Poker Players Grew from 1.6 Million to 2.4 Million in Four Years: Why Sammy Entered the Poker Business and the Business Model of No-Stakes Poker

According to Ito, Sammy is a company that has been making pachinko and pachislot machines for about 50 years. However, in addition to population decline, the number of pachinko parlors has been gradually decreasing, and the industry as a whole is shrinking. The company needed to consider new businesses, and the poker business was launched four years ago as part of that effort.

The current business consists of two main pillars. One is directly operated venues, with a total of two locations: Meguro in Tokyo and Nakasu in Fukuoka. The other is running the app game "m HOLD'EM." Revenue is built around these two.

Regarding the Meguro venue where the recording took place, Iijima remarked that it was bright and clean. Ito explained that this was an intentional design choice. Four years ago, when the company entered the market, the poker population was still very small. Believing that bright, easy-to-enter venues were needed to grow that population, they chose this atmosphere.

Ito said the core customers are roughly between 25 and 39 years old, and that women make up nearly 20% of all visitors. There are broadly two ways people enjoy the venue. One group comes to have fun and socialize over drinks, while the other comes to hone their skills. The venue holds some kind of tournament every day, and some customers come regularly because they want to win.

Iijima mentioned the impression that you can't come unless you have a lot of money. Ito denied this, responding that at the company's venues, you can get started for around 3,000 yen. When Iijima replied, "About the same as bowling," Ito agreed that it's easy to get started.

There are various discounts in the pricing structure, but the basic rate is 3,000 yen for 500 points' worth of chips. With 500 points, unless you make some serious misplays, you can often play for almost an entire day.

A poker table seats nine people, but it is rare for all nine to know each other. Strangers end up playing together, which Ito says also leads to customers meeting each other and making friends. The venue has become a place people can visit alone or with friends.

The company began considering entry about five years ago. Market research at the time put the poker population at around 1.6 million. Even so, poker clubs were starting to form at several universities, and poker content was increasing on YouTube, so the company judged that there was potential and entered the market.

According to the most recent survey Ito cited, the number of people who have played poker within the past year has grown to around 2.4 million. The number of venues nationwide, which was about 200 when the company entered, now exceeds 500. Ito believes the market has grown significantly over these four to five years.

On the reasons for this growth, Ito prefaced his remarks by saying it was "difficult," then gave his own view. In Ito's generation, university students' pastimes were pachinko, pachislot, and mahjong. Now, those have been replaced by poker and shisha. There is a sense of doing something different from others—not quite "a little bad," but close. Ito also speculates that because poker is a game with some gambling elements, people find the strategic back-and-forth enjoyable.

Asked whether young people's behavior reflects characteristics of the times, Ito replied that entertainment has become so diverse that it's hard to generalize. That said, Ito noted that every university now has a poker club, and some high schools do too. At the high school Ito's son attends, a class even ran casino games as their school festival exhibit. Ito's view is that people are seeing these games on YouTube and elsewhere online, and that this is driving their spread.

As for visit frequency, the most frequent customers come three to four days a week, while less frequent ones come about once a week. Since some people surely also visit other companies' venues, Ito said many people probably play poker in some form about once a week.

Asked whether the business is profitable, Ito answered that, thankfully, it is growing to a reasonable revenue scale. However, the goal is much higher. Ito cited shogi and mahjong as points of comparison, aiming to "catch up with and overtake" them. Ito also noted that, considering there are still many darts venues in Japan—including within the Sammy group—there is still room for poker to grow.

Ito named two key points for future development. One is building communication between users, both in venues and in the app, given that poker is a game played against other people. The other is planning events as a place where players can showcase the skills they have practiced and honed at venues and in the app.

In addition to increasing directly operated venues, the company has begun moving forward with franchising as one option. By Ito's understanding, of the more than 500 venues nationwide, even the largest chain has close to 30 locations. With 500 venues overall and the largest player at around 30, Ito believes there is still great potential as a venue business.

