internationalcasinoreview


One hundred not out. Many thanks for all your support!


With International Casino Review celebrating its 100th issue the whole team behind the magazine would like to say a big thank you for all the support. Whether it’s through advertising revenue or editorial guidance, Casino Review wouldn’t be here if it wasn’t for the high level of support it receives from the industry it represents.


Rule Britannia


Harrah’s join UK Gala time europeannews page 3


Ray of hope


Slotting in Finland’s helping hand europeannews page 8


Making a B line


Swiss B’s look for lower tax europeannews page 2


August 2003 • 010 www.coinslot.co.uk Product line


G2e product preview productnews page 28


Helping hand


Slots play their role in Palm Beach europeannews page 3


Baring a cross


Cross industry group to lobby UK europeannews page 2


September 2003 • 011 www.coinslot.co.uk All shook up


Nese puts Lithuania on the map europeannews page 2


Happy Heap


TCS John Huxley set sights on next generation interview page 14


Courting favour


Earls Court catches US casino eyes europeannews page 3


October 2003 • 012 www.coinslot.co.uk Gauselmann’s growing pains


From major gamble to major player interview page 10


Taking the desert by storm


The exhibitors, the products, the people G2eshowreport page 14


Doing its duty


Will Swiss tax changes save the day? europeannews page 2


November 2003 • 013 www.coinslot.co.uk Eastern delights


Belotserkovsky on the Russian revolution interview page 20


Private chancer


Corfu next on Greek sale europeannews page 8


Get into the groove


The Palms goes clubbing worldnews page 16


December 2003 • 014 www.coinslot.co.uk The Saint


Austro-Swiss partnership makes it six europeannews page 2


Border line


Swiss threat to French border casinos europeannews page 3


Season’s greetings


Kitzbühel set for longest season europeannews page 16


January 2004 • 015 www.coinslot.co.uk COINSLOT INTERNA TIONAL


European operators division formed


inoperation EUROPE


A new operators association has been formed to help give European casino groups one voice for the future. Casino companies in Finland, Spain, Portugal, Greece, Switzerland, the UK and Austria will be the frontrun- ners in forming the new Operators Organisation for Europe as a division of the European Gaming Organisation. The inaugural meeting of the asso- ciation took place in Amsterdam on June 25 resulting in the creation of an interim steering committee. Jan Rodrigo from Grupo Amorim in Portu- gal will be the interim chairman, whilst Jaime Vaca de Arrazola of Grupo Comar in Spain has been given the role of interim vice chairman. The com- mittee will be made up of Lars Porko from PAF in Finland, Ian Gosling of Hyatt Regency in Greece and Tim Cul- limore of Casino Crans Montana in Switzerland. The role of the committee is to for- mulate bye-laws, membership criteria, code of conduct and an outline of future aims for the next full meeting in October. Jan Rodrigo said: “We all agreed the need for a Pan European Operator Organisation open to all irre- spective of size. The initial issues iden- tified during the meeting show a clear consensus and the aim of the organi- sation will be to address these on behalf of the industry as a whole, and for the benefit of all.” On the list for the future were the need to implement an industry code of conduct plus to look at the issues sur- rounding money laundering, responsi- ble gaming practice, common testing throughout Europe and the need to consult with the manufacturers on common areas of operator need. “We have a lot to go away and think about before October,” said Jaime Vaca de Arrazola, “but what is clear is that our needs are common and vital for the industry in an increasingly inte- grated Europe.”


Barry De Lacy of newly formed British operator, Blue Chip Casinos, is also believed to be interested in joining the group along with Kazys Paulikas of the Nese casino in Lithuania, Silvan Krizman of Hit Casinos in Slovenia and Paul Herzfeld of Casinos Austria.


Finland’s Ray closing in on casino rebirth


With work well underway on Casino Ray’s new venue, Phil Martin visited Helsinki to witness how the relocated venue was shaping up and how it was aiming to change the face of Finnish gaming forever.


thefinnishline FINLAND


The Finnish capital of Helsinki has made huge strides in recent years in establishing itself as a travel haven for casino patrons from all over northern Europe and the Baltic Sea. But now with a refurbish-


ment very much underway, operator Casino Ray is hoping to turn the single Finnish licence into a magnet for custom from all over Europe and beyond with the launch of the country’s first genuine,inter- national casino. The new venue aims to fuse the best gaming experi- ences from Europe with those of America and become the landmark attrac- tion in Finland’s entertain- ment culture.Renowned Las Vegas architect Paul Steele- man has been entrusted with the objective of delivering a casino concept to mes- merise with modern mastery and tantalise with traditional expertise. As such,mood evoking video walls and giant plasma screens will adorn parts of the casino whilst all the ele- gance of 20s style gaming will grace other more tradi- tional sections. The move will see the


casino relocate from the Ramada Presidentti Hotel, near the city’s bus station,to a newly renovated site nearby in Mikonkatu,on the southern side of Rautatien- tori,the Railway Square right in the centre of Helsinki. Nestling within the city’s cultural quarter alongside the Ateneum Art Museum, the Finnish National Theatre and the Central Railway Station,as well as cinemas, restaurants and bars, this high profile location will not only allow for an increase in games and amenities within the casino itself but also allow it to benefit from increased visibility and foot- fall.


Jan Rodrigo from Grupo Amorim in Portugal will be the interim chairman for the new Operators Organisation


Martti Sillanmäki, club


manager, expressed the operator’s excitement at the


prospect of the project,but was also keen to herald it as being much more than just a move for the casino. “This is a very exciting


time for Casino Ray,” he explained.“We’re viewing the move as much more than just a relocation of our gaming licence and more of an opportunity to com- pletely rebrand the casino concept in Helsinki.We’re closing down the current Casino Ray venue and reopening the new location as Grand Casino Helsinki with the hope that people will view it as a completely different experience.The casino will more than double in size and will significantly improve its bar, restaurant and cafeteria facilities as well as the entertainment on offer.”


At 2,600m2 , the dimen-


sions of the new casino will dwarf the existing venue which squares up at 1,200m2


.


The whole project will be a doubling up exercise with the slots increasing from the current 150 to 360 and the table games doubling from the existing 15. The entertainment centre


development concentrated in the Fennia block is being completed in stages but is gradually metamorphosing into what its owners envis- age will be the beating heart of Helsinki nightlife.Two movie theatres and the metro access point with its fast food restaurants have been completed.In addition, there are also restaurant and leisure services targeting the customers’ different needs. The cultural centre Caisa will open in February with the casino scheduled to open in March 2004. Cur- rently the project has been in progress for a year and will result in gaming centred on two floors,with one of the widest selections of games in Europe. A much greater emphasis will be placed on entertain- ment with the introduction of corporate packages where gaming is combined with other various forms of


Machine gaming slots back into Belgium


backintown BELGIUM


Belgium has finally started operating its first casino slots for over two decades fol- lowing the recent revision of the country’s gaming laws.


Grand Casino Helsinki, in the city’s Railway Square, will replace Casino Ray as the only casino in Finland, when it opens in March


entertainment.“This is one reason why the casino will attract many new cus- tomers,”said Vivi Sinisal,mar- keting manager for Casino Ray.“We’re looking for steady growth by offering various forms of entertainment to attract people who may not otherwise have the desire to visit the casino but we’re looking at an expansion of only around two to five per cent a year.Due to the set up of our company there is no need for us to expand more aggressively than this. “Because of an increase in the number of slot machines,we’ve basically run out of space to provide entertainment at the exist- ing venue and so our current customers are extremely focused on playing the


games,”she added.“With the new casino we’re looking to expand on this and attract more groups of friends, couples and businessmen.” Currently,70 per cent of Casino Ray’s customer base is male,close to 30 per cent are foreign nationals who live in Helsinki,and around 12 per cent are tourists.The new venue will be much more obvious to passers by with its own façade, entrance and signage. Situ- ated so conveniently close to all manners of entertain- ment,all modes of transport and all levels of hotels, the Grand Casino Helsinki should be able to completely transmute its player demo- graphics to the benefit of Ray and all the organisations that it supports.


