Risky biz: Pachinko is pervasive and profitable. And with Japan's politicians now pushing for casinos, it just might be a prototype

Japan, Inc., August, 2003 by Tony McNicol

THE MARUHAN PACHINKO TOWER must be one of the few places in Shibuya that is actually noisier inside than on the streets outside. The din of a zillion cascading steel balls assaults one ear and thumping dance music attacks the other; an hour in its day-glow halls might be likened to sitting out a hailstorm in a super-woofer equipped tin shed. Yet the building is full. Pachinko, Japan's homegrown pinball gambling industry, has as many as 20 million players, despite still being technically illegal as a form of gambling and dogged by accusations of underworld connections--including allegations that the industry is being used as a route for sending money to Kim Jong-Il's North Korea.

You might suspect a connection exists to recent enthusiastic attempts to bring casino gambling to Japan. Are avowed casino fans, such as Tokyo Governor Shintaro Ishihara, hoping to direct players' money to a more legitimate, more easily regulated industry? A group of Diet parliamentarians intend to table a bill proposal next year to legalize casinos. The pachinko industry's 50-year winning streak might be coming to an end.

On a Sunday afternoon in Shibuya the Maruhan Pachinko Tower is packed with men and women, young and old, rich and the recently slightly less rich. Open morning till night 365 days a year, the building has five flours of video games, slot machines and pachinko. This afternoon it looks like all the 445 pachinko machines are in use; the one vacant machine is being guarded by a jittery looking man who shoots suspicious glances at anyone approaching.

As forms of gambling go, pachinko isn't particularly complicated. Players insert small steel balls into a tray on the front of a kind of vertical pinball machine. The halls are automatically fired up behind the transparent face of the machine. Depending on how they fall (plus various digital and mechanical workings inside), more may emerge at the bottom. There seems little for the players to do other than to pour the balls in and try and control their trajectory by twiddling a dial on the machine's face. The balls themselves can be bought from machines in the pachinko parlor, normally for between [yen] 50 and [yen] 80 per 200 balls depending on the type of machine. Successful players are easy to spot by the stacks of overflowing trays stashed under their stools, although claiming their winnings is a slightly involved process. Because pachinko isn't technically a form of gambling, winners can't exchange their balls directly for cash. Instead they lug the trays over to special counting machines where they can exchange them for shrink-wrapped prizes. Then the prizes themselves have to be taken to a nearby building to be swapped for cash, normally well above the actual value of the items.

The pachinko industry has taken something of a hit during the recent economic downturn and seems to be trying hard to attract a new type of customer. The stereotypical disheveled chain-smoking salaryman customer is still very much in evidence, but the Maruhan tower also has a scattering of young women and couples. The latter can snuggle up in the "love seats" tucked away in one corner. An employee explains: "We want to have places where people can relax and we want to attract more ladies."

This Sunday, one TV relaxation area is occupied by a group of men perched on the tubular steel seats, slowly filling up ashtrays and watching the racing. Elsewhere are a couple of small cafes where customers sip their drinks, put their backs to the machines and peer out the windows.

The pachinko industry is huge. According to Osaka University of Commerce's amusement industry research department, Japan's first university gambling research group, pachinko's income is about three times all the various forms of legal gambling in Japan put together. Each year around [yen] 30 trillion worth of steel balls clatter through the nation's pachinko machines. The amounts of money spent on horse, boat, bicycle and car racing as well as the national lottery are small stakes in comparison.

Daikoku Denki of Nagoya is one of the biggest companies involved in the industry. Despite seeing revenue fall during the latter half of the recessionary 90s, the company posted sales last year of [yen] 36 billion. The market leader in the computer systems that function as the nerve centers of most pachinko parlors, the company has recently begun to branch out into pachinko games for the Dreamcast and Playstation games consoles, as well as an i-mode pachinko service that boasts around 80,000 subscribers.

Like many of Japan's successful industries, pachinko can trace its roots back to the early postwar period. In Nagoya, the Masamura trading company set up the Pachinko Museum as a tribute to the company's founder Masamura Takeuchi. Often acknowledged as the creator of modern pachinko, Masamura was one of the men who turned the prewar children's game into an adult pastime. Amid postwar shortages he cobbled together some of the first machines from old tea chests and greenhouse glass. Pachinko as a game dates back even further. The carefully documented museum has a challenge to the usual theory of pachinko's origins: While most histories describe pachinko as an adaptation of the American "Corinthian Game" (a kind of grandaddy pinball), the pachinko museum sees more in common between early machines and the vertical "wall machines" of late 19th century European penny arcades.