe you don’t want to have 10 Hermes bags, or 100 bars of soap. So you take your winnings and you convert it far away in an alley for cash.”

In such a way, one of the world’s largest gaming markets operates.

60% of Japanese Do Not Want Casinos

The pachinko craze is one reason that 60% of Japanese voters were against brick-and-mortar casino gambling in Japan. Those voters were well aware of how much Japanese citizens might spend in a casino. They believe casinos could increase gambling addiction and cause social disharmony.

Japanese voters also equate gambling with organized crime. Pachinko parlors long have been rumored to be owned by Japanese organized crime, the Yakuza. In a way, the pachinko industry in Japan is seen the way the casino industry was seen in 1950s and 1960s — fun and full of light, but possibly contributing to mobsters.

That common perception comes from a slander of foreigners: in this case Korean immigrants.

Koreans Run Pachinko Industry

The truth is much different: Korean immigrants run most of the pachinko industry. Japan is a homogenous society and they do not readily accept Koreans, whom they consider gaijin.

Min Jin Lee explained how it came to be: “The reason that the Koreans ended up in Pachinko parlours is because they weren’t able to get jobs anywhere else, so it became a place of employment, a safe haven for people who could not achieve regular goals like being a postal worker, or being a truck driver, or being a teacher.”

Noting that Korean women run barbecue restaurants in Japan, Min Jin Lee said, “Women go into food services, men go into gambling. And then, generationally, they become very important in this world.”

The author said she was unaware of the truth about pachinko until she moved to Japan from Seoul, South Korea. The author said, “I did not know until I lived in Japan that it was a business dominated by the Korean Japanese. It’s also seen as very second class and kind of vulgar and dirty and dangerous business.”

Restrictive Japanese Casino Law

That is why Shinzo Abe’s Liberal Democratic Party had to negotiate strict terms to the Integrated Resort (IR) Bill with the social conservative Komeito Party in order to see the casino bill pass. The LDP’s leaders understood that the Komeito Party ultimately had a solid majority of voters on their side of the issue.

In such circumstances, it is a minor miracle that Shinzo Abe passed the bill at all. No one knows how much of a financial hit the pachinko industry will take from the installation of three integrated resort-casinos in Japan’s metropolises. Possibly it won’t be as much as one would think, due to the fact the pachinko parlors are local throughout the Japanese islands.

About the Author
April Bergman avatar
April Bergman

April Bergman was a longtime news blogger for BOC. She wrote gaming news posts from January 2013 until September 2018. April also wrote slot reviews, strategy articles, and online casino reviews for the site.

April Bergman began in the online gaming industry in August 2010. From 2010 to 2013, she managed evergreen content for several top online casino. Her duties included developing and maintaining multiple websites in the gaming space. When not writing about online gambling, April loves horse racing, travel, photography, and gardening. She's began in the business as a devoted poker players and spent several years as a card game editor on the now-defunct DMOZ. These days, she lives with her husband and two children in the Toronto metropolitan area.

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April Bergman was a longtime news blogger for BOC. She wrote gaming news posts from January 2013 until September 2018. April also wrote slot reviews, strategy articles, and online casino reviews for the site.

April Bergman began in the online gaming industry in August 2010. From 2010 to 2013, she managed evergreen content for several top online casino. Her duties included developing and maintaining multiple websites in the gaming space. When not writing about online gambling, April loves horse racing, travel, photography, and gardening. She's began in the business as a devoted poker players and spent several years as a card game editor on the now-defunct DMOZ. These days, she lives with her husband and two children in the Toronto metropolitan area.

READ MORE
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