Casino Knokke, owned by Partouche and located in the resort of Knokke-Heist on the East coast, installed 50 machines in July whilst Casino Ostend, located a little further down the coastline, sited 40 machines. Both began operating at the start of August. The legislation permits casinos to apply for a licence to operate slots, with a maximum of ten machines per table game being available to operators. All of Belgium’s eight casinos – bar one – had received approval from the Belgian Gaming Board at the time of going to press. Following the installations in Knokke and Ostend, the Namur venue is expected to launch its slot operations in September, while those in Chaudfontaine and Dinant will wait until the turn of the year. The ‘stake’ for each machine is one


euro. However, as these are token machines, the actual stake is decided by the operator, most commonly at the 10 cents or 20 cents levels. The machines are also restricted to players losing a maximum of 70 euros an hour, although losses are calculated as to their average loss per hour over the day. All the machines are stand-alone units and, as such, cannot be linked or offer progressive jackpots. “It’s not a huge market but it’s still an important one,” said the regional sales manager of one slot manufacturer. “We’ll soon see the market hit its ceiling, at which point it becomes an issue of main- taining the market rather than trying to find more sales avenues.” However, there has already been some


An artist’s impression of how the finished venue will look


consternation in the market since the slots arrival in Knokke and Ostend. Some press reports indicated that the machines were not performing properly and had already attracted the attention of the Belgian Gaming Board. “There was an issue with the software on one machine,” confirmed the manufac- turer, “but that had nothing to do with com- pliance issues. We’ve since identified and solved the problem with the assistance of the casino operators and the authorities.”


Any operator of big casinos wishing to take advantage of new UK horizons will have been gratified to discover the government’s intention in its latest position paper. In Britain, size definitely is a major issue. Report by Phil Martin and Andy McCarron.


sizingitup UNITEDKINGDOM


Operators of big resort casinos are being steered towards the UK’s new horizons following the publication of the much-anticipated position paper which is expected to shape the new-fash- ioned sector. The bigger the better seems to be the UK gov-


ernment’s view of new casino developments in a deregulated gambling environment as it aims to curb the growth of smaller,high street opera- tors and aims to price any unscrupulous new- comers out of the picture.


The position paper states that new casinos should have gaming areas no smaller than 5,000 sq ft, a 150 per cent increase in the figure rec- ommended by the Gambling Review Report, although the large number of British casinos cur- rently beneath this threshold will be allowed to continue trading. The ratio of slot machines to gaming table has been slashed,though,from a proposed eight per table to just three.However, for the larger scale casino developments,those with a gaming floor of over 10,000 sq ft, there will be no machine restrictions at all.This free market stance for the larger casino is the clearest indication yet that the government is edging towards a preference for resort casinos and will be music to the ears of many of the big US companies reported to be linking up with UK operators. Marc Etches of Leisure Parcs,the company


which wants to bring the resort concept to the Lancashire town of Blackpool,was also enthusi- astic toward the paper’s meaning.“This paper publicly reveals that ministers are saying that they want to bring forward large-scale casino developments such as ours to help with regional regeneration and tourism.To my mind,it is now a policy objective whereas previously it was not.” Minister for gambling Lord McIntosh


explained the thinking behind the decisions. “The licensing regime for casinos must strike a clear balance between bringing gambling further into the mainstream leisure industry and ensuring fairness to participants and the protec- tion of children and the vulnerable,”he said.“Our proposals for the minimum size of casinos and numbers of gaming machines will not however affect any plans to open up resort-style casinos - it is just important that they are not situated on every street corner.” The proposals delivered a sting in the tail for


proponents of wide area progressives in a move which may provide a more even playing field between owners of big casino estates and the smaller independents. Progressive jackpots will only be allowed,initially at least,to link machines on the same site.Again this would benefit the resort casino model, which would be able to offer higher linked jackpot than casinos with restrictions on machine numbers, but means that the number of venues owned is not as great a deal as once envisaged. Lord McIntosh explained that the decision on


The Namur Casino is expected to be launching its slot operations this month hot on the heels of Knokke and Ostend


progressives was based on caution and perhaps an attempt to avoid some of Australia’s prob- lems.“We think that it will be important,again in order to ensure that deregulation takes place in


Size will matter when rebuilding the Kingdom


a controlled and balanced way, that - at least in the first place - casinos, while free to install gaming machines with no fixed prize limits, are not able to link them to machines on other premises to create progressive jackpots,”he said. “Such linking would undercut effective con-


trols over the availability of machines which evi- dence from overseas suggests importantly influence the incidence of problem gambling.” The position paper did include a restriction in the proliferation of resort casinos, through the involvement of regional organisations,although there is much detail to be added to these pro- posals before the exact relationship between them and casino operators can be deciphered. British-based operators were generally appre-


ciative of the paper’s stance. Stanley Leisure’s group finance director Michael Riddy said:“The industry will be happy that the size condition has been put up as that will stop new incumbents.”


Barry Hardy of London Clubs International added that the paper ‘appears to be an encour- agement to build very big casinos’.He also said it was an encouragement for international con- tenders such as MGM and Harrahs to come in. The tight restrictions proposed by the govern-


ment for new casinos will no doubt ensure that there is at least some sort of lid on gambling explosion in the UK;following minister Richard Caborn’s precedent of ‘evolution,not revolution’. And with scope in the future to reduce the minimum floor size, expand the table:machine ratio and eventually introduce wide area pro- gressives,the British industry and all those who wish to sail in her may experience this evolution over a longer time period than originally antici- pated.Navigating new business opportunities in the UK will no doubt be more transparent, though,when proposals on machine duty and other taxes are brought to the table.


COINSLOT INTERNA TIONAL


Existing operators will be unaffected, but all new casinos in the UK will have to surpass a 5,000 sq ft threshold. Those of 10,000 sq ft or more will have a tangible advantage though


COINSLOT INTERNA TIONAL Star Wars storms ‘record’ showing at G2e


starrating UNITED STATES


With a collection of newly licensed products, spanning the world of TV, sport, music and film, this year’s G2e lived up to its billing, but for many, there was only one star of the show with IGT’s ‘Star Wars’ license on most


visitors’ to see list. Marketed impressively with its squads of marauding Stormtroopers, those who weren’t acutely aware of the slot’s presence at the show would have been gently persuaded to take a look on arrival. “The development of the Star Wars video slot will be a sig- nificant gaming event,” said Joe


Brussels, the home of the European Commission and the Council of the European Union, has so far welcomed three tenders for a casino within its city centre. Phil Martin reports on why this could prove to be ‘the‘ European project of recent times.


Three tenders in for Brussels’ licence


casinoinsight BELGIUM


The venue has been chosen and soon Brussels, often touted as the capital of Europe, will join the collec- tion of European capital cities to operate a casino. For so long shunned as a


home for gaming,the lengthy saga of who will run the casino in Brussels will soon be concluded giving way to a new chapter in the city’s casino story. The site has already been selected,a pro- moter chosen and an invita- tion to tender for a 15-year licence is close to meeting its deadline.All it needs now is an internationally renowned star to play the leading role. Whilst the identity of the


chosen operator won’t be announced until February 2004,the companies involved in the tender will be announced towards the end of October. So far, three candidates


have put their names forward in tenders which include gaming influences from Holland,France and Austria. Geert Dobbelaere at the Belgian Gaming Commission revealed that the three opera- tors which had so far applied for the licence were Casinos Austria,Euro Casinos, incor- porating Holland Casinos,and Ball Casinos, incorporating Partouche.


The licence within the Belgian capital,which claims to be the world’s second largest congress and exhibi- tion centre,is viewed by many as being one of the most important casino licenses to go up for tender for some time.


Eurocasino is a group com-


prising Holland Casino,Com- pagnie Immobilière de Belgique,Kinepolis and the Roularta Media Group.They have made their intentions public and have been press- ing for a casino in the Belgian capital for a number of years. Jean Thomas,president of


Eurocasino, said:“Our objec- tive is to develop a casino which matches the ambitions of Brussels as the capital of Europe.We would wish, if possible, to develop it along the concept of ‘fun & enter- tainment’allowing the inhab- itants of Brussels, Belgians and foreigners to enjoy playing in a pleasant environ- ment.”Thomas added that he hoped the Brussels project would be able to mirror the activities of the large interna- tional casinos in terms of the games and entertainment on offer.


