What is Japan’s pachinko gambling industry and how big is it

A
visitor plays pachinko at Dynam’s pachinko parlour in Fuefuki,
west of Tokyo June 19, 2014.
REUTERS/Issei Kato

• Japan spends $200 billion on pachinko, a vertical
  pinball game, every year.
• Despite a ban on most gambling, the industry employs
  more people than the top 10 car manufacturers and accounts for
  nearly half of the country’s leisure activities.
• The industry has long been run by Korean Japanese who
  have faced decades of discrimination and were unable to enter
  the traditional workforce after World War II.
• Some parlour owners support North Korea and reportedly
  sent hundreds of millions of dollars to the regime.
• Casinos have recently been legalized, but revenue
  estimates don’t come close to pachinko.

Each year, Japanese gamblers spend $200 billion on vertical
pinball-like slot machines called pachinko.

That’s 30 times the annual gambling revenue of
Las Vegas, double Japan‘s
export car industry, and more than New
Zealand’s entire GDP.

Around the country 10,600 pachinko parlours entice players with
rows upon rows of colorful and flashing machines. The aim is to
drop as many silver ball bearings as possible into a middle
scoring hole by turning a single wheel that controls how the
balls shoot into the machine, before bouncing down pins that the
house regularly reconfigures to ensure it always comes out on
top.

But despite its popularity, pachinko parlours operate in a legal
grey space. Gambling has generally been banned in Japan with
only exceptions for betting on horse racing and some auto
races. 

Visitors
play Pachinko at a Dynam pachinko parlour in Honjo, north of
Tokyo August 4, 2014.
REUTERS/Issei
Kato

Min Jin Lee, the author of a historical fiction book set in Japan
called “Pachinko,” told Business Insider that pachinko parlours
use a loophole by having an intermediary between the winning
of the balls and then the conversion into cash.

“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 lets you get an 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,” Lee said.

This cash exchange used to be controlled by Japan’s yakuza mafia,
but that has largely changed with Lee saying many places now just
erect a glass wall between the prize counter and the
cashier. 

“You take your winnings which gets converted into, let’s say, a
plastic disc and inside there will be an actual amount of gold,
or silver. So the thing itself has market value but then that
thing, the little chip or the disc, gets converted at the cashier
into cash,” Lee explained.

Korean Japanese dominate the pachinko industry

Nearly half of all leisure time in Japan is spent in pachinko
parlours, and the industry hires more people than the country’s
top 10 car manufacturers.

One of the biggest corporate operators is Dynam,
which runs 400 halls around the country that are promoted as
being cleaner and quieter than traditional parlours.

But parlours are largely run by Korean Japanese people, who
pioneered the industry after the end of World War II. During
colonial rule, many Koreans had sought employment or were forced
laborers in Japan, and hundreds of thousands faced isolating
discrimination when the war ended.

“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,” said Lee, adding that many
Korean women ended up working in Korean barbeque
restaurants. “Women go into food services, men go into
gambling. And then, generationally, they become very important in
this world.”

Lee spent five years in Japan while writing her latest book about
a fictional multigenerational Korean family, but interviewed
countless Korean Japanese people, sometimes referred to as
Zainichi, about their experiences.

Paeng
Yu Na, a high school student at Kanagawa Korean Middle and High
School in her classroom in Yokohama, Kanagawa Prefecture, Japan,
June 1, 2018. She is dressed in the school’s uniform of
traditional Korean clothes.
REUTERS/Kim Kyung-Hoo

“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,” said
Lee, adding that these sorts of words and attitudes are still
commonly associated with Korean Japanese, even those who have
lived in Japan for decades.

While many Koreans who originally arrived in Japan in the
mid-twentieth century came from a united country, some do now
support the North Korean regime.

Sung-Yoon Lee, a professor of Korean studies at the
Fletcher School at Tufts University, estimated for PRI
that pachinko parlour owners sent hundreds of millions of dollars
to North Korea at the industry’s height in the 1990s.

Casinos are coming for pachinko

Much like Japan’s population, the number of pachinko parlours
have been shrinking. There are nearly one-third less than there
were in 2005, and parlours are increasingly trying to attract
younger players as their market rapidly ages.

But new laws have been introduced to try and limit players’
addictions by cutting the maximum payout each machine can give by
one-third, which means a player should never be able to win more
than $450 in a four hour session.

At the same time, lawmakers have lifted Japan’s ban on casinos.
In a bid to tackle addition, local residents will be limited to
three visits a week and will have to pay fees to enter, but it’s
still expected that casinos will rake in billions in profit
and taxes.

Each year, 1.5 million new pachinko machines are still sold to
parlours, according to the
Financial Times.

And habits, even if they aren’t addictions, are hard to break.

“One out of 11 Japanese people play it once a week. Once a week,”
Lee said. “So it isn’t like if you and I went to some silly
place — it’s not like Vegas where you go once a
year or once every 10 years and say, ‘Oh, I’m going to be a bride
so let’s go crazy.’ It isn’t like that at all.”