Great article from Bloomberg on the Pachinko industry:
Japan’s Pachinko Parlors Beat Vegas as Gamblers Defy Recession
As Japan’s economy shrank at an annual 12.1 percent pace in the last quarter and revenue slumped at Las Vegas casino companies like MGM Mirage and Las Vegas Sands Corp., the 23 trillion-yen pachinko industry is on a roll. Sales from the machines, which resemble upright pinball games, rebounded 0.5 percent in last quarter, reversing a six-year decline, and rose 0.9 percent in January, according to government statistics.
Kyoto-based Maruhan Corp., the biggest pachinko-hall operator by sales, forecast net income will rise 11 percent to 20 billion yen in the fiscal year ending today, according to a statement on its Web site. Operators aren’t publicly traded and typically don’t provide financial information.
Casino gambling revenue in Las Vegas fell the most on record last year and dropped 15 percent in January as the U.S. recession curbed spending on travel and betting. Shares of MGM Mirage and Las Vegas Sands fell more than 95 percent in the 12 months through March 27.
Introduced in the 1920s, pachinko is played by about 13 percent of Japan’s population, who fed 23 trillion yen into the machines in 2007, according to the Japan Productivity Center for Socio-Economic Development.
Numbers are down from 16 percent of the population and 29.6 trillion yen in 2003, a drop that was caused by a regulatory crackdown on types of machines that encouraged heavy gambling, according to a February 2007 report by CLSA Asia-Pacific Markets.
Japan’s 13,000 pachinko halls — more than one for every 10,000 residents — are located throughout the country around train stations, along highways and in entertainment areas.
Pachinko players seek to amass piles of small steel balls that can be exchanged for prizes. Because casinos are illegal in Japan, cash can’t be paid out on the premises. Prizes can usually be exchanged for money at a nearby booth.
Operators are luring customers with new high-stakes machines that yield bigger profit margins, while lowering fees for others to 1 yen per ball from 4 yen.
“Parlors are thinking more carefully about which machines customers like, which machines are the most profitable,” S&P analyst Miyuki Onchi said. “Sales have come up bit by bit.”
Lower-fee machines have widened the customer base at Maruhan, the company said in an e-mail. Founded in 1957, Maruhan said it has 242 parlors, up from 225 a year ago, and about 12,000 workers.
Spending by Japanese households dropped 5.9 percent in January from a year earlier, the most in more than two years, the government said last month.
“It’s an industry that in the past, when the economy has slumped, it has improved,” Kobayashi said. “But this time we don’t know how bad the recession will be.”
That’s a whopping 13,000 parlors, compared to:
- 3,800 McDonald’s stores
- 1,102 Sukiya beef bowl stores (they edged out Yoshinoya in 2008)
- If pachinko parlors were a convenience store chain, it would be the biggest (7-11 Japan is the biggest with 12,071 stores, with more than 50,000 convenience stores nationwide)
For some reason the article doesn’t mention that part of the new attraction of these “new high stakes machines” is the aggressive advertising and licensing deals. Recent titles have included Evangelion, Space Battle Ship Yamato, Korean drama Winter Sonata, and even Tensai Bakabon. There is also a difference between pure pachinko and pachinko-slots (“pachi-slo”) that I still don’t really understand.
46 thoughts on “Bloomberg on Pachinko”
Pachi-slo – no balls.
Seriously – you go through money faster on pachi-slo.
For 13,000 parlors, I think that they are probably including game shop with a dozen or so machines (where you can’t exchange the wins for cash).
Maruhan shops really are off the hook. They have good TV spots too.
This “exchange for prizes” thing is a long loved trope in the Western writing on pachinko, but these days you get the “medals” to exchange for cash, along with a print out of exactly how much money you have one. You do still have to march it over to the window, however.
Yeah, going by presence in TV advertising Maruhan does seem to be doing quite well these days.
When the likes of Misora Hibari and Darth Vader started getting used for pachinko machine designs, I knew that nothing was sacred.
“Misora Hibari and Darth Vader started getting used for pachinko machine designs, I knew that nothing was sacred.”
Two words – Seven Samurai.
I’d play it. The “Change!” reach would be off the hook.
