Slot-like pachinko industry struggles due to pandemic

by William Brown Last Updated
Slot-like pachinko industry struggles due to pandemic

Japan’s pachinko industry continues to suffer from the impacts of the coronavirus pandemic, with a major manufacturer of equipment for pachinko parlours reporting the market size was down by US$49.2 billion from the previous year.

Inside Asian Gaming reports that Daikoku Denki has seen its total gross profit down US$8.1 billion, while sales and gross profits fell 27 per cent year-on-year.

Executive officer and managing director of Amusement Press Japan, Tsuyoshi Tanaka said COVID-19 was not the only reason for the decline in the pachinko market.

“There has also been an increased removal of machines with high gambling properties,” he said.

“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.”

The mechanical game originating in Japan is used as a gambling device, similar to slot machines in Western gambling.

Pachinko exploits Japanese legal loophole

Gambling for cash is illegal in Japan, but the widespread popularity of low stakes pachinko gambling in Japanese society has enabled the game to exist.

Under the law, pachinko balls won from games cannot be exchanged directly for money in the parlour, nor can they be removed from the premises or exchanged with other patrons.

They can be legally traded to the parlour for special prize tokens, which are then legally sold for cash to a separate vendor located off-premises.

These vendors then sell the tokens back to the parlour at the same price paid for them, plus a small commission.

Tanaka also commented that the pachinko industry had been contracting long before the start of the pandemic.

In his opinion, this is because of parlours making it more difficult to win in order to increase their profit margin; regulatory changes which have seen machines with higher gambling properties and big wins removed; and the high cost of playing compared with other leisure activities available to younger players who have stagnated wages.

This has been compounded by the pandemic, with the player population decreasing further and leading to a decline in revenue for parlours.

One industry insider said: “There are signs that the pachinko industry will improve even though the market is certainly getting smaller. I think it may have shrunk even more than 27 per cent.”

“IF you are not a major company, your parlour may struggle with capital investment in your facilities such as new units or replacing old ones.

“However, for the pachinko industry as a whole, there are signs that it will trend slightly upward as popular models are released.

“I think it may take a little longer for pachislots to enjoy this uplift.”

Japan’s legal framework for casinos is released 

The legal framework governing Japan’s planned trio of integrated casino resorts went live on July 19.

The Integrated Resorts Implementation Act was ratified in 2018 and is due to allow three Japanese jurisdictions to operate a Las Vegas-style development complete with casinos.

These gambling-friendly venues are to be run under 40-year licences and permitted to over a range of currently banned games, including two types of baccarat and eight derivations of poker.

The new legislation comes after Japanese Prime Minister Yoshihide Suga completed a public consultation period 10 weeks ago that allowed communities to refine their proposed submissions.

Front runners for a local gambling licence include Nagasaki, Wakayama, Yokohama and Osaka.

The tenets of the new legislation cover disparate fields including the licensing procedures for casinos and types of background checks required for casino games and rules.

The new laws will deal with technical and structural standards, lay out how venues should calculate gross gaming revenues and what internal controls must be employed to prevent money laundering and problem gambling.

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