Pachinko and Zainichi Koreans: The Korean Connection to Japan's Gambling Industry

One of the most striking paradoxes in East Asian gambling history involves the Korean people: while gambling remains broadly illegal in South Korea, ethnic Koreans have dominated Japan's massive pachinko industry for decades. The Zainichi community—Koreans who remained in Japan after World War II and their descendants—built and controlled what became one of the world's largest gambling sectors, generating revenues exceeding Japan's automobile exports at its peak. This complex history illuminates not only the economics of gambling but also the experiences of diaspora communities, Cold War geopolitics, and the social construction of gambling regulation across national boundaries.

Understanding the Zainichi-pachinko connection provides essential context for anyone studying the comparative gambling policies of Korea and Japan, as well as the broader history of gambling in Korean culture.

Origins: The Post-War Pachinko Boom

Pachinko emerged in its modern form in post-World War II Japan, a period of profound dislocation for the Korean population that had been brought to Japan as colonial subjects. When Japan's empire collapsed in 1945, approximately 2 million Koreans were in Japan—some brought as forced laborers, others seeking economic opportunity in the colonial metropole. About 600,000 remained after the war, becoming the Zainichi community.

Economic Marginalization and Entrepreneurship

The Zainichi faced systematic discrimination in post-war Japan that would shape their economic trajectory for generations:

• Employment Discrimination: Major Japanese corporations explicitly refused to hire Koreans, regardless of qualifications
• Citizenship Barriers: Despite being born in Japan, Zainichi were classified as aliens, limiting their legal rights
• Educational Obstacles: Access to Japanese universities was restricted, and Korean schools faced funding challenges
• Financial Exclusion: Mainstream Japanese banks often refused to lend to Korean-owned businesses
• Social Stigma: Discrimination in housing, marriage, and daily life pushed Koreans to the margins of society

These barriers paradoxically created opportunity in industries that ethnic Japanese shunned. Pachinko, with its associations with gambling and its location in entertainment districts alongside bars and other marginal businesses, was one such industry. As one Zainichi businessman explained in an interview documented by The Journal of Asian Studies, "We went into pachinko because no one else would hire us, and no one respected the business enough to keep us out."

Early Industry Development

The pachinko industry grew explosively in the 1950s and 1960s, fueled by Japan's economic recovery and the public's demand for affordable entertainment. Several factors facilitated Zainichi entry:

• Low Capital Requirements: Initial parlors could be opened with modest investment
• Community Networks: Early Korean entrants helped relatives and community members enter the business
• Gray Legal Status: The ambiguous legality of pachinko deterred more established businesses
• Cash Business: Pachinko's cash-based operations suited entrepreneurs without access to formal banking
• No Credential Requirements: Unlike professions requiring Japanese university degrees, pachinko needed only business acumen

By the 1960s, ethnic Koreans had established a dominant position in the industry that would persist for decades. This represents a remarkable case of a marginalized minority community building economic power in a sector that mainstream society regarded with ambivalence.

The Political Dimension: Chongryon and North Korea

The Cold War division of Korea added a geopolitical dimension to the Zainichi pachinko story. The Korean community in Japan split along ideological lines, with two main organizations representing the community:

• Chongryon (General Association of Korean Residents in Japan): Aligned with North Korea, operating Korean schools, credit unions, and cultural organizations
• Mindan (Korean Residents Union in Japan): Aligned with South Korea, similarly providing community services

Pachinko and North Korean Remittances

Chongryon-affiliated Zainichi became particularly prominent in the pachinko industry, and their business success had significant geopolitical implications. Profits from pachinko operations were channeled to North Korea through various mechanisms:

• Direct Remittances: Cash transfers to relatives in North Korea
• Organizational Contributions: Donations to Chongryon and its affiliated institutions
• Trade Financing: Investment in Japan-North Korea trade operations
• Ferry Operations: Support for the Mangyongbong-92 ferry that connected Japan and North Korea

Estimates of these remittances vary widely, but during the peak period from the 1970s through the 1990s, annual transfers may have reached hundreds of millions to over a billion dollars. According to research compiled by the Council on Foreign Relations, these remittances constituted a significant source of hard currency for North Korea's cash-strapped economy.