Casinos Austria has also put


forward its bid. Hermann Pamminger, head of corpo- rate relations at the Austrian operator, emphasised the importance that the group, which runs some 53 venues across the world,gave to the licence. “The value that Casinos Austria places on the Brussels’project is extremely high,” he explained. “Our company has been working on potential plans for this licence for many years and sees it as a very prestigious project, perhaps even ‘the’ casino project of recent times.Brussels is the centre of many things for Europe and clearly we would like to be associated with the develop- ment of a casino there.” Little has been publicly


declared by the Ball group, but with Partouche already involved in casinos in Knokke le Zoute, Ostende, Chaud- fontaine and Spa,the group will no doubt wish to transfer its expertise in the market to a venue in Belgium’s capital. The much sought after location,which is expected to be fully operational some- time during 2007,has already been unveiled with the his- torical Anspach galleries, which date back to 1898, being given the opportunity to house the city’s break- through in gambling. Accordingly,the commu- nal council of the City has granted the lease for the casino to NGBA (New Gal- leries of the Anspach boule- vard - Fortis group), the owners of the Anspach centre.


The total venue of the city


centre site will measure 30,000 square meters with the casino taking up just over a third of the allotted space. The remainder of the surface area will be occupied by a hotel, residential property and offices.While awaiting for the restoration to be com- pleted,the casino will proba- bly be installed temporarily in ‘La salle de la Madeleine’ which is located some 500 meters away, in the city centre. Dobbelaere did add one final twist to the current plot, though,stating that the tem- porary casino may not yet be sited at the Madeleine.“One of the applicants would like to operate on a boat on the river rather than spend money on the refurbishment of a temporary site,”he said.


Pointing the way to gaming in Brussels on the Anspach boulevard


“The decision will be down to the City of Brussels to make however." The introduction of a casino into Brussels has long been banished to the waiting room of Belgium’s legislators in what is a unique example of the complexities of law.For although casinos are techni- cally against the law,the indus- try is officially tolerated due to the Napoleonic code in existence. This states that everything which is not


specifically forbidden should be permitted,however, the application of actual laws have been necessitated to allow gaming into the capital. The new laws regarding


the Brussels’ licence follow hot on the heels of the country’s new slot regula- tions which has seen stand alone slot machines installed at three of Belgium’s eight existing casinos already,with others to follow suit shortly. Whilst Belgium has long


had a love hate relationship with casinos,this latest move should see the ‘swingometer’ tip over to acceptance at least. Whichever of these operators eventually suc- ceeds in gaining the licence, or indeed if a late entry steals their thunder, European gaming’s new kid on the block should be a picture for all that see it,especially those that have followed the unwinding story of its con- ception from the start.


Kaminkow, IGT’s vice president of game design. “Those who stood in line in 1977 to see the first Star Wars movie are now about 50 years old. Exactly the demographic of core slot players.”


The machine is in prototype and at this stage it isn’t known when it will be available to Europe, but it still


managed to make a dramatic entrance at a show which even at 216,400 square feet was still bulging with new ideas. Organisers are already claiming record crowds for the show.


An extensive company by company G2e show report will appear in next month’s Casino Review.


British


market to saturate in five years


saturationpoint UNITED KINGDOM


The British government’s desire to limit the growth of smaller high street casinos and open the market up to destination casinos could see the new sector saturated within five years of the new laws being passed, according to leading market analyst Andrew Burnett of Merill Lynch. Together with the minimum floor sizes and table to slot ratios proposed in the UK’s latest Casino Position Paper, Burnett believes the government has succeeded in completely shifting the emphasis for the liberalised sector in the quest for a more controlled approach. “To my mind, the casino position paper changed everything,” he explained. “The government has reduced the absolute potential for the small casino model, made the larger casino model far more attractive and probably put off quite a few of the new entrants. Most cities are big enough to absorb two, three, four, maybe even five of these cruiser weight casinos. But sadly I think we will reach saturation of these big casinos within five years of the bill coming out.


“The question is not, now, how many casinos have you got or how many machines you can link together across an estate, but how big a casino can you develop and how many slots can you link under one roof.”


As for the development of the heavyweight resort casinos, Burnett believes the limit of 10,000 sq ft of live gaming and the investment that goes with that has effectively ruled out their development to all but the biggest and boldest projects. And that, some will argue, could open the door to the international big hitters.


UKReport


Sizing up the British opportunity Page 4


COINSLOT INTERNA TIONAL


Investors get their teeth into Transylvania ski lift


While recent news from Romania has centered on venues being forced to close due to increased player taxes, one operator is about to go against the grain and open ‘the biggest and the most elegant casino in Romania’. Phil Martin reports on the plan with high hopes of charming visitors to its Transylvania ski resort.


palatialpackage ROMANIA


Situated high in the Carpathian Mountains in the famed Transyl- vania region of central Romania, the popular winter sports desti- nation of Sinaia will soon bear witness to the opening of a ten table,100 slot operation,which aims to complete the tourist offering of the town. Having earned the nickname


the ‘Pearl of the Carpathians’,and with Sinaia once famed for being the summer home of the King and Queen of Romania,the casino will be hoping to prove that it itself is indeed fit for a king. Operator SC Casino Sinaia SA,


a group made up of ‘Romanian and foreign investors’,is planning the grand re-opening of the venue of the same name on November 15 this year.With that date fast approaching, it is confident that the addition of a high quality gaming venue will complete the tourism amenities of a resort already enriched with scores of modern hotels,villas and inns. Casino Sinaia,which its oper-


ator claims will be the largest as well as the most elegant casino in the republic, is located in the Dimitrie Ghica Park with its plen- tiful fir trees.And it certainly has the history to back its aspira- tions; the venue was originally built in 1911 by the Ephors Society and frequented by the Romanian aristocracy and by the Royal House’s members, King Carol the Second being one of the most important gam- blers in its history. This historical monument


has lay dormant though since 1947, until this multinational group invested 2.5m euros in a bid to restore Sinaia’s former gaming honour. Ion Menciu, director of


Merill Lynch analyst Andrew Burnett


foreign relationships, explained how the magnificence of the revived venue aims to reflect the target clientele.“The archi-


tectural splendor of the casino should appeal to gamblers who can identify themselves with the standards of a 5-star casino. In our very European view, we decided our casino should be situated in a resort and not the capital,but having said that we didn't choose Sinaia as the loca- tion,we chose the casino. But being a mountain resort with intense activity in winter means there is a steady flow of visitors to the resort.The casino,will only add to the motivation to visit Sinaia and we expect it to attract tourists out of peak season too.”


The gaming floor itself will


measure 400 square metres with four roulette tables, three black jack,one poker,one Caribbean poker and one baccarat.A 200 square metre slot room will host 100 slot machines,bought from the Evona Electronics firm in Bratislava,and there will also be a piano-bar and a cabaret theatre adding to the ambience. “The casino’s style is Rococo


and is very similar in style to what you would experience in Monte Carlo,” Doina Plotino, general director of the casino, added.There will also be a three table VIP room which he stressed has an ‘important historical past’ and should only heighten the feel of opulence. The development should


prove relatively unique in Romania,if not only for the fact that it will not be housed in the grounds of a hotel. Indeed, the Palace Casino, owned by Ver- nescu House, is the only stand- alone venue in the whole of Bucharest.But given the tourist status of the locality, the Sinaia project will be affiliated to its neighboring hotel,the grandiose Palace Hotel,as it strives to boost visitor levels through a series of special tourist packages. As such,it is hoping to be much


more than just a casino and aims to differentiate itself by offering groups of gamblers packages ranging from three,five and seven days to an 11-day stay.“The Sinaia Casino offers many different activities and facilities from those offered by the other casinos in Romania, through our packages which will include accommoda- tion and inclusive meals at the hotel and casino,” Plotino


explained.“You can spend the mornings benefiting from the fitness-hall,massage,sauna,solar- ium or visiting various tourist’s objectives in the Prahova Valley, and the Dracula Palace in the mountain station Bran, near Brasov.Whatever the season you can admire the mountain view from the cable railway.In winter we have skiing or a ride in a sledge.In summer, you have the opportunity of playing golf in a splendid setting in Breaza,where you can breathe the purest air in the whole of Europe. And, of course, in the evenings you can spend your nights at the splendid casino, or in the bar, cabaret or piano-bar.” The venue will not be at a loss


for casino company either.The Peles Castle, complete with a much smaller four-table opera- tion,is only a mile down the road with its proximity very much wel- comed by the Sinaia owners.“The two casinos complete a great package for casino customers,” Menciu explained.“The visit to the Peles Castle is in every package that we offer and we expect to see everybody who visits the Peles Castle at our casino too.” The business plan is tight and


exclusive, which tells its own story of the high degree of service which should be in place. Plotino explained that only 86 gamblers are envisaged in the daily business plan with a


