Japan Looks to Curb Its Pachinko Problem

As the Japanese Diet prepares a framework of regulation that will pave the way for the country’s first casinos, politicians are also turning their attention to an existing gambling scene long too neglected by regulators.

The country’s colorful, noisy pachinko parlors line the streets of almost every town and city in .

Technically, these pinball-slot hybrids skirt the fringes of legality but are accepted because they do not pay out money directly.

Instead, players trade captured balls for prizes, or for tokens that can be exchanged for money elsewhere.

Pachinko is therefore legally classified as an “amusement,” like a fairground attraction, which means the sector has largely escaped regulation applied to Japan’s other gambling pastimes, such as betting on horse, boat, bicycle and motorcycle racing.

The pachinko market has actually been shrinking over the last few years but it remains huge. Japanese spent $209 billion at pachinko parlors in 2015. That’s about 4 percent of the country’s GDP.

A 2014 study found that 5.36 million Japanese, or 4.8 percent of the adult population, may be problem or pathological gamblers. Those rates are alarmingly high in comparison with the rest of the developed world, where problem gambling rates, generally speaking, usually hover somewhere just below the one percent mark.

It may be, of course that the study, commissioned by Ministry of Health, Labor and Welfare, is using a different criteria to define problem gambling.

Nevertheless, the figures are alarming, and meanwhile the plan to authorize casinos has little public support. As part of the preparation for casino legalization, the government has called for more research into dependency, the results of which may have inspired it to tighten pachinko controls.

New measures will also allow it to deflect inevitable criticism that it is allowing gambling to run rampant.

Among options under consideration, according to documents seen by Bloomberg, is allowing relatives of a gamblers to opt them out, restricting their access to .

The government is also looking at regulations to make the game dynamics less addictive, as well as obligating operators to take their own measures to combat addiction, with an independent body set up to monitor progress.      

Companies in any sector prefer to regulate themselves being bound by legislation is bad for business, said Kazuaki Sasaki, associate professor in the department of international tourism at Tokyo University.

Although the increase in costs will hurt the industry in the short term, they re necessary to ensure its long-term survival, he said.