The Betting Connection.(government gambling revenue)(Brief Article)(Statistical Data Included)

For decades, gamblers helped finance small-town Japan. Take the city of Hiratsuka just outside Tokyo, where the local government sponsored betting on bicycle races to help fill the coffers. Now fat-pocket gamblers are turning away from the track, and Hiratsuka is doing its best to draw them back. It has dressed up its outdoor velodrome with thousands of white lights, soft jazz and government-subsidized food stands. Scantily clad girls in silver shorts introduce the racers. Despite all this, attendance is down 36 percent from its high in 1992. Revenues are down 53 percent. The track draws a crowd of aging men who clutch a racing form as if it was their last penny. Professionals like Masahiko Aoki hang around, hawking tips for just 80 cents a pop. "Look around," says Aoki, 57, gazing at the crowd. "Everything is declining. The generation of people who came to cycle racing hasn't changed in years."

Ever since the seventh century, Japanese have gambled on everything from horses to poetry competitions. But in the postwar era, legalized betting became a source of revenue for the emerging "construction state." Japanese cities began sponsoring gambling on horse and motorcycle racing, and invented new games of chance, including miniboat and bicycle races. Proceeds were split by the local and national government, which used part of its share to pay for reconstruction, and building new schools, senior centers and the like. Working at the track became a favored post for city hall employees after they left government.

All that started to change around 1995 when the cracks in Japan's economy began to widen. Workers began worrying more about the future and no longer spent their leisure time at the races--leaving only hard- core gamblers in the stands. Youths drifted off to competing pastimes, like videogames. By 1999 gambling revenue had fallen to $30 billion, a third less than the peak a ...