Russian proposals could curb pace of expansion


In the space of just over one spectacular decade, the Russian sector has expanded like few before it. On the eve of Eastern Europe’s most important casino exhibition, Phil Martin asks the question when and how will the market level off.


growingstrains RUSSIA


Standing tall: The casino in Peles Castle, pictured above, will neighbour Casino Sinaia, pictured left, and even act as part of the operator’s package tour.


firm emphasis placed on quality not quantity, although he expects that the average per day should exceed 100 customers. The quality will be there from day one with the list of digni- taries confirmed for the opening including His Majesty Mihai of Romania and the country’s Prime Minister. Given the current climate in Romania,where two casinos in the capital, Casino Paris and Casino Blindel,were recently forced to close, the investment in Sinaia could be seen as some- thing of a gamble. It certainly goes against the trend with the domestic market down to only ten casinos,from the 30 in oper-


ation when it was at its peak.“We have never operated in Romania before,”Menciu explained,“but the manager of our casino has a wealth of experience as the manager of many casinos,includ- ing venues in San Remo and Las Vegas.And of course we took into consideration all the Roman- ian gaming laws when formulat- ing our business plan.” It’s secret is in differentiation.


And as far as easing the swell of foreign players now frequenting nearby casino haunts in Bulgaria and Hungary,and tapping into a tourist area flaunting the biggest skiable vertical in Romania,that business plan could easily prove a blue print for success in Sinaia.


Growth in the Russian market has refused to slow during the last 12 months with many observers pre- dicting this has, in fact,been the biggest boom of all.A total of four 30 plus table opera- tions have opened in the centre of Moscow alone,but it is the many more smaller or slot-only venues springing up that have kept the market at its most buoyant. Business has certainly been


brisk with high levels of investment from the bigger operators matched by some sweet rewards. Michael Boettcher,president and CEO of Storm International which owns famed Moscow venues such as the Shangri-Lai and the Vinso Grand explained: “Since the financial crisis of 1998 there has been a slow improvement which, in the last year, became a rapid


improvement with most properties experiencing record revenues month after month.That trend has settled now but we’re looking for continuing improvement, albeit at a slower rate before levelling out.The time frame of that uniformity is difficult to predict with the ever changing and developing Russian economy but we believe that the future is bright.” But, with Moscow now boasting some 25,000 slot machines and St Petersburg something in the region of 18,000,proposals have been placed before the Duma that may signal harder times ahead, in terms of tougher taxation and perhaps even a clampdown on the actual number of new openings. “There are several new


laws,”Boettcher cautioned, “that are likely to effect the gaming industry on the Duma agenda this coming


year including,inevitably,the raising of gaming taxes,table taxes and the taxes levied on slot machines.There is also a proposal to limit the number of casinos allowed and also for each property to post a substantial bond as well as increasing license fees for both casino and slot opera- tors.As far as we understand, these are just proposals and need to go through the par- liament before being enacted sometime next year.” A sharp increase in taxes


over the last few months has already squeezed the prof- itability out of some small operators and a further hike would probably increase the stronghold of the major players.


Alan Carr,shift manager at the Metilitsa,one of the first and still one of the biggest casinos in Moscow, observed: “Very recently there has been a substantial increase in the taxes that


MGM Mirage longing for London resort


lionsshare UNITED KINGDOM


MGM Mirage, one of the most famous casino names on the international circuit, is hoping to team up with Earls Court and Olympia Group to develop a casino entertainment complex at the Olympia Exhibition Centre in the heart of London.


The US operator wants to trans- form more than 300,000 sq ft of space into an ‘unparalleled venue’ comprising restaurants, retail outlets, entertainment bars and a Las Vegas style casino to be among the ‘first of its kind in Europe.’ The Olympia exhibition hall is located close to Earls Court exhi- bition centre which, of course,


hosts the International Casino Exhibition in January. Terry Lanni, chairman and CEO of MGM Mirage, said: “We’re most excited to be bring- ing our unrivalled knowledge and experience as the world’s leading casino resort operator to support the creation of this new and ambitious entertain- ment complex in the heart of London. Our aim is to produce a dynamic environment that will bring fun and entertainment to the capital, and which will con- tribute significantly to new jobs, investment and tourism.”


FullReport


Olympian challenge europeannews page 14


casino and slot operators have had to pay for each indi- vidual gaming table and slot machine. This will have a greater effect on the mar- ginal,smaller operations that can’t offer the same level of services or options that the bigger operations can.” All casinos also covet the local player business with tourist dollars counting for a very small and largely insignificant percentage of casino action, something which could also contribute to market saturation. “The competition for


players is intense,” Carr explained.“The majority of casinos are professionally run using modern management techniques and technology. Slots operations are no differ- ent; with constant machine upgrades and jackpots to equal those found in Western Europe. “But,” he warned,“with several new casino/slot proj-


ects in the pipeline,the ‘new’ player base isn’t growing at the same rate as the increase in new operations.Some of the newer operations are finding it difficult to attract players away from their usual place of gaming, and while some are struggling along, others have already closed their doors.” Since first arriving in


Moscow in 1991, Boettcher has seen the market evolve more than many.“There have been huge changes,”he said. “The most noticeable is the growth and sophistication of the Russian operators who have learned far quicker than other fledgling casino indus- tries about how to run profes- sional and sophisticated operations.Another massive change is the service area - non-existent in the early days, it is now as good as you will find anywhere.Not in all cases, of course,but then this is still a new business after all.”


Moscow’s Metilitsa casino celebrating 10 years this year. Proposals before the Duma could curb the growth of smaller slot only operations in 2004 with tax hikes kick-starting a survival of the finest


And for a new industry, the Russian sector has cer- tainly set new standards. It now remains to be seen as to whether the new pro- posals will help heighten the quality,whilst maintain- ing a sustainable environ- ment in which to operate. The old adage of milking


the cow dry will be resting on the tip of some tongues, but rumours that American operators, such as Man- dalay Resort Group, are looking to set up on the outskirts of Moscow, and that IGT,the world’s biggest slot manufacturer, has recently re-entered the market, paints a much dif- ferent picture of Russian gaming perhaps entering the next and most crucial stage in its evolution.


GameOn


Russian players take to new games europeannews page 3


Russian casino groups will have time to debate the proposed regulations in the New Year following the voting in of a new State Duma


COINSLOT INTERNA TIONAL COINSLOT INTERNA TIONAL Russian ruling on ice


slowdownslowed RUSSIA


REPORT BY PHIL MARTIN Russian regulations aiming to slow the pace of expansion of street level gaming operations have been held back following the voting in of a new State Duma. The pro-Kremlin United Russia party was pro- pelled to a surprise victory in the State Duma elec- tions in the week preceding the biggest ever Eastern European Leisure Expo. The outcome of the parlia- mentary elections means that President Vladimir Putin now has the two-thirds majority he needs to amend the Russian Constitution. From a gaming perspective, it means that the


proposed legislation which had made it through two stages of the Russian legislative process has been knocked back. This will lead to much debate in the New Year between advocates and opponents of the proposal which would have raised gaming tax and forced many smaller operators or new


street level entrants to reconsider their business plans. The feeling from the exhibition floor at this year’s EELEX was that a diluted version of the pro- posed law would be introduced within the first six months of 2004. While President Putin’s re-election to a second


term is treated as a foregone conclusion, other dilemmas facing the gaming industry in particularly are not as easy to predict.


One exhibitor at EELEX did say however: “There will be a power struggle between the smaller and bigger operators but most people now believe that a watered down version of the law will be approved before the summer. It’s difficult to forecast exactly what the detail will be but the proposed high taxes could wipe out the smaller operator and give the more established, powerful operators an even bigger share of the action. At first we thought this might impact sales, but many smaller operators could join forces to stay in operation and avoid the creation of what in essence would be a monopolis- tic stronghold in the market.”


