Summary of Research Findings

For this research, 128 pachinko parlor operators were randomly sampled from a total of 2,862 pachinko parlor operators nationwide listed in the “YANO Pachinko Database”. We analyzed the business performance trends over the three years from FY2020 to FY2022 based on the average value of key indicators in their financial statements.

Looking into the average financial results of pachinko parlor operators for FY2018, sales was 19,383 million yen, cost of sales was 16,355 million yen (composition ratio 84.4%), SGA expenses was 2,622 million yen (13.5%), and operating income was 405 million yen (2.1%).
Sales for FY2018 decreased by 3.1% from the previous fiscal year, indicating the decline in earnings seen in FY2017 continued.

While the operating income fell by 15.7% YoY in FY2017, it increased by 8.0% in FY2018. Similarly, operating income improved the composition ratio from 1.9% for FY2017 to 2.1% for FY2018. It indicates that the “prize” (technically, in reality, money) to pachinko/pachislot gamers decreased.

SGA expenses declined by 2.9% compared to the previous fiscal year, while composition ratio remained at 13.5%, which is equal to that for FY2017.
For pachinko parlor operators, SGA expenses include purchase cost of gaming machines. According to the past surveys, composition ratio of SGA expenses rose by more than 10% from 2008. Since then, the purchase cost of gaming machines has been weighing heavily on the financials of pachinko parlor operators.

Due to the outbreak of coronavirus infections, the number of customers began to diminish in March 2020. When the government declared a state of emergency, many pachinko parlor operators closed their parlors. In addition to the decline in the number of customers and decline in sales due to store closure, pachinko parlor operators expected a rise in SGA expenses as gaming machine replacements by January 2021 to comply with the National Police Agency regulation (the regulation that obligates parlors to replace old machines that have “structural” problem of arousing players’ gambling spirit, to new machines programmed as ‘gaming machine’ that would not stimulate gambling as much as the old ones). Under the circumstances, we anticipate a sharp drop in the business performance of pachinko parlor operators.

Research Outline