Golf and gaming growing together in Japan

Pachinko parlor
With revenue at pachinko parlors across Japan trending down, some of their owners are looking to add golf to their mix of activities.

Series: Golf Buzz

Published: Wednesday, December 26, 2012 | 6:19 p.m.

We don't really have pachinko parlors here in the United States, but they're huge in Japan. Pachinko parlors there gross around $378 billion a year, according to the Japanese government – that's about four times the gross of all the world's legal casino gaming combined.

Pachinko machines are the Far Eastern equivalent of slot machines, and pachinko parlors have hundreds or even thousands of them all lined up like slot machines. A pachinko machine is like a stand-up pinball machine -- you shoot balls up into the machine, and the balls then filter down through a series of pins. Instead of paddling the balls like in pinball, the goal of pachinko is to capture as many balls as possible.

Japan's big pachinko parlor operators are hungry to expand their revenue, according to the Yomiuri Shimbun, Japan's largest newspaper, and they're increasingly turning their attention to golf courses to help them become more all-round purveyors of leisure activities. Some companies are really getting aggressive, and it's having a significant impact on the golf business in Japan.

How significant? Well, PGM Holdings K.K., Japan's second-largest golf course operator, is currently pursuing a takeover of Accordia Golf, Japan's largest. This medium-sized-fish-eats-big fish-scenario is possible because PGM Holdings is a subsidiary of Heiwa Corp., which makes pachinko machines and wants the industry to grow so it can sell even more machines.

PGM is believed to be trying to buy a 50.1 percent of Accordia shares worth about 42.5 billion yen (about $381 million). If the takeover is successful, says Yomiuri Shimbun, the combined company would own about 240 golf courses – about 10 percent of all the courses in Japan. That would make it six times larger than the country's third-largest golf course operator.

Another factor driving the pachinko industry's interest in golf, the newspaper says, is that Japan is engaged in a serious national debate about legalizing casinos. Across Asia – as in the United States – golf courses are a key component in many leisure and resort complexes, and the pachinko parlors believe golf can help them compete with these casinos, and perhaps even join them.

Pachinko machine maker Universal Entertainment Corp. has begun building a casino resort in the Philippines that is expected to open in 2014, while Heiwa Casinos across Asia includes golf courses, and is considering a new casino resort development in South Korea. Gaming no doubt will be the focus of those resorts, but it's a sure thing golf will also play a key role in their success.