Japan has a difficult relationship with gambling. Even though gambling is formally prohibited by Japan’s penal code, opportunities to gamble are ubiquitous; from pachinko to betting in various sports disciplines to lotto – the options are ample. This inconsistency between the law and reality can be explained by the fact that gambling, with the notable exception of pachinko, is directly controlled by the government or by local authorities. To resolve the legal issues of gambling, exceptions were created in the form of special laws, using loopholes to allow for the official approval of gambling. Currently, legal gambling is limited to pachinko, sports race betting, and lotto. Gambling in Japan is a multi-trillion Japanese yen industry comprised of the three aforementioned segments. Pachinko is the largest segment and generates the lion’s share of the industry’s revenue. The penetration of gambling in Japanese society is substantial. For instance, the active player population of pachinko is in the millions, while there are tens of millions of betting participants at horse races throughout the year.
Sports race betting
Sports race betting in Japan is controlled and administered by organizations affiliated with the government. There are four main sports race betting disciplines, which include horse racing, motorboat racing, bicycle racing, and motorcycle or auto racing. Horse racing (keiba) is the dominant discipline among betting sports in terms of the revenue generated. Horse racing is administered either by the Japan Racing Association (JRA) or the National Association of Racing (NAR). JRA generates the highest betting turnover among gambling sports disciplines. Other than horse racing, motorboat racing is immensely popular and is also the only other segment that generates net sales from gambling tickets that surpass one trillion Japanese yen, although sales in bicycle racing and NAR-administered horse racing have picked up significantly in recent years, closing in on the one trillion yen mark. In general, the total amount wagered at sports race betting events has grown in the past years, especially after the advent of the COVID-19 pandemic.
Current trends in the gambling industry
An overarching trend that was already observed even before the COVID-19 pandemic was the ongoing decline in the active pachinko player population, which was accompanied by shrinking attendance at live venues at sports race betting events. To make up for the decline in visitors to venues, sports betting has embarked on a digitalization strategy, using innovations and technology to provide consumers with flexible and exciting user experiences. While this strategy seems to have worked well with sports betting, reflected, as mentioned previously, in increased gambling turnover despite a significant overall decline in attendances at venues, this was not the case for the pachinko industry, which has been contracting for many years and was especially hard-hit by the COVID-19 pandemic. The various advantages brought by digitalization, coupled with the restrictions caused by the COVID-19 pandemic seem to be game-changers in Japan’s gambling industry. Whether the pachinko industry is slowly going to dwindle into obscurity, eclipsed by other forms of gambling, or it finds a way out of its current downward trend remains to be seen, as the era of digitalization offers new possibilities and poses new challenges to all entities involved.
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