Pachinko: The Little Japanese Bastard That Beeps and Blinks

 Imagine a pinball machine having a romantic tête-à-tête with a slot machine. The result? Pachinko: An unbearable noisy little bastard that resembles a vertical pinball machine and never stops blinking.

Entering a pachinko parlor, the first thing players do is exchanging their hard-earned stash for a tray of small steel balls costing ¥4 each.

For western observers Pachinko is difficult to grasp. Parlors are smoky, swarmed and noisy premises. A strange place to recreate in a crowded and uproarious city like Tokyo or Osaka. Although parlors box customers like sardines, they are an extraordinary spot to be secluded. Players do not trouble each other. And trying to hold a conversation would be a hopeless endeavor given the loud noise. However, be prepared that breathing turns out to be just as impossible, once the chain-smoking kicks in.

Around Japan roughly 10,000 parlors exist. The point of the game is to drop as many steel balls as possible into the center of the machine. That is done by turning a wheel that controls how the balls shoot into the machine. The aim is a jackpot (“fever”) that pays out hundreds more balls than invested.

Paradoxically, on average players win more balls than they lose. It appears that players have an edge over the house in Pachinko. But the exchange value of the winning ball is only 2.5 Yen a piece (vs. cost of 4 Yen). Thus, regardless of whether you end up with a greater number of balls than you began with, you most likely have lost money. To beat the house in Pachinko, you need to beat it by a significant margin!

Although win proportions are set by the Japanese government, it is an open secret that parlors manipulate them. They increase jackpots during busy days and hours to attract players. Ingenious players, on the other end, resort to utilizing electronic devices/ magnets to “hotwire” the machines into making bigger pay-outs.

Pachinko parlors exist in a legal “gray zone”, at least when it comes to monetizing the balls hopefully won. Gambling for money is generally illegal in Japan. The only exception is betting on horse and some auto races. If a gambler racks up a little fortune in pachinko balls, he can exchange them for prizes inside the parlor: Think snacks, perfumes, electronics, bags, or toys, etc. But what to do when you do not have any use of those prices?

Well, take what are called “special prizes”. Usually, worthless plastic boxes or empty cigarette lighters, and convert them for cash at an intermediary of the parlor around the corner. These places then sell the “special prices” back to the parlor with a little margin. This legal hack allows the Japanese administration to insist that pachinko parlors do not facilitate gambling, but instead provide an innocuous “fun game”.

Be it as it may, what is undeniable is this “fun game” being big business. At its peak in the mid 1990’s the numbers were flabbergasting. Pachinko employed roughly 350’000 people, three times more than the Japanese steel industry. It commanded 40 percent of the turnover of the entire Japanese leisure industry (restaurants and bars included). The total wager was staggering too. Almost 30 million regular pachinko enthusiasts were spending roughly $300 billion per year (a higher turnover than the car industry). Thus, it was big business indeed. Basically, Japan was, and still is, the biggest gambling market in the world. Not bad for a country where gambling is regarded as illegal.

But much like Japan’s population Pachinko has also been on the decline. A quarter century ago Japan had roughly twice as many pachinko parlors. But still, Japanese gamblers as of 2019 spend approximately $200 billion on pachinko, the equivalent to about 4 percent of Japan’s GDP. 

Pachinko parlors are mostly run by Japanese of Korean origin. During Japan’s colonial rule, many Koreans had sought employment or were forced laborers in Japan. Many faced discriminations within Japan and kept out of the traditional labor market in the after-war period. For those, the pachinko industry was the only means to make a living. Some even got very wealthy when pachinko morphed into a multi-billion-dollar business. 

It is an open secret that some parlors proactively channel funds to North Korea. Many originate from North Korea, have families in North Korea, and/ or identify with the North Korean regime. Presumably, a lot of the money goes to North Korean family members. However, a portion of it has turned into a hard currency source for North Korea's gruesome dictatorship. Nobody has a clue about the exact amount, but they are certainly significant numbers.

 

Source:

Modern Japan - Entertainment - Pachinko (japan-zone.com)

https://www.japansociety.org/pachinko_nation

Pachinko Faces Tough Year as Decline Continues | Nippon.com

Even without casinos, pachinko-related gambling accounts for 4% of Japan's GDP | The Japan Times

Some loud, smoky pachinko parlors defy Japan’s shutdown | The World from PRX

What Is Japan's Pachinko Gambling Industry and How Big Is It (businessinsider.com)