U.S.-Japan Foundation Media Fellows Program

2001-2002

 

The saddest person I met in Japan was Koji Furukawa. He’s about 45 years old, with graying hair and glasses. He has terrible teeth—the kind of twisted, rotten teeth that come only from years of neglect. This is not surprising, because for 20 years, Furukawa destroyed himself.

 

Furukawa began playing pachinko in his early ‘20s. He was a salesman, and he played between appointments or to relax after work. He adored it, and played more and more, in the morning, all weekend, on holidays. And, because everyone loses at pachinko eventually—that’s how parlors stay in business—Furukawa was soon losing more than he earned at work. After five years, he had to borrow 1.5 million yen from a consumer credit bureau to cover his losses. When he couldn’t pay back the debt, he started stealing from his company. His bosses found out. They didn’t press charges, but they fired him.

 

Furukawa made a new start. His family paid back the loan, He found himself a computer programming job, and at first didn’t have time for pachinko. But the job got easier, and soon he was spending his free hours back in the parlor. He had no wife, few friends, no hobbies. All he had were the balls and the board. He earned more at his new job, but the debts mounted once more. After a decade, he owed nearly 5 million yen. Again he was fired, and again his family paid off the loan.

 

He started working construction, and kept haunting the parlors. His boss made the mistake of trusting him. Furukawa repaid that confidence by embezzling from the company, a little at a time, until he had heisted 6 million yen. In 1997, he ran away from the debt and the crime. He lived on the street in Kanagawa prefecture, hunting for change beneath vending machines, then throwing away whatever money he found in the pachinko parlor. Finally, broke, disheveled, humiliated, Furukawa slinked back to his parents’ house. When the president of the construction company threatened to kill him, Furukawa’s brother paid back the 6 million yen Furukawa had stolen. Finally, Furukawa’s parents sent him to a city counselor, and the city counselor mentioned Gamblers Anonymous to him. Furukawa started going to GA meetings five years ago, stopped gambling, and found himself a job directing traffic at Tokyo port—a happy ending, of a sort.

 

Furukawa spent 20 years as a pachinko addict, was fired from three jobs, stole nearly 10 million yen, lost tens of millions of yen more in machines, drained his family’s savings, alienated his parents and brother, and lived on the street, yet it was not until he hit absolute rock-bottom that anyone talked to him about his gambling or that he sought help for it. It was two decades of denial and deception.

 

I don’t want to make too much of Furukawa’s story. The vast majority of people in pachinko halls play without problems (notwithstanding the two or three children who die of heat exhaustion every year because they’re locked in a car while their mother goes to the parlor). But Furukawa’s story is an apt metaphor for Japanese gambling. Gambling is a gargantuan business in Japan—you’ll see how big in a minute--and a business that exacts significant social and economic costs, yet Japan avoids confronting it, avoids thinking about it, and never seeks to understand gambling’s costs and benefits. Japan, with a live-and-let-live attitude that is both wonderful and disturbing, has chosen to gamble like crazy and pretend that it doesn’t.

 

When I was in Tokyo this spring, I tried a little experiment: I asked every Japanese I met about how much gambling there is in Japan. Almost invariably, people give me an answer like, “gambling is illegal in Japan, except for a few exceptions,” or “Japanese don’t gamble very much.”

 

It’s true: Japanese criminal law declares unambiguously that gambling is illegal. But gambling is illegal in Japan in the same way it was illegal in Casablanca. A few exceptions? Pachinko—that strange combination of pinball, slot machine, and ball-bearing factory—and “pachislo”—the slot machines housed in pachinko parlors--are bigger than the Japanese auto industry. Thirty million Japanese play pachinko and pachislo every year, dropping more than $200 billion in the machines, and losing around $40 billion of it. Japan’s government-run horseracing industry is three times bigger than any other horseracing business in the world, with nearly $30 billion wagered every year. Japan has more professional cyclists than any country in the world. Why? Because Japan runs the world’s largest bicycle-racing betting operation. Government-sponsored motorboat races (kyotei) and motorcycle races attract billions in wagers every year. The government operates a soccer lottery and a national numbers lottery, too.