My sincere apologies for writing “off the hook” twice in the same thread.
Kim Jong Il Pachinko?
“Kim Jong Il Pachinko?”
Oh #^@% yeah!
I believe the “medals” are usually plastic bricks with anti-counterfeiting holograms on them (like on a Windows disc or something). They used to use more ordinary items as “prizes” but it was too easy to counterfeit them, and even worse it was impossible to prosecute the scammers because of the separation between the pachinko parlor and exchange counter, due to the legal pretense that it is not actually gambling. I understand that the money and “prizes” are exchanged between the actual parlor and the exchange stand through a third company, which is essentially a legal (or at least tolerated) money laundering operation that buys and sells the “prizes” at artificially controlled prices, only between licensed partners. Benjamin once explained it to me, and I think I’m going to ask him to write an entire post on the subject.
Roy, all true. But none of it is remotely secret or confusing – most places actually post the yen per ball rate, etc.
The semi-secret and confusing part is the structure of the behind the scenes structure of financial transactions that allows them to obey the letter of the anti-gambling statutes while still actually running open gambling dens. From the consumer point of view it’s quite simple, which I think is a testament to how complex those behind the scenes structures are.
Pachi-slo are not pachinko machines, they look like slot machines and essentially function the same way.
Oh, and Roy’s explanation above of the triangle money exchange system is a good one. The third company which Roy calls a “money laundering operation” is technically a pawn shop.
I have always been amazed at how often they remodel pachinko parlors. It seems as though they completely and expensively remodeled the ones where I live- a small city it Gifu prefecture -about every 5 years or so. It looks as though two of the three larger ones in our town have recently closed. Originally these parlors had been bowling alleys during Japans bowling boom some 30 years ago. Pachinko has definitely had a long lived run as booms in Japan go.
It may be that Pachinko parlors are ideal receptacles for money laundering activities. Its an all cash business and with the added confusion of gift stores and prize exchanges there must be a lot of opportunities for creative book cooking. I’ve always suspected that the frequent remodels also have something to do with these creative financial opportunities.
I’ve heard of the legendary pachinkars that are the equivalent of professional gamblers that actually can make a living at it. I imagine they are few and far between. I tried Pachinko twice twenty years ago. Each time I lost 2,000 yen and decided it definitely wasn’t my game.
Roy, all true. But none of it is remotely secret or confusing – most places actually post the yen per ball rate, etc.
The rate per ball is always 4 yen when you “rent” (buy) them. I’m fairly sure this is set by law. The rate at which you exchange them back, however, varies and is generally not posted at the parlor, although if you ask an employee they will tell you. Ten years ago it was almost always 2.5 yen, nowadays it varies but is generally significantly less than the original 4.
This difference is very important to Pachinko strategy. If you have a 40% loss every time you change your balls (!) then you should avoid doing this as much as you can (!!). The longer you play without buying new balls or exchanging them into cash, the higher your expected value is. This is why people show up at the parlors when they open and play all day, playing for as long as you can is good strategy.
So in sum, Adamu, don’t change your balls and play with them for as long as you can.
Yup, 4 yen is the legal rate. See Section 35.2 of this.
My favorite strategy for Pachinko is – wait until father-in-law has won more than 10 boxes and nick one.
“The rate per ball is always 4 yen when you “rent””
Things have gone nuts these days with 1en pachinko. I’ve seen some places that have balls of 3 different values under the same roof.
Not sure how they work that legally, however….
I haven’t played pachinko since I was under legal age (won once, lost once, and decided that was it), so have no idea what they are like these days, but I cannot let this comment pass (“Adamu, don’t change your balls and play with them for as long as you can”) without referring MF readers to this classic of children’s television….
h t t p : / / w w w. funny-videos. co. uk/videorainbowtwanger. h t m l
(correct the hypertext transport protocol headers and spaces etc – that’s to avoid getting stuck in the spam filter….)
“Things have gone nuts these days with 1en pachinko. I’ve seen some places that have balls of 3 different values under the same roof.”
