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Pachinko is a big, big business: there are 17 million players that make it Japan’s number one leisure activity. A lot of folks get its true value a bit wrong though when they say that the industry accounts for thirty percent of leisure sector revenue at a level of 30 trillion yen. In fact this is the amount that is bet, and you should really measure revenue by the net win, which is the amount that players lose – that’s how they measure it in Las Vegas.

Based on an average net win in Japan of around 10-12%, the true gaming revenue from pachinko machines is closer to 30 trillion yen rather than 30 trillion yen. Based on these calculations, the revenue generated from pachislot/pachinko ranks behind other leisure-related activities in sectors like restaurants, sports and tourism. That said, pachinko is the most visible leisure activity in the country, employing over a third of a million people in more than 15,000 pachinko machine parlors

Pachinko is facing financial pressures and this is leading to pachinko parlors closing. Over 5,000 parlors are expected to close in the next couple of years and this provides a great opportunity for real estate investors to buy some prime retail locations, redevelop them and make a bundle of cash. There is nobody focused on this market right now so the time is right to turn it into a great business.

The Build-to-Suit Opportunity: According to S&P, “the pachinko industry has voracious demand for capital to fund the opening of new parlors”. This is concurrent with the drop in total parlor numbers noted above, and is a result of a strong trend towards industry consolidation, and ever larger pachinko parlors with more pachinko machines – the number of machines per hall has increased by 13% over the last five years, and the introduction of Regulation 5 is expected to further accelerate industry consolidation. The top operators continue to expand aggressively with Dynam and Maruhan increasing stores 4-5x in the last 10 years, with a 6-10x increase in sales. There is no build-to-suit developer known to be operating in the market, but the market conditions indicate a strong opportunity.

Pachinko needs capital: JPY70bn was raised for GAIA by Deutsche Bank in 2005 and in 2006 Standard and Poors rated JPY42bn of pachinko related transactions. But now this source of funding is no longer available pachinko parlors are looking to do sale-leaseback deals where they sell they assets and then lease them back on long-term leases.

If you are interested in pachinko machines and all things pachinko then you should certainly visit the web site http://hubpages.com/hub/Pachinko-Machines which is all about pachinko.