With 17 million players, 30 trillion yen of money wagered, 15,000 pachinko-machine parlors, and 330,000 industry employees there is no denying the fact that pachinko is Japan’s most popular leisure activity, but just what the heck is パチンコ (pachinko)!?

Well, the parlors are basically slot machine gambling venues, and are usually located in prime retail areas next to train stations.

They say a picture is a thousand words so let’s take a look inside…

Pachinko was introduced in the 1920s but its popularity boomed in the 1940s and 1950s at a time when there weren’t many other entertainment options to chose from. One of the challenges the 120 million Japanese have always faced is the lack of space in their country, so the fact that these pachinko parlors didn’t take up much room, and could be quickly built, were distinct advantages. Back when the pachinko machine started getting popular the prizes, such as tobacco, chocolate, soap and perfume, generated a lot of excitement. Things have come a long way since this vintage pachinko era.

Pachinko machines are vertical, like slot machines, but players shoot small metal pachinko balls upward, like pinball. The aim of the game is to send the balls upward to bounce off various pins and drop into scoring holes. Balls that fall into the bottom of the machine and are lost and do not score any points. When a ball falls into a scoring hole it triggers a set number of balls to be returned to the player, thus you count your winning by the number of small ball bearings that you collect – you will see that big winners sit with stacks of ball bearing trays behind them. Every machine has a start pocket, which activates the jackpot. Once a player hits a jackpot he then draws for a single or double jackpot. These rules apply to all pachinko games, from the standard Sankyo pachinko, through to pachinko online.

Pachinko parlors also provide alternative gaming machines known as pachislot. Pachislot machines are similar to slot machines commonly found in other parts of the world. The typical design is three spinning wheels, with a separate hold button for each wheel. These pachislot machines require a higher level of skill than pachinko as players have some control over the outcome by pressing the buttons to stop the reels. The objective is usually to line up three ‘7s' to win the jackpot, and there tends to be a lot less variation that with the slot machines you see in the west.

With 17 million players, 30 trillion yen of money wagered, 15,000 pachinko-machine parlors, and 330,000 industry employees there is no denying the fact that pachinko is Japan’s most popular leisure activity, however, these statistics do not tell the whole picture. The amount of money that punters lose, the so called “net win” to the pachinko parlors, is around 10%, so this is a three trillion industry in terms of revenue, which is smaller than many other leisure activities, such as eating out.

In terms of machine numbers, pachinko makes up around 60% of the market with pachislot the remaining 40%. The pachislot share increased dramatically from 1995 but has stabilised at close to 40% over the past two years. According to a survey by the Pachinko Machine Manufacturers Association, the average spend per pachinko player is 19,921 yen, and for pachislot is 25,839 yen.

Gambling is illegal in Japan, and thus the pachinko market operates within a grey area. Article 23 of the Entertainment and Amusement Trades Rationalisation Act specifically prohibits pachinko parlors from providing cash or marketable securities as merchandise, or buying back goods that were offered to the customer. This includes steel balls and prizes.

To get around the law winning players cash in balls/tokens for prizes, which are nominal prizes, like chocolate or soap, of two sizes 1,000 yen and 2,500 yen. These prizes are then exchanged for cash at a nearby exchange store. There is an exchange store for every pachinko parlour.

There is then a third shop - that of the wholesalers, which are fewer in number and cover multiple parlors and exchange stores. Wholesalers act as intermediaries between pachinko parlors and exchange stores.

One of the crazy things is that because of pachinko’s grey status the government doesn’t collect any taxes on the amounts wagered.

The police take an active role in the pachinko industry, and curb issues such as children being locked inside cars while parents are playing in the pachinko parlor, and rising consumer lending to fund pachinko players. The current status is that police seek to retain control of the sector rather than have it fall under the jurisdiction of another government department. For example, many retired police officers, called ‘old boys’, operate these exchange stores.

The government has been concerned by the rise in popularity of pachislot, which has a greater gaming element, and the reduction in number of casual use players. The overall affect is that the pachinko/pachislot industry has become associated with more serious gambling. This has led to new regulation.

The three industry associations are:

• Nikkiso: Nihon Yugiki Kogyo Kumiai (the Pachinko Machine Manufacturers Association)
• Nichidenkyo: Nihon Dendoshiki Yugiki Kogyo Kyodo Kumiai (the Pachislot Machine Manufacturers Association)
• Shinyuko: Nihon Shin Yugiki Kaihatu Kogyokai (the Palot Machine Manufacturers Association)