Due diligence on Pachinko Industry

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When our customer tries to have a business with Japanese who runs a Pachinko parlor often wonder if they are a member of a criminal organization or Yakuza. However, situations regarding Pachinko business is more complicated than those outside Japan imagine.

In short, Pachinko gambling business is not illegal in Japan. Therefore, it is not a type of business crime syndicates would operate.

And statistics tell us that about 80% of those managing Pachinko parlors are Korean-Japanese. Korean Japanese retain special privileges since WW2. They can have official double names (Japanese and Korean names), which could be abused to evade tax or derogatory records.

Bellow is the example of Japanese Korean who still retains Korean passport. The same person can officially use 4 different names in Japan.

Korean Name Japanese Name
Kwangsoo PARK
박 광수
朴 光秀
Mitsuhide BOKU
Kansu PAKU
朴 光秀
Mitsuhide ARAI
新井 光秀
Hideo ARAI
新井 秀夫

Some foreign clients are not aware that there is aa semi-legal gambling in Japan, which is Pachinko. It is legally problematic in a sense, but Pachinko is regulated by Police.

Due to the nature of Pachinko as a gambling business, those who are not so familiar with the industry are often concerned about the connections with crime organizations. However, in fact, Pachinko industry is semi-legal gambling business controlled by police.

Pachinko is a semi-legal gambling business based on the concession of police. After WW2, Japanese government granted special privilege to poor immigrants from former subordinate countries (Koreans, Taiwanese). But in a meanwhile Pachinko industry became so big that the industry itself became social problems: bankruptcies of gamblers and funding to North Korean terrorists through the relatives of Korean-Japanese. So since 1990’s, the government has been trying to shrink the speculation aspect.

However, still, as it is gambling, profit level is exceptional compared to any other industry.

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