 

Japan also tolerates a multibillion-dollar gray market in mahjongg, which is technically illegal to bet on; ignores massive illegal wagering on sumo and high-school baseball; and has not bothered to shut down the hundreds of totally criminal Las Vegas-style casinos found in every big city. Oh, and did I mention that various trendy economists, dozens of Diet members, and the governors of half-a-dozen prefectures are now campaigning vigorously to open large Vegas-style casinos around Japan to help revive the economy and attract tourists.

 

The total wager in Japan is staggering, on the order of $300 billion/year for legal gambling alone. Japan is the biggest gambling market in the world. The average Japanese adult loses $400 per year gambling, more than twice as much as the average American. Japan has 10 times more gambling machines per capita than the United States. All this in a country where, you see, gambling is illegal.

 

Before I discuss what I learned, let me briefly describe who I met and what I saw. Gambling, though omnipresent, is a surprisingly difficult subject to study in Japan. The Japanese government does not fund any research into gambling, and neither do gambling companies themselves. Only a handful of academics study gambling, and only a couple do it fulltime. This differs vastly from the U.S., where government, industry, and universities flood the market with gambling research. People involved in the Japanese gambling industry are leery of reporters. Pachinko has gotten so much bad press over the years that parlor operators are suspicious of almost all questions. The police, who regulate pachinko, don’t like talking about it either. The government-sponsored gambling industries are somewhat more open, but too were awkward with a foreign reporter. The government-chartered Nippon Foundation, which distributes 3 percent of kyotei revenues to charitable and educational causes, was particularly cagey.

 

That said, the Foreign Press Center, the program staff at International House, and other kind folks got me in touch with almost every significant person or agency involved in Japanese gambling. In the case of government-sponsored gambling, I met with the ministerial officials who oversee bike-racing, motorcycle-racing, motorboat-racing, and the soccer lottery. I visited the government-chartered associations that receive state-gambling revenues, including the Keirin Association, the Japan Racing Association, and the Nippon Foundation. I attended motorboat races, horse races, and bike races, took a private tour of the Tamagawa kyotei (and got to quiz a couple racers), and interviewed the mayor of Ome City about his city’s kyotei business. I discussed Tokyo’s plans to build a casino with an adviser to Prime Minister Koizumi and an official with the Tokyo metropolitan government. 

 

I also had excellent access for my research on pachinko and other private gambling. I took behind-the-scenes tours of a pachinko parlor in Ginza and a pachinko factory in Nagoya. I interviewed the head of the leading national pachinko association, the National Police Agency superintendent in charge of pachinko regulation, the editor of Japan’s top pachinko magazine, and several parlor owners. A stock analyst who follows the pachinko industry briefed me on the economics of the business. The only two professors who study pachinko gave me interviews, as did the lone expert on Korean involvement in pachinko and the head of the only think tank that tracks gambling. The curator of the ICC gallery in Tokyo described his fascination with pachinko machines as art objects. A couple of Americans who study yakuza gave me background information on yakuza gambling practices. A Japanese mahjongg enthusiast took me on a mahjongg parlor tour, and explained how this pastime had grown into a multibillion-dollar, semi-legal gambling business. I had a bizarre meeting with two pachinko “professionals” who now sell books and videotapes purporting to show pachinko players how to win. And I spent hours upon hours playing pachinko and slots in parlors around Japan. I came out 3,300 yen—plus one box of caramels--ahead. 

 

One day in early spring, I decided to spend a day at the U-Mitoya pachinko parlor. The U-Mitoya is a midsized joint down the street from my apartment in Ueno. A 20-foot long statue of lion stretches out over the front door, its left eye flashing a strobe light every few seconds. A sign at the side entrance reads, in glorious Jinglish, “Fortune comes in by a merry gate.” (The sign is a manifestation of the pachinko industry’s new obsession with seeming “fun.” Now that pachinko faces so much competition from video games, TV, etc., parlors are trying desperately to seem like entertainment, not gambling.) The U-Mitoya anchors a block of parlors that call themselves—with an exceptionally misplaced sense of grandiosity—“Casino Alley.” The U-Mitoya is average in every way. It has a couple of hundred pachinko machines on the ground floor, a similar number slot machines upstairs. It serves locals, mostly the men toing and froing from the Yamanote line station (Uguisudani) next door.

