Shares in Japan’s Pachinko companies fell this week on the news that the government is planning to tighten regulations on the machines and slash payouts by 50 percent.
According to the Japan Times, the National Police Agency wants to lower the amount that can be won within four hours’ play from ¥100,000 ($880) to ¥50,000 ($440). This is part of its initiative to combat problem gambling as the country prepares to legalize and regulate casinos.
The colorful, noisy machines, which can be found in parlors throughout cities in Japan, have in the past escaped the stricter regulatory oversight imposed on other forms of gambling because they are classified as “amusements,” like fairground attractions.
A kind of slot/pinball hybrid, pachinkos don’t pay out cash directly. Instead, players trade captured balls for tokens that can be exchanged for money elsewhere.
Same Rules as Slots
But that’s all about to change. The NPA wants to apply exactly the same kind of rules to pachinko machines as they will to the slots that will line the casino floors of its future integrated resorts.
It believes that limiting the amount that can be won in one sitting will make people less likely to chase their losses.
The pachinko market has actually shrunk dramatically over the past 20 years, from 18,244 parlors at its 1995 peak to 10,986 in 2016. But its still huge. The Japanese spent $209 billion playing pachinko in 2015, around 4 percent of the country’s GDP.
The Japanese are concerned that they may have a pachinko problem. A 2014 study found that 5.36 million Japanese, or 4.8 percent of the adult population, could be problem gamblers.
With the new casinos coming, the government has promised to devote more resources to research into dependency. Its plans to legalize casino gaming have been met with little public enthusiasm and it wants to deflect criticism that it is allowing gambling to run rampant.
The NPA said it will call for managers of pachinko parlors to educate employees about problem gambling and provide information to customers to how they can get help if their gambling is out of control.
Stock in major pachinko operators and manufactures Sega Sammy Holdings and Universal Entertainment plummeted seven percent and five percent, respectfully, in the wake of the news.