Taxing times for pachinko as Japan considers casino gamble

Tue May 13, 2014 3:36am EDT
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By Farah Master and Nathan Layne

OSAKA/TOKYO (Reuters) - Moves towards legalizing casinos in Japan have reignited a debate over the legal status of pachinko, with a potential new tax mooted for a $200 billion gaming industry that has existed for decades on the fringes of the law.

Pachinko, a slot-cum-pinball form of gambling, is a national obsession, with one in six Japanese playing the game, though that number is declining as younger generations prefer to play games on their mobile phones.

With past links to organized crime, pachinko is not classified as gambling, which is illegal in Japan. Instead it's treated as an amusement activity like arcades and hostess bars, and the operators of pachinko parlors that are found in city streets across Japan pay no gaming tax.

As some lawmakers push to allow casinos that would contribute billions of dollars to state coffers, pachinko, too, could come under a new regulatory umbrella. Takeshi Iwaya, a leading proponent for casinos from the ruling Liberal Democratic Party, reckons any move to change pachinko laws should come once casinos are up and running, which could be as early as 2020, when Tokyo will host the Olympic Games.

While years away, such reforms may have greater implications for the pachinko industry than the likely loss of customers to new casino resorts, analysts say. And reforming the industry won't be easy given the web of special interests involved, not least the national police agency which oversees it.

"I see no easy way out for the pachinko industry," said Ichiro Tanioka, an expert on Japanese gaming industries and president of the Osaka University of Commerce, a leading proponent in the casino debate. "It's a mess."


A visitor plays Pachinko, a Japanese form of legal gambling, at Dynam Japan Holdings Co.'s Pachinko parlour in Koga, north of Tokyo April 7, 2014. REUTERS/Issei Kato