The entertainment industry of pachinko, Japanized pinball machines, is a unique business to Japan. Although its total market size exceeds that of such significant industries as iron and steel and chemicals, history research has long neglected this business. Partially it is because in the mind of ordinary people the industry still remains in the gray zone of legalized yet antisocial gambling that is characterized by tax evasion and connections to organized crime. It may also be because the industry historically developed thanks to the active contributions of ethnic minorities in Japanese society like Koreans and Chinese. Actually, pachinko business including both upstream machine-making to downstream service establishments stands as the only large industry in which the minority groups have played a predominant role in Japan.
Although the pachinko entertainment originated on the busy street of temple and shrine festivals in pre-World War II Japan, the modern development resulted from the legalization of pachinko gambling after the war. The number of pachinko places thus skyrocketed to 43, 452 in 1953 from 4, 818 establishments in 1949, although the number then rapidly declined to 8, 487 in 1957. The turbulent 1950s symbolized the decade in which the basic organization of the industry got established thanks presumably to the emergence of innovative machines and the alterations of police regulations regarding high-risk gambling.
The present article focuses on the entrepreneurial activities of Takeichi Masamura whose mechanical improvement called Masamura-gauge revolutionized the pachinko machine that became more technically sophisticated. While Masamura did not deliberately register for the patent of his invention for the sake of the overall development of the pachinko industry, his business combining the machine-making segment and the amusement establishments still flourished thanks to the strong sales of his machines and the technical know-how his company possessed as a manufacturer.
In 1955, however, police regulation got altered in order to prevent the gambling craze of pachinko, which drastically changed the performance of the industry in general. Masamura's enterprise was also hit hard as the demand for new equipment suddenly declined. His downstream pachinko amusement segment, on the other hand, could improve the profitability, because the new regulation eventually lowered the business uncertainty that had been associated to the progressively risky equipment. Given the new regulatory environment and the stabilized structure of the industry the performance of pachinko business now depended upon accumulated managerial know-how and capabilities, rather simple luck or technical skills. Principles of scale economies kicked into the industry and the average size of amusement establishments would get larger in the 1960s. The new entry thus became difficult for both machine-making and amusement segment because of the requirements for financial resources and managerial know-how.

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