The decline of pachinko - once so popular that a hit song from the mid-1990s exhorted addicts, “Get back to work! Your wife and kids are crying!” - has been mirrored in Japan’s other legal forms of gambling. Income at horse, boat and bicycle racing venues has also fallen steadily for the past two decades.
“Many smaller pachinko operators are simply giving up,” says Takashi Kiso, a leisure sector analyst who advises investors about new opportunities in casino gaming - an industry that does not exist in Japan but may soon. A bill to legalize casinos is before parliament and has wide support, including from Shinzo Abe, prime minister. It is unclear whether Japanese are tired of their old gambling pastimes or of gambling in general. CLSA, a brokerage, estimates that a dozen or so casinos could generate $40bn in revenues a year, leaving Japan only about $10bn shy of Macau, the world’s largest casino-gaming market.
Yet nothing has stopped the decline in numbers. Today’s youth have less disposable income than their parents did, and would rather spend what they have on games for their mobile phones. Pachinko’s eclipse explains why larger companies in the industry are turning elsewhere. Sega-Samy holdings, a maker of pachinko machines, last year bought a struggling seaside resort where it hopes eventually to build a casino, and has partnered with South Korea’s Paradise group on a planned $1.7bn casino near Seoul.
Pachinko operators are meanwhile milking more money from their remaining customers, who surveys show spend an average of more than Y10,000 each time they play. Industry revenues have fallen by 40 per cent over the two-decade period tracked by the Japan Productivity Centre, less than the 60-plus-per cent drop in the number of players.
Those who still play longer and more often, a change that may reflect the game’s growing reliance on time-rich retirees. New slot-machine-like features added to machines in recent years have also made the game more addictive, critics say. Some operators hope to clarify the game’s legal status to improve its image.
That part runs against antigambling laws, though the violation is universally ignored by police. Retired officers are often hired as “consultants” to parlour operators, an arrangement that helps deaden the incentive to crack down.
Now, some pachinko groups are arguing that the looming acceptance of casinos means their industry should be brought out of the shadows too, gambling element included. Lawmakers who support them have formed a new cross-party group to promote the idea - a development that has worried some in the casino lobby, who think it could increase public opposition to the pro-casino bill. “It’s hard to argue with their case,” says Takeshi Iwaya, a legislator from the ruling Liberal Democratic party who is sponsoring the casino bill, “but we’re urging them to be patient before pressing it.”
(written by Jonathan Soble for Financial Times)