Japan Pachinko Industry Continues Reeling, Profits Down 27 Percent

By | August 3, 2021

The Japan pachinko industry’s struggles in recent years were only exacerbated by the COVID-19 pandemic.

Japan pachinko games casino resort
A man plays a pachinko machine in Tokyo last year. The Japan pachinko industry generated more than $21 billion in 2020 profits. But that’s down substantially from previous years. (Image: Bloomberg)

According to a market report from Daikoku Denki, a Japanese-based gaming manufacturing firm, pachinko’s popularity continues to decline. Pachinko is an amusement game that can best be explained as a vertical pinball machine. 

Pachinko halls in Japan award players with vouchers that can be exchanged for various prizes, including tobacco, alcohol, groceries, cosmetics, and electronics. But many players take their vouchers to businesses within close proximity to the pachinko parlors that exchange the prize vouchers for cash. The money exchange venues often work in cahoots with the pachinko parlors. 

Pachinko revenue and profits both plummeted during the 2020 coronavirus year. JPY14.6 trillion (US$133 billion) was put into the machines, down $49.2 billion from 2019 — or 27 percent. Gross profit from the terminals was slashed $8.1 billion to $21.4 billion. 

Pachinko Losing Luster

Commenting on the Daikoku Denki report, Tsuyoshi Tanaka, executive officer and Managing Director of Amusement Press Japan, says pachinko isn’t nearly as popular with young people as it is and was with their parents and grandparents. 

Many players feel that the machines are no longer exciting. The segment that lost the highest player population in 2020 was not the elderly, but the younger players,” Tanaka explained. 

Pachinko is most heavily played in Japan. Of the 7.4 million pachinko machines in the world operating in 2018, 4.3 million — or 58 percent — were in Japan. 

Japan’s pachinko machines and the number of pachinko halls have gradually decreased over the past five years. In 2016, Japan was home to nearly 11,000 pachinko parlors, and 4.52 million machines. Last year, the country counted 9,035 pachinko parlors and four million machines.

Casinos Coming

Japan’s central government is in the process of bringing commercial casino resorts to the nation. Three integrated resort (IR) licenses with gaming privileges are up for grabs, and the cities of Osaka, Yokohama, Nagasaki, and Wakayama are in the running. 

But pachinko, the most popular amusement game and quasi-gambling activity in Japan, won’t be offered inside the imminent casinos. Earlier this year, Japan’s Casino Regulatory Commission outlined permissible casino games, and pachinko wasn’t named.

The casinos, expected to be multibillion-dollar developments, will be allowed to offer baccarat, blackjack, sic bo, craps, casino war, roulette, pai gow, and slot machines. The impact the three casinos have on pachinko businesses in the surrounding regions might not be substantial. The integrated resorts are being tailored to foreigners, not locals. 

Japanese residents will have limited access to the casino floors, and will be required to pay an entrance admission. Current regulations mandate a JPY3,000 (US$27.50) entry fee for locals. They are to be restricted to three casino visits per week, or 10 entries per month.

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