Another, different sort of social hierarchy the new technology promises to flatten out in Japan is the nation's pachinko industry. It's a form of slot machine gambling that, with annual sales of more than $200 billion, is bigger than the domestic automobile market.
At present a dark world of illicit ties lies behind the nation's thousands of brightly lit pachinko parlors. This may soon be changed by Kazuo Okada, 57. Okada is a former jukebox repairman with a genius for anticipating gambler psychology. He's tried his hand in slot machines for the Las Vegas market (a twin brother lives there as a successful gambler, he says) but today sees the biggest opportunity at home in Japan.
Okada has built a $4.8 billion fortune from designing a type of machine that employs aluminum tokens instead of the ball bearings used in traditional pinball-like pachinko. His most recent machine was so popular that people lined up overnight throughout Japan to be first to use it. Now he is using his wealth and investor interest in his publicly listed Aruze Co. to fund a project team seeking to bring pachinko-type gambling to the home via the Internet. If he succeeds, gangsters, shady businessmen and thousands of policemen who now find postretirement jobs in the parlor industry might have to register with Goodwill Group to find work.
The police and justice authorities, protecting their nest eggs, could still trip him up by strangling his new venture with regulations. If they don't, cutting out all those hangers-on will improve the odds for Japan's 20 million pachinko players.
Unlike most Internet plays in Japan, Aruze's stock is cheap and is supported by real business operations. In the year to Mar. 31, the company posted an operating profit margin of 57% and a net profit of 29% on sales of $1.33 billion. Okada vows he will double sales and profits within three years. With a price/trailing earnings ratio of 15-to-1, Aruze may be a better bet than the ones made on its machines.