Regulatory Crackdowns and Decline

The Japan-North Korea remittance channel became increasingly controversial as concerns about North Korea's nuclear weapons program intensified:

• 2006: Japan imposed comprehensive sanctions following North Korea's first nuclear test
• Banking Restrictions: Stricter anti-money laundering regulations made transfers more difficult
• Ferry Ban: The Mangyongbong-92 was banned from Japanese ports
• Tax Investigations: Japanese authorities increased scrutiny of Chongryon-affiliated businesses
• Generational Change: Younger Zainichi increasingly naturalized as Japanese citizens or distanced themselves from political organizations

Today, while ethnic Koreans remain prominent in the pachinko industry, the explicit political connections that characterized the Cold War era have largely faded. Many successful pachinko families have naturalized as Japanese citizens, and the sharp distinction between Chongryon and Mindan affiliations has blurred for younger generations.

The Pachinko Industry Today

Modern pachinko remains a massive industry, though it has declined from its 1990s peak. According to data from Statista, the industry still generates revenues that dwarf most countries' entire entertainment sectors:

Zainichi Ownership in the Modern Era

While precise ownership statistics are difficult to obtain due to corporate structures and naturalization, several factors characterize the modern Zainichi-pachinko relationship:

• Consolidation: Large pachinko corporations have absorbed many smaller operators
• Diversification: Major operators have expanded into real estate, hospitality, and other sectors
• Generational Transition: Third and fourth-generation Zainichi now lead many family businesses
• Identity Complexity: Many successful pachinko executives have naturalized as Japanese citizens
• Continued Overrepresentation: Even with these changes, ethnic Koreans remain disproportionately represented in industry ownership

Major pachinko corporations with Zainichi origins include Maruhan (founded by Han Chang-Woo, a Zainichi entrepreneur who became one of Japan's wealthiest individuals), Dynam Holdings, and numerous regional operators. Some of these companies have gone public on Japanese stock exchanges, representing the ultimate mainstreaming of what began as a marginalized minority enterprise.

The Paradox: Korean Gambling Entrepreneurs Abroad, Prohibition at Home

The Zainichi-pachinko story highlights a striking paradox in Korean attitudes toward gambling. While South Korean law severely restricts gambling for its citizens, ethnic Koreans built one of the world's largest gambling industries in a neighboring country. Several factors explain this apparent contradiction:

Different Historical Trajectories

The Zainichi community and Korean society on the peninsula developed along different paths:

• Colonial Legacy: Zainichi were shaped by the Japanese colonial system and post-war Japanese society
• Economic Necessity: Discrimination pushed Zainichi into industries that Koreans in Korea might have avoided
• Regulatory Environment: Japan's tolerance of pachinko created opportunities that didn't exist in Korea
• Community Survival: Pachinko success enabled Zainichi institutions, schools, and cultural organizations to survive

Moral Compartmentalization

Many Zainichi pachinko operators maintained complex attitudes toward their industry:

• Some viewed pachinko as fundamentally different from "real" gambling
• Others saw their work as providing harmless entertainment rather than facilitating addiction
• Business success was framed as overcoming discrimination rather than profiting from vice
• Community contributions (schools, cultural centers) were emphasized over gambling profits

This compartmentalization echoes broader patterns in how societies construct gambling regulation. As explored in our analysis of Korean gambling tourism, many Koreans who would never gamble at home engage in gambling when traveling abroad, suggesting complex psychological boundaries around gambling behavior.

Impact on Korean-Japanese Relations

The pachinko-Zainichi connection has influenced Korean-Japanese relations in various ways:

Economic Dimensions

• Investment Flows: Some Zainichi pachinko wealth has been invested in South Korean business ventures
• Tourism: Successful Zainichi entrepreneurs have supported Korean cultural exports and tourism
• Philanthropy: Major donations to Korean educational and cultural institutions

Political Tensions

• North Korea Associations: The historical remittance channel created tensions in Japan-Korea-US relations
• Japanese Right-Wing Targeting: Zainichi pachinko operators have faced harassment from Japanese nationalist groups
• Identity Politics: Debates about Zainichi identity often reference pachinko wealth as either success story or problematic association

Cultural Representation: The Novel "Pachinko"

The Zainichi experience, including the pachinko industry connection, received global attention through Min Jin Lee's critically acclaimed novel "Pachinko" (2017) and its subsequent adaptation as an Apple TV+ series. The work explores multiple generations of a Korean family in Japan, with the pachinko industry serving as both backdrop and symbol.