By region, about half of the 500 venues—around 200—are in Tokyo. For that reason, Ito said there is still room for growth nationwide.

Iijima asked whether app games weren't Sammy's specialty. Ito corrected this, explaining that this is the first time Sammy itself has operated an app game. The company has of course made gaming machines, but it had no experience running apps. For that reason, it is proceeding while drawing on the know-how of group company Sega.

As for why the company is still pursuing an app, Ito said that to expand the market, the first priority is to get people to try the game. Ito gave shogi as an example. Shogi has a large player population, but Ito doesn't really know where one can go to play it. On the other hand, many people play shogi games. Likewise in poker, people who are too busy to visit venues need to be able to improve their skills through an app, and Ito regards the app as "inseparable" from the business. The company's app has users spanning a wide age range, from middle and high school students to people in their 50s and 60s.

Regarding the expansion of related businesses, Ito listed several areas. First are poker goods such as chips, which are essential to poker. Next is apparel: poker players often wear hoodies, and many are particular about their clothing. Ito also cited real-world events such as poker tournaments, and learning tools for improving skills.

With YouTube content increasing and more people viewing poker as a business, Ito said competition will likely increase as well. Ito added that there is both a feeling of needing to work hard and a desire to properly reap the benefits as an early mover. At the same time, Ito said the company is not going to take everything itself, and wants to move forward by partnering with various others.

As for current partnerships, the company does things such as teaming up with tournament organizers as a sponsor. However, there are not yet many concrete projects involving collaboration on the app or venues. The area Ito expressed particular hope for is educational content. Creating content is demanding, and the company has not been able to devote much time or effort to it. For that reason, Ito said there is potential in partnering with companies in that field and in receiving proposals for improving the app.

On global trends, Ito said participation has grown significantly in tournaments such as the WSOP in the United States and tournaments in Asia. The number of Japanese players is increasing, as is the number of local Asian players.

However, overseas, poker tournaments are often held inside casinos and also have an aspect of being casino games. Ito pointed out that, for this reason, some Japanese people who are uncomfortable with gambling may feel it is different from playing in Japan.

Since betting is not allowed in Japan, poker is enjoyed as an amusement. As for why it can still be fun, Ito pointed to the competition for chips. People enjoy the strategic back-and-forth and the emotional ups and downs as their chip stacks grow and shrink. When Iijima compared it to arcade coin games, where you can't cash out but still dislike losing coins and want them to increase, Ito agreed that it's the same.

Ito also cited the fact that you can play while talking with others and mapping out your own strategy. Poker involves a great deal of strategy, such as how aggressively to play and what kinds of bluffs to attempt. When Iijima asked whether it is taking on a sense of sport or competition, Ito affirmed this.

Regarding tournament prize money, Ito explained how it works in Japan. Prize money at tournaments the company hosts is basically paid from sponsors' contributions. As with esports, golf, and shogi, it can be operated legally as long as prize money comes from sponsorship funds.

Prize amounts have been growing, but the number of companies providing sponsorship is still limited. This is because the market is still at an early stage, and Ito said finding cooperative sponsors is one of the challenges.

On the other hand, Ito explained that the reason overseas world tournaments offer prizes ranging from tens of millions to hundreds of millions of yen is that they are held in casinos. They use a method called a "prize pool," in which money paid by participants is pooled and distributed. For example, if 10 people each pay 100,000 yen, that makes 1 million yen, and what remains after the casino's fee is deducted becomes the prize money. Doing this in Japan would be illegal gambling, so the company pays prize money within the scope of sponsorship funds received from sponsoring companies.

When holding events, the company consults the nearest police station, explains the event format, and obtains permission before proceeding. Finally, Iijima suggested that clean operations and the reassurance of a major company running the business might be one factor behind the growth in users. Ito modestly replied, "It might be one," and the conversation ended.