Gaming in Japan
As Macau’s casino market has opened up, and Singapore has started the integrated casino resort project, many experts foresee the legalization of casino gaming in Japan as the next wave in Asia. Already, some forms of gambling are legal in Japan such as pari-mutuel horse racing and lotteries run by the national government or local governments, generating US$60 billion a year. In addition, although not legally considered gambling, the pachinko/pachi-slot market is much bigger than the public-run gambling market. It generates annual sales of US$300 billion (more like coin-in rather than slot win) from 15,000 parlors with 4,900,000 machines. By comparison, the US gaming machine market has 15,000 locations such as gaming machine outlets and casinos with 760,000 gaming machines, including VLT’s and video gaming machines. Typical slot machines and all types of table games are prohibited in Japan but illegal baccarat games and video poker games are widespread.
Interestingly, the pachinko/pachi-slot industry is regulated under the law, which also regulates video game arcades, nightclubs and massage parlors in order to maintain public moral and to protect minors. Just like AWP (amusement with prize) machines in the UK, pachinko and pachi-slot machines are regulated to have smaller jackpots (approximately US$50 value) than ordinary slot machines and are programmed to win jackpots consecutively if a player hits a specific combination of reels.
To operate a pachinko/pachi-slot parlor, the law requires submitting a request for approval to the regional Public Safety Commission. The criteria for approval are precisely stipulated and include requirements concerning such as business entity, structure and technical standards for the facility, unsuitable zones, selection of a business administrator, standards for acceptable machines, and limitation in operating hours and advertising.
Interestingly, the pachinko/pachi-slot industry is not considered as gambling, so no gaming tax is imposed. If ordinary slot machines become available in many locations by lifting a ban on casino gaming, and many pachinko/pachi-slot players shift to playing slot machines, it is assumed that it would contribute to the generation of huge tax revenues. However, some experts predict that the slot revenue will be generated not from existing pachinko/pachi-slot players but from latent clients.