Japan Looks to Curb $200 Billion Spent on Pachinko Gambling (1)

(Bloomberg) -- As Japan prepares for its first Las Vegas-style casino resorts, the government is considering restrictions on existing gambling establishments, including pachinko parlors and race tracks, in a bid to tackle addiction.

The legalization of casinos in December divided Prime Minister Shinzo Abe’s Buddhist-backed coalition partner Komeito amid concerns about compulsive gambling. Both ruling parties have prepared reports calling for research into dependency and consideration of regulation, including on casinos.

Although the market is shrinking, Japan’s gamblers spent 23.3 trillion yen ($209 billion) at pachinko parlors in 2015, about four percent of gross domestic product. Betting is also allowed on horse, boat, bicycle and motorcycle racing, but relatively little has been done to combat the associated problems.

Read more on Japan’s move to legalize casinos

Among the ideas to be considered are allowing an individual’s access to pachinko to be restricted on the request of relatives, according to a government document obtained by Bloomberg. Such visit limits are offered by Singapore’s casino regulatory authority. The way the pinball-like machines operate could also be regulated in a bid to make the game less addictive. Pachinko operators may be obliged to take measures to combat addiction, and an independent body could be set up to oversee progress.

Ensure Survival

Regulations to be considered for other gambling venues include banning credit-card machines that offer instant cash loans from race tracks, according to the document. A panel of government ministers is set to approve the document by the end of the week.

“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 Toyo University, when asked about the potential effect on pachinko operators. “Although the increase in costs will hurt the industry in the short term, they’re necessary to ensure its long-term survival.”

One reason why gambling addiction hasn’t been taken seriously in Japan in the past is that pachinko is legally classified as an amusement similar to a fairground attraction, Sasaki said. To avoid any direct breach of the law, winners are offered prizes, which can be exchanged for cash at counters close to the pachinko parlors.

(Updates with Singapore comparison in fourth paragraph, details on pachinko in last.)

To contact the reporters on this story: Isabel Reynolds in Tokyo at ireynolds1@bloomberg.net, Yuki Hagiwara in Tokyo at yhagiwara1@bloomberg.net, Grace Huang in Tokyo at xhuang66@bloomberg.net.

To contact the editors responsible for this story: Daniel Ten Kate at dtenkate@bloomberg.net, Russell Ward

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