New Year new confidence in Slovakian sector


After some very testing times for gaming in the central European republic of Slovakia, a group of British ex-pats have set out to transform the fortunes of casinos in the country. Hugh Sorrill finds out how a new venture is aiming to bring back the missing punters from times gone by.


slomotion SLOVAKIA


Bratislava,the capital of Slovakia, is to get a new gaming venue in the New Year with the Regency Casino set to open in the four- star Hotel Forum (pictured),situ- ated on the edge of the old town. The project is a redevelop- ment of the old Forum Casino, one of two struggling casinos bought by an experienced inter- national team that have come together to breathe new life into the casino industry.The other is the Park Casino situated in the city’s main square. The operating company,


Regency Casinos International,is run by Andy Stephens,as director of casino operations,with Mike Hayes and Mark Preston, direc- tors of the Regency and the Park respectively; Gary Wilson is the financial director and Andre van der Merwe and Phil Newby are the directors of surveillance.All these ex-pats worked together for four years managing the Las Vegas and Tropicana casino and combined have more than 100 years’ experience in Europe, Africa,Australia,America and Asia. They will be supported by a man- agement team of Libor Kotlán and Adriana Simonová at the


Regency and Katarina Valterová at The Park. “The Regency name comes


from the eight years I spent with Sun International working at the Wild Coast Sun,” said Andy Stephens.“The casino had a salon privé and another private room called The Regency Club.I spent many happy hours working as a pit boss in that room,so I thought it would be a fitting name for the company.” The new casino is being built in


two phases.The main gaming floor, which will be finished by the end of December 2003,will have six American Roulette,five Blackjack and two progressive Poker tables as well as a mini Punto Banco.The soft opening is sometime in the first half of January with the offi- cial opening in the spring.The salon privé will be finished at the end of January and will start with two American Roulette and two Blackjack tables and a 12-seat Punto Banco, but has enough space to expand later.The whole casino covers 1,200sq m and includes a nightclub with dinner seating for 100 guests.The night- club will have daily entertainment and a full cabaret at weekends and will also show major sporting events on a projector. “We would like to reach a


point where our guests can come, have dinner and a few drinks, enjoy the entertainment then go on to gamble the night away,” said Stephens. “If it becomes successful, we also intend to have international stars performing in the club.The hotel restaurant menu is available for our guests throughout the day and the room service menu in the early hours.”


The casino will start out with 20 slots, all from Aristocrat, although,according to Stephens, the approval process in Slovakia is so protracted that it is unlikely they will be installed until some- time in February.The rest of the gaming equipment is from TCS John Huxley with the cards from Carta Mundi. Roulette bets will start at one euro minimum stake tables up to 25 euros. Blackjack will start at a minimum of two euros up to a maximum of 500 euros,with the highest on 500 to 5,000. Poker has a 5 euros ante and the Punto Banco 10 to 5,000. Gaming will be predominantly in euros but there will be some in the local currency.


Despite an initial boom in gaming in the immediate post communist era, in recent times revenues have been reduced con- siderably.The “Velvet Divorce”of


1993, in which Slovakia peace- fully seceded from its Czech neighbours was always going to be a struggle for the more rural half of the former union. But tourist numbers remain on the increase and it is from rich visi- tors that Regency Casinos expects to find its success. “The Czech republic has expe- rienced a boom in the casino


business - and it has 26 operating now,”said Stephens.“A lot of that has to do with Prague,which does everything for the imagina- tion of a tourist that Bratislava does not - yet. But I have seen Bratislava in the summer for the last three years and it is booming with tourists.” He continued:“Back in the mid to late-90s, business here was good,coming mainly from Austria. Lack of investment in the casinos led to players slowly drifting away and the casino in Znojmo in the Czech Republic and Sopron in Hungary benefited.The fact is that Bratislava is closer to Vienna than either of these destinations. Our first target group,therefore, is the Austrian market.They were


here before and we will bring them back.Second are the tourists and hotel gusts in the city; third are junket groups and finally the local market. I hope guest numbers will rise over the first few months of opening.By the summer I want 150 guests a day during the week, rising to 200 at weekends. I believe this to be a conservative figure.” Whilst any new project in the casino industry represents some- thing of a gamble, Stephens is confident that he will achieve an annual take of Sk60m,which ana- lysts suggest is the minimum needed to survive.Their knowl- edge of the market and collective gaming experiences should cer- tainly bode well for the future.


British tax levels leave US giants ready to put the brake on casino projects


taxingquestions UNITED KINGDOM


US investment and the revolution of the British gaming industry hinges on the government introducing a tax rate of no more than 20 per cent on gaming profits, a move which would effectively slash current gaming duty in half. Lloyd Nathan, managing director of MGM Mirage Development, Europe, believes the current tax rate would be ‘prohibitive’ to the type of large scale development that the government is hoping to see shape the new industry. He highlighted the plight in other juris- dictions where there is a direct relation- ship between ‘a low and stable taxation rate and resultant high investment. The higher the tax, the lower the investment.’ So, has Britain’s Treasury got far to go


in order to lure in the overseas investor? Well, it seems so according to Nathan. It’s a view as blunt as they come: “I can say affirmatively it is too high at the moment.”


Whether that will change is another matter; Britain’s chancellor has a relish for everything prudent. However, holes are beginning to appear in the govern- ment budget and that is not a vote winning policy when re-election time comes around in the next 12-18 months. Whilst gambling deregulation will deliver a major boon financially, Nathan’s concerns are very close to being spot on. It’s a growing viewpoint, particularly in financial quarters, and very Keyne- sian: the money’s great, but only if the investors will spend. And that is the big question. The UK’s taxation landscape at the moment draws large casinos into the 40 per cent tax threshold, although smaller, provincial casinos pay a lower rate depending on their profitability. And Nathan is not a lone voice. His comments follow on from similar senti- ments expressed by Peter George, head of Caesars Entertainment’s (formerly Park Place’s) international operations. He said the company had purposefully held back from following its US rivals as there was a requirement for “several key issues to be determined”, including poli- cies on licensing and duty. “If you are looking to make large investments in resort-style casinos you need to know how the licensing people will approach their jobs,” George said. He suggested that a harmonisation of duty rates for casinos in line with other gambling activities such as betting shops and bingo halls was “the logical outcome” especially given the govern- ment’s desire to open the sector up to the all accommodating gambling emporiums.


‘Britannia’, as the patriotic anthem goes, may claim it ‘rules the waves’, but if the current tax rate doesn’t change there may not be too many investors willing to ride them.


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Lithuania gearing up for table explosion


Three Lithuanian casinos are already in operation since gaming was legalised in July last year. But is that it? Phil Martin reports on how amendments to that law could open up the live gaming market even more.


tablemanners LITHUANIA


New gaming laws have been unveiled in Lithuania which could steer the ex-Soviet state towards an explosion in tradi- tional casino style gaming. The legislative framework


cuts across both operational and playing fields of the gaming sector. In the mainstream,the authorities have sought to draw a clear line for the gaming sector with its primary directive declar- ing that only operators with full casino licences are able to operate slot machines with unlimited jackpots. The new laws have also estab- lished machine guidelines with the minimum number of machines in a slot hall now set at ten.On the taxation front,the amount of tax that slot only operators have to pay has been slashed with the hope that the market will now open up to smaller companies. For the player,efforts have been made to bring pay-outs into step with the maximum pay-out for cate- gory B machines in slot parlours now set at LTL 200,with the maximum stake being LT 1. With the ink barely dry on


the recently passed legislation, many quarters of the Lithuanian gaming industry are eagerly assessing the prospects of a dra- matically changing landscape. None,however,can escape


the fact that the jewel in the Lithuanian gaming crown,the


unlimited jackpot, has been given to the casinos. And here lies the divide: whilst opening the doors to a more prosperous gaming envi- ronment, there are certainly those far less enthused by this particular revision.Leading the anti-group are the slot parlours who have lost the ability to operate machines with unlim- ited jackpots.This move,accord- ing to many domestic analysts, could force slot parlours across the country to upgrade to a casino licence or lose out on their current investment as it is now illegal for companies to sell used machines in Lithuania. Indeed,for some this change


in the law marks a financial disas- ter.Audingas Matulevicius,direc- tor of slot machine firm Unigames,has recently bought 60 high pay-out machines. He had hoped to open three


arcades in the summer but under the new legislation his licence won’t allow him to use the unlimited payout machines or even to sell them.He criti- cised the changes saying it was impossible to make any busi- ness predictions as the laws could always change again. The minimum number of


tables in a Lithuanian casino is now three, with at least one having to be roulette,whilst the minimum number of category A,unlimited jackpot machines has been set at 30. Further good news for full casino operators comes with


the announcement that table games can now connect to pro- gressive jackpots. A spokesperson for one of the biggest suppliers of slot machines into Lithuania said: “The new law will encourage the use of AWPs in the gaming halls and make it very difficult for casino machines to be oper- ated in gaming halls.The gaming halls currently open with casino slot machines will have to either upgrade to a casino licence by adding tables, and of course paying the authorised capital, or replace their machines with those approved for Type B.” Inga Cesnakiene,director of Lithuania’s first legal casino,the Nese Casino,said most of the amendments were welcomed by her company. “Everything is going well for us at the moment,” she explained.“In fact following the new laws we are planing to move our casino with its gam- bling machines to a new build- ing,the old bank building,in Klaipeda city centre.We hope to do this within the next six months and believe it will become the new entertainment centre for the city with bars, restaurants, a disco and of course the casino.” The ban on gambling in Lithuania,a member of the Baltic States,was lifted in July last year in a move which gave birth to three full casinos,The Nese, Casino Planet and most recently the Poker Vegas.