Oops, forgot about this. My mistake. The MAXIMUM for renting a ball is 4 yen per and until recently this was universal. In the past few years parlors have put forth 1 2 and 3 yen pachinko but your chances of coming out ahead are significantly lower, so people who are out to win don’t play these. There was an interesting article in FACTA magazine a couple months ago about how people who win at 1en pachinko don’t even bother changing their money into cash, instead they use their balls to buy toiletries and other essentials so the parlor winds up functioning as a convenience store.
My sister-in-law once brought over some chocolates that she won at low-stakes pachinko… It all points back to the essential POINTLESSNESS of the whole game. I have yet to identify any redeeming quality. Why don’t they just stay home and play Dr. Mario like my friend’s mom did for hours and hours a day back when I was a kid?
“It all points back to the essential POINTLESSNESS of the whole game.”
Tanioka Ichiro, Asia’s top gaming academic, wrote a book on pachinko （ギャンブル フィーバー） in which he compares it to every other popular form of gambling and concludes that it is the most exciting and fun out of all of them. I have to agree with Adamu in that I don’t really see the point of it, but then again I also don’t see the point of the people who play the mechanical horse races in video game parlors and there are a whole lot of them too.
You have to admit, there is something “Japanese” about sitting in a big room and making the exact same mechanical motions as everyone else around you.
You’d better tell that to Henry Ford,Benjamin.
“in which he compares it to every other popular form of gambling and concludes that it is the most exciting and fun out of all of them.”
Mahjong is way better (for those who haven’t played, I’d compare it to playing four games of poker at one time, but better), but Pachinko is a lot more fun than slots/pokies.
For low stakes Pachiko, the point only point that I can see is to see the funny/awesome videos on the cheap.
“You have to admit, there is something “Japanese” about sitting in a big room and making the exact same mechanical motions as everyone else around you.”
I think that you should tell that to all of the old people on buses to Vegas and Atlantic City….
I’ve often seen infants sleeping in running cars while the parents are in playing a few balls. There are numerous deaths of children reported in Japan. When an engine stalls out and the air conditioning goes out it doesn’t take long for the temperature to rise to a fatal range.
Tanioka Ichiro should have also written that it is one of the most deadly forms of gambling.
Even with all of the organized corruption in Las Vegas related to gambling and other illicit activities the bosses wouldn’t let the little kiddies regularly die in the parking lots. Mainly because it would just be bad business.
Thomas, I think what you are describing is an example of misplaced moral panic on the part of the Japanese press.
Between 1998 and 2005 there were 1-2 such cases a year. Tragic, indeed. But I can’t help but see the over-reportage of it partly as a result of the morning wideshows taking any chance that they can get to demonize women who who fail to live up to housewifely ideals. “Women shouldn’t think about going out and having fun before their children are in middle school” is one uber-moralist comment that I can remember.
I’d also be very surprised if other forms of gambling were not causing similar death rates. I’d be very surprised as well if there were not 1-2 cases in Vegas each year.
Now don’t get me wrong, people who leave their kids in cars to die while playing pachinko are diabolical idiots, but the way that it is reported, you would think that there are 50 cases each year. Something about the whole discussion isn’t right.
As for Vegas the police in the U.S. probably at times arrest parents for child endangerment when taking their children to the dentist. I’d hate to think what they’d do if they were left in a hot car while gambling.
I’ve read ever so many cases of parents shooting their kids for a variety of reasons in the U.S. and a myriad of other preventable idiotic fatalities but not once have I read of them leaving their babies in the car while gambling. It’s possible though. Stupidity and indifference is not a trademark of Japanese parents.
Longass response with links lost to spam filter.
Gist – 35 total cases in US per year compared to 5-6 for Japan.
Lots of cases of it happening in Las Vegas and elsewhere gambling related in the US too.
Fewer yearly deaths in Japan lately, more in US.
A problem that deserves attention in every country.
You know, that’s actually surprising. I would think that the number would be higher in Japan because its much easier to drive your kid to a local Pachinko parlor than it is to drive all the day to Vegas or Atlantic City. Go figure, I guess.
“You’d better tell that to Henry Ford,Benjamin.”
I’m pretty sure his workers got paid 😛 Of course, that might be about to change…
“I think that you should tell that to all of the old people on buses to Vegas and Atlantic City….”