 

I had played pachinko myself, but I wanted to observe how the game affected regulars. The day I chose was gorgeous, the sky clear, the air warm and sweet. I walked by the U-Mitoya at 8:30 a.m., 90 minutes before it opened that morning, and there were already half-a-dozen young men lined up outside. Pachinko obsessives hunt for the loosest machines— based on electronic readouts of past performance that the parlor supplies—and then line up so they can grab them. If you walk through pachinko-heavy neighborhoods like Ueno in the morning, you’ll always see young men loitering outside parlors for the opening bell. By the time doors to the U-Mitoya slid open at 10, more than 20 people were waiting, and they raced in to grab their chosen machines.

 

The first observation about pachinko: It’s is an extraordinarily unsociable activity. No one looks around. No one talks. Even if you wanted to, you couldn’t: The music is too loud, the noise of the balls unspeakable. (But this racket is not enough for some parlors. One trick of the trade: Parlors actually broadcast a tape of balls clanging through machines, so that even when a parlor is empty, it sounds like it’s full of players.) I have sat next to people for an hour in pachinko hall—less than two inches separating our legs—and I could not tell you if they were male or female, young or old. The game is mesmerizing, literally. Players stare intently at their machine, watching their balls bounce down the board, their hands moving ever so minutely on the wheel that controls how balls are shot. It is impossible to take your gaze away from the board. If your concentration breaks for a second, you lose: Your groove vanishes. Players break rhythm only to slide another 1,000 yen note into the machine (enough for 250 more balls), to drink a cup of coffee and smoke a cigarette, or to visit the “Pachinko Premium Toilets” (whatever they may be). One of the great paradoxes of pachinko parlors is that they are among the most crowded and noisiest activities in a crowded and noisy country, yet they are great places to be alone. Players don’t bother each other. Your space—your machine—is yours.

 

Over the course of the day, the U-Mitoya never slows. The machines are lined up, 15 or 20 to a row. Usually at least half the machines are occupied. Most of the people who arrive early stay for hours—some remain all day, parked at the same “Sea Story” or “Mappy Park” machine. By late morning, the slot parlor on the second floor fills up with kids. The law says you have to be 18 to play pachinko or slots, but this is rarely enforced. (Slots are extremely popular among teenagers—far more popular than pachinko, in fact.) Downstairs in the pachinko hall, a player will occasionally stand up and signal for a yellow-vested attendant, who will race over to grab the plastic trays stacked at the player’s feet. Each tray holds 2000 or so balls, and must weigh 10 pounds. The attendant hauls the trays to a counting machine at the end of the aisle, dumps the balls in a drum, run the counter, and delivers a receipt to the player. The player takes the receipt to still another counter, where he trades it in.

 

In theory, pachinko is played for prizes, and one corner of every pachinko parlor is a boutique. Glass shelves carry Chanel perfumes, Fendi bags, Hello Kitty Alarm Clocks and CDs. Next to them stand racks of dinky prizes such as pencils, band aids, candy, or magazines, labeled “300 balls” or “90 balls.” Back in the early days of pachinko, just after World War II, the game was a major source of black market products like soap and chocolates. But today, instead of cashing in the receipt for a bottle of Chanel No. 5, almost all players want money. So they trade their receipts for what are called “special prizes,” usually worthless plastic boxes or empty cigarette lighters. They take the “special prizes” to a small, dark hallway across the alley from the U-Mitoya. This is the “exchange parlor,” a separate business from the hall and the fiction that allows Japan to pretend pachinko is not gambling for cash. An attendant sits behind a locked door and one-way glass. You place your special prizes in a security drawer. The attendant yanks the drawer inside, then passes back cash. From cash to balls to receipt to special prize to cash again: It’s a five-part transaction just to collect your winnings. 

