The Transformation of Japan’s Gaming Industry

With a culture that is both conservative and forward-thinking, the modern nation of Japan is facing large changes to its gaming industry. Currently, these changes are happening on two major fronts: Japan’s pachinko parlors and the federal government’s proposed plans to introduce integrated resorts (IR) and casinos in the country. Much like the travel industry, these two major fronts are being bogged down by the global health crisis.

Since it was passed in 2016 and formally enacted in 2018, Japan’s IR promotion law in particular has been and continues to be a contested topic among Japan’s prominent politicians. According to ExpatBets’ guide to Japan for travelers, the new IR legislation allows the state to issue up to three licenses for casinos – provided that they meet a wide range of criteria, including being built as part of resort complexes like Singapore’s Marina Bay Sands. This effectively upends the country’s previously very strict laws against land-based casinos and other gambling activities with direct cash payouts. However, recent events have thrown a wrench into the whole planning and approval process for the proposed IRs.

Apart from the economic effects of the pandemic, there’s also the matter of former Japanese prime minister Shinzo Abe resigning amid a highly publicized bribery scandal. This has forced the state to further stall the much-awaited process of formalizing the criteria for both foreign investors and local governments aiming to host the new IRs. Yokohama for instance has said that its initial plans to open an IR within the year have been postponed indefinitely. Similar delays have been reported by the prefectures of Osaka, Wakayama, and Nagasaki. Meanwhile, major investor Las Vegas Sands has withdrawn its plans entirely while the casino giant Wynn has closed its Yokohama office, citing licensing delays. Despite all this, proponents of the IR law are not giving up on the proposed major changes to the country’s gaming industry.

On the other side of the casino token, Japan’s pachinko industry is also facing major hurdles.

Despite being unaffected by the country’s strict gambling laws due to being considered as a ‘recreational activity,’ the pachinko industry has seen massive declines over recent years. From around 11,000 pachinko parlors in 2016, 2019 saw the number of parlors drop to less than 10,000. Furthermore, Nippon.com’s guide to the current state of the pachinko industry notes how twelve different parlors declared bankruptcy between January to May 2020 – three of which were related to the economic effects of the global health crisis. In the cited survey by Tokyo Shōkō Research, experts predict that more than 30 parlors will be bankrupt by the end of the year.

These grim predictions however did not stop gaming companies from cashing in on the strong grip that pachinko has over the country’s players. Following in the footsteps of Konami who last year released a pachinko machine version of its iconic Silent Hill video game, Capcom has recently collaborated with Enterrise to release the new Monster Hunter: World pachinko machine. These efforts will go a long way towards gaining new players and support for the struggling pachinko market.

While both the proposed IR casinos and the pachinko parlors in Japan are facing major hurdles, the main proponents of the country’s ever-evolving gaming industry seem intent on pursuing their plans for the near future. Only time will tell whether or not the Japanese gaming and gambling industry will recover from these setbacks and continue its transformation.

 

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