Ok ok, I think you both know I was being tongue-in-cheek about that comment. People who play slots anywhere generally look ridiculous. But there really is a difference, both in scale and demographics. There are plenty of old people who play here, but there are also plenty of young men and housewives. In terms of numbers, I forget the exact statistic, but there are more pachinko/pachislo machines in Japan than there are slot machines in the rest of the world, by far.
I sometimes wonder if this is only due to easy access to gambling in Japan. If slot machines were legal all over America, maybe you’d see the same thing.
“If slot machines were legal all over America, maybe you’d see the same thing.”
I think so, and I also think that you would see more creative machine design.
In places like Canada and Australia where you can play slots in lots of bars (do they not have these in the USA?) people treat them much like pachinko. In Canada, they call them an extremely stupid name – Video Lottery Terminal (VLT). Of course, it is also impossible to tell how many people are playing stupid #^@% like online slots or video poker, etc.
I think online poker is what fills the nitche in the west.
Online bingo is probably a better comparison than poker. It also has a big following in Japan where, although it is illegal, domestic regulations can’t prevent Japanese citizens from signing up to sites registered overseas. Some credit card companies have refused to honour transactions with counterparty traders engaging in gambling businesses but most quickly got around this.
There has been talk on the internet that South Koreans had banned pachinko（Metal Chigi）in 2006.Yet,president Lee Myong Bak had insisted Ozawa Ichiro to “have interest in pachinko dealers who are facing problems due to recent restriction”.
2ch is all raging in usual anti-Koreanism that J-media for not reporting these because in the rural stations,Pachinko parlors are the biggest client for TV commercials.
In Taiwan I saw Pachinko only around Taichung. I heard that it was banned in the Taipei area, but I’ve never read any solid information, and the only thing Chinese wiki says about pachinko in Taiwan is that it has as transliterated name (柏青哥) as well as the official Chinese translation of 彈珠機.
Japanese gambling and gaming industry might be the biggest one in the world. I wonder if Las Vegas’ wealthiest man is richer than Japanese’s largest pachinko owner
I love this game and know it well – after living in Japan and playing it every week for 3 years. For gaijins, its a strange thing to do for sure. But its even more interesting to me BECAUSE of that strangeness and the lack of Western players. I have a website on it now at http://www.pachimono.com, should you be interested. I hope that one day, pachinko, or some form of it, is as big over here as it is in Japan.
Jeeze. I certainly hope that it’s never even close to as big in the US as it is in Japan! But I also definitely think it would be kind of neat for it to at least exist in the US alongside all those bland slot machines and video poker.
BTW Jon, the pachinko glossary you did is very cool. I wonder if it’s the only one that exists in English.
Eric Sedensky had one in his book “Winning Pachinko”. It’s out of print now, though, and it looks like a second-hand copy could set you back over $40. It gets a regular name-check on pachitalk.com
I’ve just spotted that an email from Sedensky a couple of months ago is quoted on their forums:
Someone pointed out his book’s high second-hand price and he replied:
“About two years ago, some electronic publisher contacted me about doing a re-issue of Winning Pachinko online, also for some kind of pachinko forum or club like the one you mention. They went so far as to contact the publisher, but being that Tuttle is still so stodgy and tied to the 20th century print business model, they wanted some outrageous up front fee and percentage that made electronic publication prohibitive. The project, needless to say, languished and died, much to my chagrin.”
Actually, looking at that pachitalk thread, the “someone” who contacted Sedensky looks to be the same Jon who comments on MF above.
I haven’t actually played pachinko, but my former housemate bought a video slot machine for 5000 yen from a recycle shop and we had some fun poking around the insides.
I’m holding out for a first generation Hokuto no Ken machine for less than 10,000.
Mulboyne – you’re quite right, that was me. I used parts of Eric’s english translations for my glossary, but Eric’s does not use any of the kanji or kana script in his book, and so yes, mine might well be the one and only Japanese-English in circulation since Eric’s was attempted back in 1990. Mine’s expanding all the time and I have over 80 JP–>Eng pachinko specific terms lined up now – it will be updated on the wesbite soon.
Jon, shoot us an email when you update your glossary so we can link to it. A one of a kind project like that deserves some notice.
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