 

The economics of pachinko are Byzantine. Players “rent” balls for four yen apiece, then play with those balls. Paradoxically, the average player wins more balls than he loses, so it seems like you have the advantage on the house. However, the exchange value of the balls is only 2.5 yen apiece, so even if you end up with a lot more balls than you started with, you probably have lost money. You have to beat the house by a significant margin to make money.

 

In late morning, most of the U-Mitoya customers are young and middle-aged men, but the parlor is sprinkled with middle-aged and elderly women. Starting in the afternoon, and until early evening, the U-Mitoya is jammed, scarcely a board open. Pachinko parlors must shut at 10 p.m. in Tokyo (police rules), and traffic slows by 8 p.m. (Even so, some of the men who were lined up at 8:30 a.m. are still there when it shuts.) If the U-Mitoya is like the P-Ark, a Ginza parlor of a similar size that gave me a behind-the-scenes tour, more than 1,000 people passed through today, and each machine took in 50,000 yen—$400. By this estimate, the U-Mitoya cashes $80,000 a day, $560,000 a week, more than $25 million per year.

 

This $25 million buys what, exactly? Why should people spend so much money and time on this strange activity when they could be playing video games or watching TV or, god forbid, socializing? Pachinko is sometimes described as “vertical pinball,” but that’s an insult to pinball. Pinball is a game of real skill. Pachinko—despite all its advocates may protest—is not. In pachinko, you fire balls, 100 per minute, up a chute onto a field of nails with holes at the bottom. The balls bounce through the nails. When a ball falls into one of several special holes, you get a few more balls to play. Players do nothing except control how hard the balls are fired. The only skill—if it can be called that—is making sure you fire balls so they land near the peak of the nailbed. After that, pachinko is just clatter and confusion. The balls make a tremendous racket falling down. Each winning ball activates a video game in the center of the board which makes an even greater racket. (The video game, a random number drawing, decides if you get the “fever key” that allows you to win a jackpot.) In the old, precomputer days, professional pachinko players--“pachi-pros”--could read the nails on the board, find machines that were particularly loose, and beat the house. These days, computerization and better manufacturing make pachinko as random as Vegas slots.

 

To anyone who’s never played, and even to many who have, the game is grotesque. It’s horribly noisy. Parlors are smoky and unpleasant. While it’s true that no one ever loses too much at pachinko, no one ever wins much either. (Pachinko machines are programmed so that it is impossible to lose more than $2 a minute. Compare that to blackjack or slots or any American gamble, where you can easily lose thousands of dollars per hour. On the other hand, the biggest pachinko jackpots are worth only $50.) Pachinko is dreary. It’s no wonder it has never caught on anywhere else.

 

Yet 30 million Japanese lose $40 billion a year playing it. Why? Part of the appeal of pachinko, I realized after playing and watching for awhile, is that it is so noisy and smoky and antisocial. Pachinko parlors are a place you can be alone and unbothered. More than that, they are a place where you can zone out. A huge percentage of pachinko players are salarymen who stop in on their way home from a long day at work. Pachinko allows you to not think, to let the balls hypnotize you into neverland. I could zone out after just 15 minutes playing Sea Story.

 

Donald Richie describes pachinko as a kind of cut-rate Zen. Japanese life, especially working life, is so oppressive, so constantly barraging, that people need escape. Pachinko serves that purpose. It is a blessed empty relief from the mental stress of the Japanese workplace, and the physical compression of the Japanese home. In pachinko—in the endless repetitive clatter of balls—you find the emptiness that Japan so rarely permits. This is why it doesn’t matter how noisy or smoky or crowded parlors get. Since players aren’t really there, they don’t notice.

 

Zoning out is not the only reason for pachinko’s popularity, of course. Pachinko also feeds on Japan’s fascination with machines. There is much more gadgetry to the average pachinko machine than there is to any American gambling device. Over and over again, people explained pachinko as a manifestation of Japan’s fascination with clever little machines. Collectors pay high prices for old pachinko machines. Bookstores sell pachinko machine photo books. There is even a pachinko machine museum. Players love all the little gizmos on machines—the “tulips” that open up to allow more balls to find the right holes, different arrangements of nails, clever new video-games-within-the-game. (One theory why pachinko revenues stagnanted recently is that government regulators have not allowed manufacturers to bring new machines to market. Pachinko players have grown bored with the old machines’ tricks, and hunger for new gadgetry.)