Playboy founder and editor-in-chief Hugh Hefner poses with a few friends at the official unveiling of the Playboy series of slot machines from Bally Gaming at the Playboy Mansion in Los Angeles. Hefner joined a large gathering of Wall Street executives and casino operators on the eve of the Global Gaming Expo, held in Las Vegas, where the slots were to make their full industry debut. G2E Review Page 10.


In search of common ground


The unification of European gaming could be closer than most think, if the latest signs from changing legislation are anything to go by.


unifyingeurope EUROPE


The belief that European gaming jurisdictions should become more unified seems to be taking hold with more and more governments across Europe looking to appoint one gaming board to oversee gaming and betting at all levels. One particular sector reflecting this mood of uni-


Bepi Mottes: welcomes commonality of legislative frameworks.


formity is the regulation of machine gaming where a growing number of govern- ments have adopted a clas- sication policy. Machine gaming is, in many coun- tries, now being regulated at three levels with classifi- cations of unlimited,limited and no payout becoming the accepted norm and giving rise to laws for casino jackpots, over 18 slot halls and video or amusement only arcades. Holland, the United Kingdom, Belgium, Slove- nia, Malta, Lithuania and Denmark have all made their position known and other countries such as Italy, Bulgaria and Russia are believed to be close to making similar moves. Whilst it will take some


time for Europe to shed its patchwork quilt of legisla- tion, many believe that the one gaming board stance currently being taken in several jurisdictions marks the beginning of the move to a more standardised approach to gaming in Europe.


Bepi Mottes, chairman of the European Gaming Organisation, said: “EGO has promoted the idea of co-operation regarding leg- islation for some time and has been active in advising some governments on the formulation of new legisla- tion.The change will take many years and EGO will be escalating its presence in promoting a commonality of legislative frameworks during the coming year.”


A rumour circulating the casino industry that Paris was about to open up to gaming remains just that, much to the disappointment of operators and slot suppliers in France.


Paris remains on the edge of casinos


Paris is not about to open the floodgates to casino style gaming despite the hopes of several sources in the casino industry. Instead, the French capital remains firmly rooted at the top of every French opera- tor’s wish list.


As the law stands today, and indeed for sometime to come it seems, casinos are permitted in


tourist resort type towns, and more recently in major cities such as Lyon, Bordeaux, Lille, Toulouse, Marseille. Out of these, so far casinos are only operational in Lyon and Bor- deaux. In the French capital, in the region of a dozen private member Cercles de Jeu clubs exist,but there is still no provi- sion for commercial casinos.


Accor’s David Marshall explained: “This ruling dates back to the early 20th century, when casinos were authorised as something for the well to do people. To keep the Parisian workers away from casinos, it was established that casinos were not permitted within a day’s horse ride (100kms) of Paris - and so it stays. Even then, the


poor were only really allowed to play Boule at the entry to the casino and the posh people paid to go inside the casino. “The nearest casino to Paris,” he added, “was originally Forges-les-Eaux at 101kms away. Later, a casino was per- mitted at Enghein, a thermal resort then just outside Paris and now effectively a suburb of


Paris. This, obviously, has the biggest tables action in France and has just recently been granted 100 slots which are packed day and night. Casinos or a casino will eventually be permitted in Paris, but not just yet,” he added. The French revolution, in gaming at least, remains unable to breakdown the gates to Paris.


A casino brand, completely new to Europe,was recently unleashed on the British gaming public but,despite its novelty,it was still a name instantly recognisable all over the world. The Hard Rock Casino opened its doors in Man- chester at the end of July in a blaze of publicity.Located in the Printworks leisure and retail complex - the fast developing ‘in place’ in the


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worldnews page 8 Celebrity Slots: Stars bring celebrity status en route to gaming show Coinslot’s monthly analysis of the European casino market


Moscow set for bigger and better EELEX europeannews page 3


Rocking all over


rockbrand GREAT BRITAIN


north west city - it set out to deliver gaming to the masses and position itself both phys- ically and mentally along- side other mainstream leisure pursuits. As the first Hard Rock Casino in Europe, it was a much-celebrated event,but this month a second Hard Rock Casino is opening in the heart of London’s West End, possibly to even greater acclaim. “We’re expecting big things from the London venue,” said David Boden, managing director of Rank Gaming, the group which owns Hard Rock and the Grosvenor chain of casinos. “It will benefit from a high profile location in Leicester Square feeding off the bars, restaurants, cinemas and numerous other casinos in the area.”


The whole ethos of trans-


ferring the Hard Rock brand to the gaming floor was to make the casino more acces- sible to a new younger adult audience.Following a higher volume,lower spend model, the Manchester experience certainly points towards a high degree of success.


the world? “Conceptually we’re very


happy with the Hard Rock in Manchester, the member- ship numbers are superb and the customer feedback has not just been positive but very


positive,” Boden


explained.“From the point of view of age profile,we have an average age which is about ten years younger than that for your average provin- cial casino.This is exactly the age group that we wanted to deliver the Hard Rock to.The male/female split is slightly better too.The music theme delivers something that people already recognise and feel a part of and helps to remove any potential intimidation of going to the casino for the first time,” he added.


Music is also one of the


few aspects of leisure that can transcend anything, covering the whole spec- trum of age groups, and Hard Rock memorabilia covers bands that have been around for 40 years alongside some more con- temporary collections. The fact that weekends


are twice as busy at Man- chester’s Hard Rock than


Jackpots to slot into Bel


The Belgian casino industry is head seen since France updated its slot breakthrough could be as early as n


timeslot BELGIUM


The Belgian Gaming Commission is hoping to make key progress in its efforts to introduce slot machines into the country’s eight privately owned casinos within the next year. Belgium has just undergone the


rigorous administrative task of ensuring that everyone working in a casino or arcade is qualified to hold a D licence. It is now looking at defin- ing an appropriate ICT system for casinos and arcades and is screen-


ing the file venues w expected to duction befo The comm


laere said o machines in “Our target 2003. The ca install ten slo per ‘opened Casinos


to eight sp resorts, alt expected t


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Eastward ho!


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French landscape set for change as figures hit record levels


Buoyant after recording its best ever gaming results, the French sector is now rife with new year speculation that a fusion between two of its leading operators would lead to the formation of not only its dominant domestic casino group, but one of the biggest operators in Europe. Phil Martin reports.


twoscompany FRANCE


If sources in the French media ring true,Accor Casinos and Groupe Lucien Barrière could be about to join forces to make one of the most powerful operational forces in European gaming.


