Trends in Sales and Profits

Pachinko Parlors’ Sales Are About 23.2 Trillion Yen

How much are the annual sales of pachinko and pachislo combined? The market size described in the Japan Productivity Center’s “White Paper” on Leisure is a typical market size indicator, which is used inside and outside the pachinko industry. The pachinko market size in 2015 was calculated to be 23.229 trillion yen. The white paper says that the market size is based on Ball/Token Lending Fees; therefore, it corresponds to the annual total of money paid by pachinko players to use balls/tokens in pachinko parlors in Japan. In bookkeeping, revenues from ball/token lending fees should be recorded as sales. Companies that run pachinko parlors are supposed to do bookkeeping in accordance with such accounting principles. Therefore, the sales recorded in the settlement report of a company that runs a pachinko parlor(s) almost always corresponds to the revenue from lending balls (tokens).

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The pachinko industry is frequently called a 30 trillion yen industry. This is based on its revenues that were announced by the Management and Coordination Agency, which was later incorporated into the Ministry of Internal Affairs and Communications, in January 1996. In response to this announcement, the related figures in the “White Paper on Leisure” were corrected. Since then, it has been gradually declining. It has experienced a drop below the 25 trillion yen level. The White Paper on Leisure says “the decline since 2005 has subsequently stopped.” However, it also indicates the “unpopularity” of pachinko and pachislo among young people as well as among the elderly. It concludes that the pachinko industry has reached the limit of growth through sales strategies based on “sophisticated” play machines for “heavy users.”

Another Approach toward Increasing Sales Volume

Did you know that there is a controversy as to whether the ball (token) lending system is appropriate for the size of the pachinko market? Some people think that pachinko parlor sales should be calculated by subtracting the costs of offering prizes to players from the revenues from the ball/token lending fees paid in the pachinko parlor. In their opinion, gross profits should be reported as sales. In fact, in the gaming industry, which is often associated with casinos, they normally report their sales by subtracting the amount of money paid to players from the amount of money received. The casino markets in Las Vegas, Macau, and Singapore are said to be about 10.2 billion USD (about 1.0399 trillion JPY, 2013), about 360.7 billion MOP (about 4.6897 trillion JPY, 2013), and about 5.2 billion SGD (about 419.3 billion JPY, 2013), respectively. However, it should be noted that these figures are dwarfed due to differences in accounting systems. Critics often label Japan as the Paradise of Gambling based on simple comparisons between the world’s major casino markets and the Japanese pachinko industry. We would say that it is unfair to make comparisons based on the figures from the different accounting systems.

Gross Profit Advocated by Daikoku Denki

Daikoku Denki, which is engaged in the development, production, and sale of computer devices for use in the pachinko industry, has announced both the market size and gross profit of the pachinko industry, which were estimated from the aggregate data based on the information disclosure system [DK-SIS] using the data collected from the pachinko parlors with the Daikoku Denki computer system installed.

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According to the DK-SIS White Paper, it is believed that the market size and gross profit of the pachinko industry was about 22.3 trillion yen and 3.32 trillion yen, respectively, in 2015. In the DK-SIS White Paper, the gross profit is described as the most important indicator of the pachinko industry’s market size. The gross profit has been gradually declining year by year. This means that the pachinko industry must survive increasingly harsh environments every year.
This White Paper discusses the pachinko industry from a slightly different perspective than the White Paper on Leisure. However, both White Papers agree that the pachinko industry’s market is shrinking.

It is also possible to calculate the pachinko market size based on pachinko parlors in Japan using the estimates in the “Current Survey of Selected Service Industries” conducted by the Ministry of Economy, Trade and Industry or the Economic Census figures, the figures from the prepaid card system suppliers, or the total sales reported by the companies that run pachinko parlors.

  White Paper on Leisure DK-SIS White Paper
  Sales Sales Gross Profits
2005 348,620 406,000 46,800
2006 336,420 376,000 44,700
2007 301,770 325,000 43,700
2008 288,190 284,000 43,200
2009 282,420 276,000 42,700
2010 259,830 253,000 39,500
2011 254,890 246,000 38,200
2012 256,720 248,000 37,800
2013 250,050 241,000 36,300
2014 245,040 235,000 35,000
2015 232,290 223,000- 33,200

*Comparisons of figures in the White Paper on Leisure and in the DK-SIS White Paper