 

The popularity of pachinko and of the other forms of Japanese gambling is rooted in the absence of entertainment in Japan. After the war, Japan had effectively no leisure activities. Japan could spare little space for recreation. Japanese work schedules allowed few opportunities for play. Pachinko and government-sponsored gambling, which exploded in the late ‘40s and ‘50s, filled the void. Horse-racing, bike-racing, boat-racing, and motorcycle-racing became hugely popular (and profitable) because Japan offered so few other sports or diversions. Going to these races was cheap, and there was always the faint hope of a big score. Pachinko required very little space and offered Japanese the chance to win goods that they needed. Pachinko and government gambling had a headstart on television, video games, sports, and that is what allowed them to grow and grow and grow. Even today, leisure is more expensive and harder to find in Japan than in the U.S. People go to pachinko parlors or the kyotei because there’s less other entertainment they can afford.

 

The diversification of Japanese leisure is catching up with the gambling business, however. Japan’s wealth, along with the success of video games and TV, mean that Japanese gamblers have more ways to waste their time and money. Pachinko revenues have been flat for a few years. Revenues from government gambling—especially motorcycle racing, bike racing, and motorboat racing—have been falling fast. The gambling industries face a demographic crisis. The best customers are old men who picked up the habit 20, 30, 50 years ago. Few kids are going to the kyotei, because they have much better ways to kill time. Pachinko parlors have slowed this decline by adding kid-friendly slot machines, but they still have trouble competing with virtual reality games and satellite TV.

 

It occurred to me, after awhile, that gambling in Japan is quite unlike gambling elsewhere? In one peculiar way the people who deny that Japan is a gambling society are right. Japanese love gambling games, but they don’t actually gamble—in the sense that they take no chances. Japanese gamblers never risk it all on one throw, never take one enormous risk. The games don’t allow it, and the players seem allergic to it. In Japanese gambling, players lose money (and win it) a little at a time. American casinos are packed with high-stakes games of blackjack, poker, roulette, craps, and baccarat. But pachinko is a penny-ante game: You can’t play more than 100 balls per minute, and each ball always costs 4 yen. You can’t lose a lot, and you can’t win a lot. Japanese gambling, as several observers noted to me, is like most of Japanese society: low-stakes, low-risk. You can make unlimited wagers at the tracks, but even there gamblers are conservative. Bets as large as $100 are enormous; bets of $100,000 are essentially unheard of.

 

Japanese gambling is also, you may be surprised to learn, a relatively clean business. According to Takashi Kadokura, an economist at the Dai-Ichi Life Research Institute, the Japanese underground economy is only half the size of the underground economy in similar nations. Though gangsters are more public in Japan than elsewhere, the generally law-abiding nature of the society means that there is less illegal gambling than you might expect. The government-sponsored gambling operations have effectively barred yakuza and other criminals for a generation. There are almost no allegations of race-fixing these days. Since the ‘60s, but especially since the anti-gambling law of a decade ago, the police have been making enormous efforts to roust yakuza out of pachinko. They have largely exiled yakuza from the prize-exchange business and stopped most of the extortion by gangsters of parlor owners. The installation of “card­reader” machines has reduced the amount of tax evasion and money laundering in pachinko (though Korean money laundering is still troublesome, as described below). Pachinko has also cleaned up because so many police officers take jobs in the industry after they retire. This has reduced the amount of overt criminal involvement, though it has made the cops far too vulnerable to lobbying by former colleagues.

 

Japanese gambling is also exceptional in the way it functions as a quasi-philanthropic arm of the government. The main purpose of government-sponsored gambling is to raise money for the local governments that sponsor the races (though increasingly local governments lose money on them). The second purpose is to support various industries tangentially connected to the races. A small portion of revenues from the bicycle and motorcycle races, for example, support the Japanese machinery industry, supplying grants for research, trade shows, and the like. Horse racing similarly supports Japanese agriculture. Motorboat racing revenues buttress Japan’s shipbuilding industry, subsidizing billions of dollars in sweetheart loans for ship contractors.