According to The New York Times review, the novel illuminated a largely unknown chapter of East Asian history. The novel and series have helped introduce international audiences to:

• The complex history of Koreans in Japan
• Discrimination faced by the Zainichi community
• The role of pachinko in Korean-Japanese economic life
• Tensions between assimilation and identity preservation

As discussed in our analysis of gambling in Korean media, cultural representations of gambling often shape public perceptions and policy debates. The success of "Pachinko" has contributed to a more nuanced understanding of the Zainichi experience beyond simple stereotypes.

Lessons for Understanding Gambling Regulation

The Zainichi-pachinko story offers several insights relevant to understanding gambling regulation more broadly:

Regulatory Arbitrage and Marginalization

When mainstream society creates regulatory gray zones or marginal industries, marginalized groups often fill those niches. The same pattern appears in gambling worldwide—immigrant communities frequently become prominent in casino operations, lottery sales, and other gambling-related businesses.

The Social Construction of "Gambling"

Japan's legal fiction that pachinko is not gambling—despite its obvious gambling-like characteristics—demonstrates how societies construct categories of acceptable and unacceptable risk-taking. Similar ambiguities appear in social casino games, CS2 skin gambling, and other contemporary gray areas.

Economic Incentives vs. Social Concerns

The pachinko industry's massive economic contribution—tax revenue, employment, economic activity—has long protected it from stricter regulation, despite documented social harms including problem gambling. This tension between economic benefits and social costs echoes debates about gambling's role in the Korean economy.

Diaspora Economics and Gambling

The Zainichi experience highlights how gambling industries can become economic foundations for diaspora communities. Similar patterns appear with Chinese communities and Macau casinos, Vietnamese communities and card rooms, and other diaspora-gambling connections worldwide.

Contemporary Issues and Future Trends

Industry Decline and Adaptation

The pachinko industry faces significant challenges:

• Demographic Decline: Japan's aging population reduces the player base
• Regulatory Pressure: New regulations limit the gambling-like features of machines
• Competition: Smartphones and other entertainment compete for leisure time
• Social Stigma: Younger Japanese view pachinko less favorably than previous generations
• Casino Legalization: Japan's integrated resort plans create new competition

Industry operators are responding with technology upgrades, improved facilities, and attempts to attract younger and female players. Some are diversifying into other entertainment and hospitality sectors.

Integrated Resorts and the Korean Connection

Japan's 2018 legalization of integrated resorts (large-scale casino complexes) creates both opportunities and challenges for the pachinko industry. Some large pachinko operators have explored involvement in integrated resort development, potentially bringing their gaming expertise to the new legal casino sector.

This development creates interesting parallels with South Korea's approach. As Japan opens its first legal casinos, observers will compare results with Kangwon Land and Korea's foreigner-only casinos, potentially informing future policy debates in both countries.

Frequently Asked Questions

Conclusion

The story of Zainichi Koreans and the pachinko industry represents one of the most remarkable cases of marginalized community economic success in modern history. Pushed into Japan's gambling sector by discrimination, ethnic Koreans built and controlled an industry that at its peak rivaled the GDP of small nations. This success came with contradictions—Korean entrepreneurs dominating gambling abroad while their homeland prohibits the activity, and profits flowing to North Korea during the Cold War.

Today, as both the pachinko industry and the Zainichi community evolve, this history offers valuable lessons for understanding how gambling industries develop, how marginalized communities navigate economic opportunity, and how societies construct the boundaries between acceptable and forbidden risk-taking. For those seeking to understand gambling in East Asia, the Zainichi-pachinko connection remains an essential chapter.

For more information about gambling regulation in the region, explore our comprehensive guides to South Korean gambling law, Korea-Japan gambling comparison, and problem gambling resources.