Pachinko Gets Caught in Cross Hairs as Japan Regulates Casino Resorts

Posted on: April 10, 2018, 03:20h. 

Last updated on: April 10, 2018, 03:24h.

With the global gaming industry holding its collective breath while Japan’s lawmakers craft regulations for the country’s impending integrated casino resorts, pachinko parlors may be facing extinction.

Pachinko in decline
Old man’s game? Pachinko numbers have dropped and operators are going bust as millennials in Japan find better things to do. Meanwhile, casino regulation has brought the pachinko industry under the spotlight like never before. (Image: The Japan Times)

The colorful, noisy gaming arcades line the streets of almost every town and city in Japan. Although increasingly: less so.

New analysis by the Tokyo-based Yano Research Institute (YRI) counted 10,258 pachinko parlors in the country at the end of last year, calculating that 420 – or one in 25 – had shuttered in 2017.

Meanwhile,177 companies operating pachinko parlors went bust last year, which is more than five percent of all the operators in Japan.

Millennial Apathy

Pachinko is a slot/pinball hybrid, classed as “amusement,” along the lines of fairground attractions. To maintain the illusion that the machines aren’t actually gambling, they don’t pay out cash directly. Instead, players trade captured balls for tokens that can then be exchanged for money elsewhere.

Like more traditional casino games, such as slots, it seems pachinko is suffering from millennial disinterest. YRI suggested the explosion in entertainment options brought by fast internet speeds has distracted Japan’s youth from pachinko, particularly in rural areas where the parlors used to provide one of the few leisure activities.

It’s not as though operators haven’t tried to grab the intention of the nation’s millennials, but as Casey Baseel noted in Japan Today this week, “no matter how many anime and video game franchises pachinko machine manufacturers license in an attempt to appeal to … younger fan bases, pachinko is widely seen as the pastime of stodgy middle-aged and older men.”

Tighter Regulation Could Be Nail in Coffin

The number of active pachinko players has dropped from 30 million in 1994 to just 9.4 million today, and the downturn is likely to continue to descend. The advent of casinos may add competition, although, with just three resorts planned, the effect is likely to be minimal.

But casinos have, indirectly, already had a devastating impact on the pachinko industry. The designation of machines as “amusements” has long allowed them to avoid Japan’s strict gambling regulations, but those days may be coming to an end.

The legalization of casinos has forced lawmakers to confront problem gambling in Japanese society, as they draw up regulations to govern the new industry and minimize addiction. In doing so, they’ve turned their attention first to the gambling industry hiding in plain sight.

In February, the government slashed the maximum payouts on pachinko machines by a third. The repercussions for an already hard-hit industry are likely to be severe.