Discussions between the two,which follow


confirmation of a 3.68 per cent growth in French gross gaming profits in 2003, are cur- rently taking place behind closed doors. Negotiations are believed to have been ongoing for several weeks with a February announcement reported as being a distinct possibility. French newspaper reports state that a link up between Accor and Barrière would give birth to the French casino leader with a domes- tic market share close to 30 per cent compared with 29 per cent for the Groupe Partouche. Accor currently owns 17 casinos in France


with three more to open in 2004.It also oper- ates two venues in Switzerland and one in Belgium and Malta.Barrière,meanwhile,owns 14 casinos including the prestigious venues in Cannes, Deauville, Biarritz and the top earning casino in France once more Enghien- les-Bains.As the closest thermal site to Paris at just 14 km from the Champs-Elysées,Enghien was an obvious front runner in the industry’s 2003 accolades.For long the top earning table casino,the Barrière venue claimed the overall title in 2002 due to the installation of 150 slots.The addition of 130 more in 2003 saw profits soar past 100m euros, a level never before achieved by a French casino. Is that strong fuel for the speculation? Well, some analysts are seeing Barrière as the aggres- sor, valuing Accor at 560m euros, based on how much Partouche paid for Européenne de Casino in 2002 and as a ratio of the two group’s operating profits. French newspaper Les Echos reports that if


Accor,who recorded 300m euros in turnover in 2003,does not intend ‘to leave’ the casino industry it would see its holding reduced in the new company. On the flip side, the Barrière group would undoubtedly bring added prestige to Accor Casinos which is keen to expand, has the backing of US investor Colony Capital and will still be smarting after losing out in the race for Européenne de Casino to Partouche. Barrière would bring the SCHD,Société of the hotels and casinos of Deauville (casinos of Deauville,Trouville and Menton), in which Accor has already 34.9 per cent,as well as the


Business was up at Casino Ruhl, the jewel in Accor’s crown, which fourth in the French


league table, but all the talk in 2004 has been of takeover bids and mergers. Who’s


courting who remains to be seen


ICE welcomes new heights in tenth year


topten UNITED KINGDOM


The International Casino Exhibitio age in its tenth year with a new h providing more space and attract exhibitors and visitors than ever b A record-high 7,322 unique c gaming industry professionals p through the doors of Earls Cour January, a 14.6 per cent increas previous year’s figure.


Overall participation in ICE wa boosted with 10,453 visitors regis ICE’s soft gaming and amusemen


The consolidation of the French market has continued with the news that Accor and Lucien Barrière have wanted to joined forces in a deal which many believe has brought a new order not only to the French sector but also to Europe. Phil Martin found out more.


SHCLB,the hotel company of the chain Lucien Barrière to the deal. But it is understood that the agreement in the leasing of the municipal casino of Cannes, in which Partouche holds 15.5 per cent, would render that casino defunct in any deal with Accor. Some observers,meanwhile,are suggesting


a merger and the creation of a common company where Barrière would hold 51 per cent of the new structure and Accor 49 per cent. Such reports are speculating that Bar- rière boss Domenica Desseigne would take the presidency of the new company,but that the operational reins would be entrusted to Sven Boinet,of ex-Accor fame. Others see a split where Barrière family


would take 51 per cent,Accor 34 per cent and 15 per cent being accounted for by Colony Capital,Accor’s investment partner, who would bring 100m euros to the new entity. Further consolidation of the sector seems


inevitable but exactly who is holding the winning hand in this deal remains to be seen. What is evident,though,is the stability of the French sector.The 2002/03 season for the 180


casinos in France was marked by a new record, with a gross gaming profit of 2.546bn euros,up 3.68 per cent in comparison with 2001/02. This increase came with four extra casinos,


though,and a greater dependence on machine gaming than ever before.The overall market is beginning to plateau with the growth of 7.81 per cent last time round slowing to less than half that pace during 2003.The slots contin- ued to produce some spectacular statistics such as those at the Saint-Julien-en-Genevoix where profits soared by a massive 3,495 per cent on their introduction. But with a general levelling off in the


increase in profits and new licence opportu- nities set to saturate, some suggest that the boom time could be coming to a halt.The growth in previous years,which had to slow eventually, has still yielded not only hand- some casino returns for many but also some of the most powerful boardrooms in Europe, just how powerful should be revealed in the coming weeks.


Frenchresults businessnews page 47


New Barrière brand aspiring to lead Europe


neworder FRANCE


One of Europe’s most power- ful operating forces is going to be formed following an agreement to combine the casinos of French based oper- ators Lucien Barrière and Accor Casinos. The deal, also involving


Colony Capital who own half of Accor Casinos, is still subject to certain conditions precedent, in particular approval by the antitrust authorities and the casino supervisory authorities. It is not yet known how the


operations will be consoli- dated,but the transaction will take the form of an acquisition by Groupe Lucien Barrière of the outstanding shares of Société des Hôtels et Casino de Deauville (SHCD) and Accor Casinos currently held by the Barrière Desseigne family, Accor and Colony Capital. On completion, the


Groupe Lucien Barrière will simplify the shareholding structure, with the Barrière Desseigne family holding 51 per cent in the group,Accor 34 per cent and Colony Capital 15 per cent.


Dominique Desseigne will be appointed chairman of the Supervisory Board with specific additional powers, Benjamin Cohen will be vice chairman whilst Sven Boinet will chair the management board. Joel Mingasson,chairman of the management board of Accor Casinos, explained that


the aim of the new partner- ship is to create a group with a strong position in the Euro- pean casino sector. “The decision to merge our


operations was taken as we await some exciting develop- ments in European gaming and it leaves us in an ideal posi- tion to expand. Everyone involved is delighted with this deal as it brings so many ben- efits for each party involved,” he explained.“We believe we have


created the largest


casino player in Europe in terms of revenue, and if you consider results from the last exercise, the new group would be leading the sector, ahead of some very highly acclaimed names.” The newly formed group will operate 37 casinos,with close to 5,000 slot machines. Whilst negotiations for this


particular deal have been ongoing for the last six months,Accor and Barrière have held something of an entwined history for the last 15 years, namely through the shared ownership of SHCD, the main company of Lucien Barriere Group and the prede- cessor of Accor Casinos, the S.P.IC.Group. “There are many similari-


ties already between the two networks of casinos and how they are run,” Mingasson explained.“There are also many examples of manage- ment having worked for both companies and so the opera- tional styles are very similar. The only real difference is the Barrière philosophy of the


casino being part of an overall resort with luxury hotels and spas,but both groups operate some beautiful and very suc- cessful casinos.” There will be some changes


though.Groupe Lucien Bar- rière will,for example,acquire the ‘Lucien Barrière’ brand from the Barrière Desseigne family and will license the use of the brand to numbers of casinos and hotels within the group, meaning it will be the Barrière brand name driving the group forward. The message from the new


board is that the new group will ‘combine the respective strengths of the Groupe Lucien Barrière and Accor,in the com- mercial, industrial and finan- cial areas to attract new clients, improve the profitability of the group and continue the consolidation of the casino sector in Europe’. Whilst the exact expansion details will have to wait,Accor Casinos’ international opera- tions director David Marshall did reveal that certain markets in western Europe were par- ticularly appealing.“There are two big licences yet to be ful- filled in France with Toulouse and Lille,but with 182 casinos, the domestic market is close to saturation,”he explained.“I think every international oper- ator in Europe would be inter- ested in the Brussels licence as it is one of the last remaining European capitals without a casino. It’s also no secret that Accor is keeping an eye on developments in the UK, although I have to add that any


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Are closed doors killing Portuguese table play? EUROPEANNEWS2


A new casino and football fever raises a Croatian smile EUROPEANNEWS8


Tables keep Spanish figures moving in the right direction BUSINESSNEWS39


The Upper House of the Swiss parliament has made important reforms to the country’s four-year-old casino legislation in an attempt to create a more level playing field for casinos with B-licences. Hugh Sorrill reports.


Immediate reform to Swiss casino regulations


eveningout SWITZERLAND


PAM UPS THE ANTE FOR BALLY’S PLAYBOY LICENCE Pamela Anderson helps launch a new range for Bally in Las Vegas. Full 18 page G2e report inside


No reprise for small operators with British Bill


nochange UNITED KINGDOM


Report by Phil Martin Following a torrid fortnight of media backlash and misinformation, the British gambling sector was finally presented with the basis for its new Bill with there being little change from the government’s stance in its draft paper.


