Walking through the streets of larger cities such as Tokyo and Osaka, you may have noticed large establishments with vibrantly colored window displays and rows of slot machines. The machines are actually pachinko machines and the place is called a pachinko parlor. Gambling for real money is illegal in Japan. Pachinko parlors are the closest thing to legalized gambling you will find. The way parlors work is similar to earning tickets for prizes at Chuck E. Cheese or a Putt-Putt Fun Center.
Customers at pachinko parlors purchase metal balls that are used to play the machines. The machines vary in style, gameplay, animation, and theme. In general, balls are shot to the top of a machine's play area and fall down hitting metal pins. Balls will change trajectories when they hit the pins and each other. The goal is to get the metal balls into different slots or gates to earn additional attempts and prize payouts. The prize payouts a player earns are in the form of additional metal balls to either use in the machines or exchange for actual prizes.
Customers can exchange the metal balls received as prize payouts for items offered in the pachinko parlor. For example, a customer can exchange a certain amount of balls for a microwave or other item. The parlors cannot give actual money. However, there is usually a place near the parlor that takes prizes won by players and exchanges them for real money. You can think about it as winning a microwave and then selling it to a pawn shop for half of its estimated retail value.
Travelers are welcome to visit and play pachinko in the parlors. However, they are not family friendly as children are typically barred from entering. If you would like to learn more about pachinko, read through Japan Visitor's guide.