Pachinko revenues

“Pachinko used to be just for men, but I like pachinko. I come alone, and just focus.”

Pachinko revenues are falling as Japan’s population ages.

Gross revenue has shrunk to 19 trillion yen ($185.75 billion) from 31 trillion over the past two decades, and the number of players halved between 2002 and 2012, research by investment bank Morgan Stanley shows.

Part of the problem has been a 15-year economic slump just ending. Spending on all kinds of leisure has dropped by almost a third over the past 20 years, but the number of players per machine has roughly halved since 2000 to stand at just over two in 2012, Morgan Stanley estimates.

Japan’s moves to legalize casino resorts could force pachinko out of the gray zone where it has thrived for decades. It faces no gaming taxes, since it is not treated as gambling, which is illegal, but is viewed instead as an amusement.

Pachinko began as a children’s toy in the 1920s, which gained popularity among adults after World War Two.

Machines spew out winnings in the form of small metal balls. Most players opt to swap winnings for cash, with 87 percent of players at Dynam going this route.

Maruhan and Dynam have fared better than the rest of the industry, which is dominated by family-owned firms. Maruhan’s annual revenue after payouts was about 80 billion yen for the fiscal year that ended in March, up about 16 percent from 2012. For Dynam, revenue was flat over the same period.

But even big operators face difficulties, one expert says.

“Every year, fewer and fewer people are playing pachinko,” said Tohru Okazaki, who has published five books on the industry. “Young people are simply not playing.”

Young people stopped because payouts are smaller and they find it harder to borrow money, said Naomi Suzuki, whose family runs a chain of parlors in the Fukushima prefecture that was hit by the 2011 earthquake and the nuclear crisis that followed.

“Twenty years ago, pachinko parlors were full of young people, but now it’s mostly all middle-aged and old people that come and play,” said Suzuki. “Young people have no money.”파칭코