Casinos ready to move into mainstream

Pachinko is estimated to be worth $280 billion annually to the Japanese economy. Photo / Getty Images

Although gambling is technically illegal in Japan, gaming is a hugely lucrative industry.

Due to their illegal status, casinos in Japan have traditionally been small, seedy, backroom-style places found in the same neighbourhoods as hostess bars or massage parlours.

Naturally, they have also been the domain of Japan's infamous yakuza, or criminal syndicates, who have deep historical links to the world of gambling.

In fact, the origins of the word yakuza can be traced to the traditional Japanese card game oicho-kabu which is similar to blackjack or baccarat - "ya" (eight), "ku" (nine), "za" (three) is the worst possible hand in the game.

Yet in the run up to the 2020 Tokyo Olympics, it looks like casinos in Japan may finally shake off their dark connections and move into the mainstream. Late last year MPs from Japan's ruling Liberal Democratic Party (LDP) submitted a casino legalisation bill to Parliament which they hope to see passed this month.

The bill, which is the first pro-casino legislation submitted by LDP MPs, is supported by Prime Minister Shinzo Abe and is expected to also gain the backing of the LDP's junior coalition partner New Komeito, and the rightist Japan Restoration Party.

Although legalising casinos has been on the books for a decade or more, proponents of the bill are optimistic the approaching 2020 Olympics and the ruling, pro-business Abe Government will create the right climate to finally make it a reality.

Yet despite all the heightened talk about the potential boost legal casinos could give the Japanese economy, the reality is gambling is already a massive industry in the country.

Pachinko, the uniquely Japanese version of pokies which is a cross between slots and pinball, is worth by government estimates at least US$227 billion ($275 billion) annually - more than the revenue generated in a year by the entire Japanese automobile industry.

Another way to look at it is that Japanese spend about the same amount of money on Pachinko as they do on health care.

And it is not just the money the industry generates which is mind-boggling - the number of pachinko machines in the country also beggars belief.

In a 2011 report about gambling in the Electronic Journal of Contemporary Japanese Studies, authors Naoko Takiguchi and Richard Rosenthal stated that Japan has by far the largest number of gaming machines in the world.

In 2006, there were 4.9 million pachinko and pachislot machines in the country, which equates to one machine for every 26 people. By way of comparison, the United States has the largest number of machines outside Japan, a total of 740,475 gaming machines in 2006, or one machine for every 404 people.

Remarkably, despite the gargantuan size of the pachinko industry, gambling is still technically illegal in Japan. The 2007 Penal Code states that "a person who gambles habitually shall be punished by imprisonment with labour for not more than three years".

Yet this same law also provides an exception to its own decree, stating the prohibition doesn't apply "when the bet of a thing is made only for momentary amusement".

It is through manipulating legal loopholes in Japanese gambling law, that the pachinko industry has been able to prosper - officially it is defined not as gambling but as mere gaming. In order to maintain this charade, no cash winnings are given out inside the parlour itself. Instead winners receive "special prizes" - usually plastic tokens of an agreed monetary value containing a sliver of gold - and these are exchanged for cash at a window adjacent to the parlour.

By locating the booth where the prize money is handed over nominally off the premises, the pretence that pachinko is a game and not real gambling is maintained.

Naoko Takiguchi, Professor of sociology at Otani University and a specialist in gambling addiction, says pachinko's legal status as gaming rather than gambling means the industry remains largely unregulated, and also allows the Government to turn a blind eye to the issue of pachinko addiction, and problem gambling in general.

"Although 61 per cent of electronic gaming machines in the world are in Japan, our Government has done almost nothing to respond to gambling related problems. Almost no responsible gambling polices are in place; no training system to train gambling addiction treatment experts. No ethical code has ever been established," she says.

Takiguchi believes the problem of gambling addiction is a "very serious" one, but the lack of government acknowledgement makes it difficult to gauge its true depth.

Takiguchi, who runs rehabilitation and education programmes for problem gamblers and their families, says she has seen first-hand the damage gambling addiction can cause. "It leads to debt, poverty, crime, suicide, and loss of employment; parents fighting around the issue of money, arrest and the shame that brings to the family, divorce, and children developing gambling and other addiction problems, such as eating disorders. It is not just the gambler who suffers, but the whole family ... also friends and colleagues, and even society at large."