ETGs key for Japan casino floor, pachinko problematic

While competition is hotting up amongst the operators bidding for a coveted Japan license, suppliers are also eyeing the market for opportunities and trying to answer the key question as to what the Japanese casino floor might look like.

Japan is a very mature market when it comes to gambling options, with six types of government-run racing operations and national lotteries. Then there is the pachinko and pachislot market, which has seen better days, but still managed to gross $180 billion in 2017.

There are several factors that need to be considered when discussing games for Japan.

One of the main goals of the Japanese government is to stimulate tourism numbers, meaning the casino offering should also cater to the “foreign player” as well as the local player. It is also a certainty that the floor space of the casino will be limited to three percent of the total resort area. Then there is the local player aspect, in that the average Japanese adult is not well-versed in playing table games and many are not confident in the rules.

Considering that this will be the first casino in Japan, we will for sure see some of the classic gaming options such as video slots and classic table games like blackjack and roulette, as well as games like baccarat and sic bo catering to Chinese players who will be a significant customer segment.

The discussion gets more interesting when we look into the details. Gaming machines include electronic table games (ETGs), which have advantages over table games that could become key in Japan. Standard ETGs do not require actual dealers. This could be part of the solution for initial workforce issues considering the lack of fully trained dealers and the 24-hour operation they must handle.

Dealer-operated ETGs, where one table can cater to over 100 player machine terminals, is another attractive option. The other factor is the ETG’s role in bridging machine and table play.

Players not familiar with table games have a chance to privately learn how to play with lower stakes than the actual tables. There is also less human interaction with ETGs, something to consider as a potential advantage when targeting local Japanese players, given the Japanese cultural trait of saving face in front of others. ETGs would cater well to the mass market and beginner players, and would also have a following of their own.

The customer segment that ETGs do not reach leads us to the next interesting detail of the Japanese casino - premium-mass and VIP players. For casino floor operators, baccarat can be the ideal game. Considering that high rollers usually play solo or in small numbers and that baccarat offers one of the fastest game cycles, the card game is a staple of the mass gaming floor and VIP rooms in Asia.

Taking into account the limited floor space and the player demand for high limit bets, this customer segment is one that any Japanese casino cannot ignore, especially for an integrated resort-scale project. Unfortunately, the topic of VIP rooms is still completely up in the air. Closed rooms are synonymous with junkets and while they do not always go hand-in-hand, there is a realistic chance that Japanese casinos will implement an open-air VIP area. Some high roller potential could be lost depending on the privacy levels of the VIP facilities. In this case, the answer is yet to be seen, however the limited gaming floor space will for sure require some form of VIP player facility, closed-walled or not.

The final main factors that create the most interesting discussions are technological advancements and new gaming trends. The first casino in Japan will not be in operation for at least another five years and if we look back five years ago there have already been a few big market shifts.

How big will e-sports and sports betting become by then? Where will games of skill go from here? Will new table technology allow for smoother operation of table games? One product at G2E Las Vegas this year that caught operator attention was Aruze Gaming’s Roll to Win Craps, an ETG and table game hybrid where players still roll the dice as in the table game, all the while placing bets and being able to check game rules and result patterns on an electronic video terminal.

The operator requires only one dealer to service the table and the video aspect allows for flexibility to make flashier game experiences and use formerly unused wall space for advertisements or perhaps stream an ongoing sports event. Innovations of this kind could just be the beginning of a next generation of gaming technology that will make its way to Japanese casinos.

In terms of gaming trends, who is to say that Japan cannot be a pioneer for a more interactive and entertaining gaming floor? The country boasts one of the best arcade and amusement game industries in the world. Common Japanese amusement games like coin pushers, virtual horse racing, and card collection battle games feature interactive player ID and digital assets to keep players interested. Although differentiation between what is a “game” and what is a “gaming machine” could be a regulatory hurdle, Japan certainly has the potential to bring quality entertainment games that are not seen in the everyday casino.

However, bringing Japanese gaming to the floor, such as pachinko, seems less likely due to social stigmas. Not to mention pachinko is a game of skill that also utilizes physical randomness, a difficult combination to get right for a non-Japanese player. The target player segment is also very different from the pachinko player, as people who enjoy it, for better or for worse, can simply go to their nearest train station to play.

The casino is less accessible, theoretically requires a deeper wallet, and also requires more ancillary aspects on top of the unique gaming experience to attract an adequate number of local players. Pachislot on the other hand, is much closer to its physical-reel slot cousin seen today on casino floors, and the player skill element has been decreasing over the years in the local market. We could very well see a derivative of pachislots in the form of casino gaming machines by the time the first casino door opens.

The Japanese general public still view casino gaming as the classic Vegas casino with roulette, blackjack, poker, and slots with handles. The regulations in their initial form will for sure be created to regulate these existing games. Therefore, business-wise, we are sure to see video slots, ETGs, roulette and baccarat tables with quality tracking capabilities, and at least an open-air high roller area. Government priorities and new regulations may completely swing the target player market and game content as well.

Ideally, the Japanese offering can be unique and bring a new meaning to “casino gaming”, however a more conservative approach utilizing new technology should be the expectation at this time.

The initial competition involving suppliers will be on the technology and operation efficiency side, which is an international battle that goes on and on regardless of Japan. Perhaps the wait-and-see approach will show the need to expand and improve on current casino gaming offerings, and that is when the real gaming content battles begin.