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Gambling in Japan: Has Abe Gone Too Far?

Everyone travelling to Japan knows it: Pachinko (パチンコ). In the loud, well-lit halls dozens of people gamble, throwing steel balls into slot machines. The steel balls make a clicking sound (sounding like ‘Pachinko’ – explaining the name), and together the multiple rows of machines make a deafening noise. Still, the Pachinko are popular and form a major part of Japan’s gambling market. Yet this market is about to change, with Prime Minister Shinzo Abe planning on further deregulation gambling by legalizing casino in Japan.

Gambling is a major part of Japanese society, and is symbolized by the Pachinko. Pachinko parlors are often massive, with some being the size of IKEA stores or even bigger. A majority of cities have them close to train stations and other prime locations, but the parlors can found in rural areas as well.

The parlors are not only impressive in the cityscape by its size and presence: in numbers they are too. In Japan, there are around 4.9 million machines, which is one for every 26 people. In terms of revenues, the Pachinko industry earned around US$204 billion in 2014; accounting for 4% of the country’s GDP.

Although gambling outside government-operated facilities is currently illegal in Japan, the government tolerates the Pachinko. Operators of Pachinko use a unique system through which people do not win money, but steel balls instead. Those steel balls can be exchanged for prizes or snacks and drinks. However, most people choose the more attractive option: they change their steel balls for money in the end. Technically illegal, but not if the Pachinko parlor offers to exchange the steel balls for a “Special Token” that prevents the parlor to exchange money back. Those “Special Token” can be exchange for money in changing booths operated outside separately from the Pachinko parlor, usually around the corner.

Flashy illustrations and decorations are very common in the noisy Pachinko parlours. Source: DocChewbacca, Flickr.
Flashy illustrations and decorations are very common in the noisy Pachinko parlors. Source: DocChewbacca, Flickr.

Still, despite it being ‘legal’, many experts claim that the Pachinko parlors are run on the edge of society. Estimates show that 80% of Pachinko parlors are operated by ethnic Koreans, and some experts claim the portion of their profits run directly to North Korea.

Moreover, addiction to gambling is increasingly problematic. Research from the Health Ministry shows that about 5.6% of Japanese adults are addicted to gambling, a lot worse comparing to about 1.7% in Macau; especially workers are addicted to the easily available Pachinko games. Furthermore, issues such as poverty, crime, suicide, loss of employment, and family issues caused by gambling addiction are increasing. Also, several news outlets have reported babies left in cars to die, while their parent played a nice game of Pachinko.

The government, meanwhile, plays a minimal role. No national statistics on gambling addiction are collected. Moreover, national programs on rehabilitation and education were minimal – something exacerbated by the fact that a strong social stigma against gambling addictions exists. Nevertheless, rather than attacking problems regarding gambling addiction, the Liberal Democratic Party led by Shinzo Abe is seeking to deregulate and legalize casinos in Japan. This would not only formally legalize Pachinko, but many other forms of gambling.

The bill now passed both the Upper and Lower House in the National Diet, and the main argument behind the law is that it will support tourism. Luring tourists is essential in Abe’s economic growth strategy, and some 40 million tourists are expected annually by 2020. Especially aiming at tourists, the Abe government not only wants to legalize casinos, they also want to create so-called ‘Integrated Resort Facilities’ in hotels, shopping centers and other leisure facilities. The current bill is only is a first step towards further liberalization.

Source: Conor Ogle, Wikimedia Commons.
Source: Conor Ogle, Wikimedia Commons.

Critics meanwhile point to the government’s failure in providing adequate measures to combat the already existing issues associated with gambling, and fear an increase in gambling addiction. If the government has been unable to bring a halt to current addictions, how are they going to prevent a further increase if gambling becomes even more accessible? Moreover, it is said that casinos could be used for money laundering, and criminal gangs could use the legalized venues – brining criminal behavior into the middle of Japanese society.

Regarding tourism, the government’s opposition says that Japan must offer much more than gambling. The country is diverse with valuable sources to attract visitors, and tourism can be better supported by marketing those existing destinations in a successful way. Risking increasing domestic issues such a gambling addiction is arguably not worth the extra tourism, especially in a country with so many other tourists’ attractions.

Meanwhile, major casino hosts from Macau, Singapore and Las Vegas are looking forward to entering Japan. If implemented, Abe’s new law could make Japan the largest gambling market on earth, surpassing Las Vegas and Macau in market revenue. Japan can earn money from extra tourists flocking the country, but the casino hosts are the ones who will make the real money.

And what about the addicted Pachinko players, throwing steel balls into their machines, deafened by the incredible noise? They will continue playing, stuck in the parlor with risk of losing their jobs and falling into poverty. Worst of all, the productivity loss will be serious for Japan’s economy. With Abe’s law, they will benefit at least in one way. As further discussion regarding the details of casino will be continued this year, the conscience of law makers, politicians, and Abe himself will be tested.

Naohiko Nakayama

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