 

But the profits from government gambling also serve philanthropic purposes. Asmall portion of the take goes for good works, usually things like helping sports clubs or building nursing homes. The motorboat racing arrangement goes far beyond that. The Nippon Foundation receives more than 3 percent of motorboat racing revenues, and spends a hefty chunk of it on charitable projects in Japan and overseas. In a given year, the foundation spends nearly $100 million for overseas projects alone, making it the largest philanthropic organization in Japan. Famine relief, disease eradication (leprosy, I think, is big), and other good deeds received huge Nippon Foundation grants.

 

As many of you know, the Nippon Foundation has a controversial history, to say the least. Ryoichi Sasakawa, the fascist politician who served three years in prison as a Class A war criminal, used his government connections to establish motorboat racing in Japan in the early ‘50s. He monopolized the franchise, and in 1962, persuaded the government to earmark more than 3 percent of revenues for a foundation he also controlled. Over the next 35 years, he used the foundation for good works and self-promotion. Sasakawa scholarships were established at universities around the world. He spent millions on self-glorifying television ads during the ‘70s. Sasagawa erected statues of himself carrying his mother on his back erected throughout Japan (as well as statues of himself in the U.S.). He built himself a snazzy headquarters. He gave tens of millions of dollars in foundation money to global do-gooding organizations (the United Nations and World Health Organizations, for example) and other charities (more than $40 million to establish the U.S.-Japan Foundation, making kyotei, I suppose, my benefactor). He bought prestige where he could, with gifts to presidential libraries and a foundation for Martin Luther King Jr. He was eager to win the Nobel Peace Prize, and targeted foundation spending to best polish his image. (He clearly hoped the prize committee would forget that it was gambling losses he was spending, not his own fortune.) When Sasakawa died a few years ago, his allies tried to pass the Nippon Foundation on to his son, but government objections stymied that plan, and a leading novelist, Ayako Sono, now chairs it.

 

It’s hard to reconcile the wealth and good works of the Nippon Foundation with the grunginess of motorboat racing. I spent several days at kyotei races, and it’s awfully depressing. Unlike pachinko, which attracts all kinds of gamblers— poor, rich, young, old, men, women—and unlike horse-racing, which is a family event, kyotei draws only the real hard-core, down-on-their-luck gamblers. Kyoteis, unlike any other places I saw in Japan, are filthy. The spectators are at least 95 percent male, most of them look poor, and many of them drink heavily throughout the raceday. The betting is planned so that the house always wins 25 percent, so it’s nearly impossible for the average bettor to break even. (By contrast, American horseracing tracks take only 10-15 percent of the wager.) Fans don’t cheer at the races or evince any excitement. It’s a terribly grim form of “entertainment.” Of course, these gamblers visit the kyotei because they want to, and bet knowing the odds. It’s a free choice. Still, it’s disconcerting to visit the soaring, high-tech loveliness of the Nippon Foundation, to sink into its buttery leather chairs and drink tea out of its elegant china, knowing that the kyotei losses of some poor schmo paid for it all.

 

I don’t exactly know how to gauge the costs and benefits of gambling to Japan, largely because no one seems to have bothered to think about it. The Japanese government, which studies everything else in miraculous detail, remains willfully blind to gambling and its impact. Still, you can make a reasonable guess about it, based on the experience of other countries. Bill Thompson, a professor at the University of Nevada Reno, has devised the best schemas for determining the economic benefit of gambling. He ranks different forms of gambling. At the top of Thompson’s list is large casino gambling for tourists, a la Las Vegas. Such gambling attracts auxiliary development--hotels and restaurants--creates tons of jobs, draws tourists, and “exports” the social problems of gambling (addiction, bankruptcy) back to wherever the gambler came from. Next best is smaller, more remote casinos, such as American Indian casinos. These don’t promote much other economic development and create few jobs, but do attract tourists and export social problems. The worst kind of gambling from an economic point of view, Thompson argues, is widely dispersed, but omnipresent gambling—such as pachinko. This kind of gambling creates no economic development--since no restaurants or hotels spring up to serve it--creates only low-wage jobs, and attracts no tourists. It also magnifies noise pollution and light pollution and it makes addiction more common, since problem gamblers always have easy access to the games.

 

All signs suggest that Japanese gambling has this detrimental impact. The Japanese government and the pachinko industry have ignored gambling addiction, so no one knows how many gambling addicts there are in Japan. Still, gambling scholars estimate at least 1 million Japanese have gambling problems. Consumer credit bureaus and bankruptcies have proliferated because of pachinko. Pachinko parlors are widely considered to blight neighborhoods. Not a single person I met tried to argue that pachinko was a beneficial form of economic development. (It’s not even useful as an export industry, since no other countries play pachinko.)

 

For local governments, gambling has become, like so much else, an expansion of the welfare state. Kyotei et al were supposed to earn cash for sponsoring cities, and till the mid-‘90s, they did, allowed cities to build hospitals and extend sewer lines. But the depression slashed profits, and now many kyotei, keirin, and motorcycle races lose money. The sponsoring cities are stuck with huge costs. The tracks have become a form of government featherbedding. Mayor Takeuchi of Ome City told me he has 670 employees at the Tamagawa Kyotei, but needs only 450. It’s nearly impossible for him to fire the surplus staff. The kyotei remains an absurd, inefficient jobs program.

 

Gambling has also had an unexpected impact on Japanese ethnic politics and foreign policy. Pachinko has become a backbone for Japan’s Korean community. Estimates are sketchy, but Prof. Toshio Miyatsuka, the leading authority on Korean-Japanese, believes that three-quarters of the 17,000 pachinko parlors are run by ethnic Koreans. Koreans also control many of the pachinko manufacturing companies. Koreans entered the pachinko business soon after World War II because it was one of the few industries where they could compete fairly with Japanese. Japanese shunned the business—it had such an air of seediness about it. As a result, pachinko and Korean BBQ restaurants built a prosperous entrepreneurial Korean business community.

 

But the Korean pachinko connection fomented a disturbing foreign policy crisis for Japan. Many parlor owners come from North Korea, have families in North Korea, or sympathize with the North Korean regime. In the 1980s, as pachinko grew, parlor owners increasingly funneled pachinko profits to North Korea. No one has any idea of the exact amount—estimates range from tens of millions of dollars per year to more than $1 billion per year. Some of this cash probably went to North Korean relatives, but much of it fed North Korea’s awful communist dictatorship. Pachinko, in fact, became a critical source of hard currency for North Korea, probably subsidizing arms purchases and military research. This was awfully embarrassing for Japan. It got so bad that the CIA, according to the Wall Street Journal, pressured the Japanese government to stop the flow of yen. The Korea-laundering led the National Police Agency to impose “card-readers” on the pachinko industry. The card readers served to measure the amount of money flowing into parlors, which enabled tax authorities to make sure owners weren’t siphoning off cash for illicit transactions. By most accounts, the Korea cash stream has dried up in recent years to a trickle. Card readers cut the flow, as did the pachinko industry’s own quest for respectability (The industry has been trying to polish its image. It wasn’t good PR, to say the least, to be propping up a nuclear weasel like North Korea). Other Korean businesses may have picked up the slack. Some of the Korean credit unions that recently collapsed seem to have sent cash to Pyongyang.

 

Perhaps what is most striking for an American visitor about Japanese gambling is how little anyone talks about morality. In the U.S., church groups and religious activists invariably lead opposition to casinos and lotteries. They sermonize that Christianity frowns on gambling. Even nonreligious opponents of gambling argue loudly about the immorality of encouraging people to think they can rely on a game of chance instead of working. Morality infuses the gambling debate in the U.S. Las Vegas is, after all, “Sin City.” In the U.S., a form of gambling such pachinko would be targeted immediately by religious groups. (In fact, the state of South Carolina used to have a not dissimilar kind of gambling, a universally available, low-stakes, highly addictive game called video poker. Church groups banded together and got video poker outlawed, the first time a state banned gambling in half-a-century.)