Whilst opening up the sector to large


scale ‘regional’ developments with 1,250 unlimited jackpot machines, the UK gov- ernment’s reluctance to backtrack on cat- egory A entitlement means that the big issue for many existing, smaller British based operators remains stakes and prizes for category B machines and, of course, levels of taxation. The bill outlined four sub-categories of category B machine with casinos given the top band, which at £1 maximum stake, £2,000 maximum jackpot, remain currently unchanged. To many existing operators, an increase in category B jackpot is crucial to their survival, although the bill does state ‘stakes and prizes proposed for all categories of gaming machines are purely provisional, and will be subject to further consideration prior to the


implementation of the Gambling Act.’ The Department for Culture Media and Sport offered some words of consolation to smaller operators in its risk assess- ment report. “Overseas experience shows that only a small proportion of machines offer prizes of over £2,000 or stakes of over £1, even where unlimited prizes and stakes are permitted. Hence, the disadvantage for small and large casinos may be less in reality than appears at first sight,” it said. But this will do little to appease those fighting for an even spread of the unlimited jackpots. The last few months have seen over 100 outlined projects for casino develop- ment in the UK, many of them of regional significance, but in reality it is unlikely that more than 20 to 30 will see the light of day. Culture secretary Tessa Jowell said that the government would even shut down Las Vegas style casinos if ‘impact tests’ conducted every three years proves there to be a rise in problem gam- bling. “The Gambling Bill is not about printing pounds for casinos. I’m very con- cerned that we don’t see an increase in problem gambling,” she said. The government is hoping for Royal Ascent for the Bill in mid 2005.


Dramatic reforms to Swiss gaming laws allowing B-Casinos to offer a much more attractive gaming experience have received a mix response from the industry.While the changes meet the absolute minimum asked for by B-Casinos, they have nonetheless displeased operators of A-Casinos, also known as Grand Casinos,which foresee increased competition. The new regulations, which come into force on November 1, see the maximum stake that B- Casinos can offer rise from 5 to 25 Swiss francs;correspondingly, the maximum prize rises from 5,000 to 25,000 francs.A-licence casinos by contrast have no restrictions in stakes or prizes. “While I think that the changes will help to equalise the frame- work a bit, we’re very disap- pointed that they did not increase the maximum jackpot from 100,000 to 250,000 francs,” said Jean-Claude Frings, casino direc- tor at St Moritz,which holds a B- licence,in the Kempinski Grand Hotel.“That would have been a real attraction for us to offer.” Casino St Moritz will be putting the changes into effect when it re-opens for the winter season at the start of December. “We will not apply the new


maximum across the board,”said Frings.“We will pick out 25 of the most popular machines and make them maximum stake, then make another 20 or so 10- franc machines leaving the remainder at 5 francs.” The economics of operating a B-Casino in a mountain area mean that the increase in stake and prize maximums will not have much of an effect on the drop, he added. “For eight months of the year,we are essen- tially a local casino and the local population will not spend much more than they already do. But we will pay the higher wins,so in fact it means more risk for us.” The tax regimes have also


been brought into line.Casinos in Switzerland pay tax on Gross Gaming Revenue (GGR) on a scale that rises when certain thresholds have been reached. Under the new regulations, the tax on GGR is 40 per cent up to 20m Swiss francs for A-Casinos and 10m for B-Casinos,with the rate rising by half a percentage point for each further 1m francs. This represents an important boost for B-casinos,which until now have seen the rate rise by a full percentage point for each further 1m francs. “Our taxes were halved last


year,which was good,and under the terms of the law,we will also have this tax break in 2005,”


said Frings.“But from 2006, there will probably not be a tax break.We know at least that we will be safe until then.” The legislation that differen- tiated between A- and B- licences came into force in April, 2000. Since the first casinos opened in 2002,some B-licensed establishments, par- ticularly in the mountainous tourist areas,have struggled to make a go of it:indeed,those in Arosa and Zermatt have been forced to close their doors. “Three to four months of the


year we make good money, but over the other eight months that we operate, it’s difficult to make ends meet,” said Frings.“We’re having to adapt to the situation all the time and that tends to mean staff cuts.When we started,we employed 45 people in the peak season; now we have reduced that to 36, with a number of people on three-month con- tracts. In summer 2003, we employed 28 people;this year we got down to 20.It’s the only way for us to survive. “There used to be five moun- tain casinos,”he continued,“but now there are only three left. And I think that might soon be only two. St Moritz is safe: although it is a challenge,it is not an impossible situation and this is a prestige project that the company is willing to support.”


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Raising standards are hitting the Jackpot in


Russia? EUROPEANNEWS2


Party time outside Storm’s Shangri La Casino. Slot popularity is continuing to drive sales with over 10,000 visitors expected at this year’s EELEX


Will New York go down a Storm in


Moscow? EUROPEANNEWS3


Opportunity could soon come knocking in the UK. But


for who? FOCUS30


A cap introduced to limit regional casinos to eight might see Britain’s new Gambling Bill passed with a little less controversy for those outside the industry, but for those operators hoping to benefit, the debate over the ramifications show no signs of subsiding. Phil Martin asks, is eight great or does eight grate?


Great British race is on for eight ‘regional’ casinos


aftereights UNITED KINDOM


EELEX looking forward to 10,000 visitors


1,000’sand1,000’s RUSSIA


Unicum Group, the organisers of EELEX, Eastern Europe’s pre- eminent gaming show, has said that market demand has once again forced back exhibition walls and increased floor space at this year’s Russian show. This year all three halls in the Expocentr Pavilion 2 will be used for the first time, with more than 200 companies exhibiting. Taking place from December 14 to 16, the amazing demand for gaming product in Russia, Ukraine and several other booming areas in the East, has forced Unicom to cater for an extra 36 stands.


The international scope of the show or, indeed, the appeal of eastern Europe to the international supply force, is under no doubt with exhibitors from 21 countries now taking part. Suppliers from outside of Russia account for over 50 per cent of the EELEX exhibitors with IGT joining the massed ranks of big


name manufacturers. EELEX’s organisers anticipate that the visitor flow will bring over 10,000 visitors. A spokesperson for the event revealed: “The largest percentage of visitors come from Moscow, the Moscow region and Russia, followed by representatives from the Baltic states, Eastern Europe and other countries. It is almost a must for an industrial trade show to have a supporting conference. For many years the Russian Gaming Business Development Association has organised a one day conference which will this year be held on December 15, covering the most important issues in the Russian gaming industry. The EELEX 2004 conference programme will feature legitimate issues and analysis of the latest development of the gaming business in Russia. The second conference event is a round-table talk consulting in the gaming industry, hosted by Unicum Group of Companies.”


With only eight initial projects to see the light of day,well over 100 applications to operate in the ‘liberalised’ British casino sector will soon be gathering dust,filed away in folders headed ‘what might have been’. Whilst eight regional sized


developments and10,000 unlim- ited jackpot slots will still provide a significant jump in market size for manufacturers and players, many operators will now have to refocus their sights for the lure of the next new promised land. The UK government’s deci-


sion,which follows a public and parliamentary outcry and a media backlash over the prospect of increased problem gambling,has driven a knife through the collec- tive casino industry. Many are now warning that imposing the cap on the largest of operations will have an adverse effect on what the government is actually hoping to achieve. Lloyd Nathan,the managing


director of Europe for MGM Mirage,warned:“I am assuming that by capping regional casinos, [the government] would cap the number of smaller casinos as well. If they do not, it will be a very brave operator that would invest £150m to £250m in that environment.” At this stage nothing has been mentioned of a further cap on the middle tier of ‘large’ casinos, apart from the size restrictions. As well as greatly reducing invest- ment,job creation and the scope for regenerative benefits,Nathan predicted a cap would produce ‘a proliferation of smaller casinos’,with £2,000 jackpot machines giving similar prob- lems to the Australian model. Peter Byrne, executive direc- tor of Sun International,which owns the Sun City resort in South Africa, also believed a statutory cap would defeat the government’s aims of limiting


problem gambling, as smaller casinos would spring up ‘on every high street’ following the changes to legislation. “Our concern is that if there


is going to be a cap we are going to get proliferation,”he said.“A raft of small and medium-sized casinos will spring up every- where.That would be the oppo- site of what the government is trying to do.” With regional casinos


expected to cost about £150m to £250m to build, the benefits to local communities of job creation would ‘disappear’,he added. Many areas expected to miss out on the biggest of venues, including Great Yarmouth, Brighton and Coventry,are now having to rethink their regener- ative plans. One developer,Peter Jay,had


proposals to build in Great Yarmouth but he said he now thought the town was effectively out of the race.He said he would like to have seen the govern- ment target British coastal resorts including Yarmouth, Torquay, Scarborough and Skeg- ness, where regeneration was vital.He was, though,optimistic enough to predict that Yarmouth would benefit from the planned second tier of casinos.


In Coventry building work is


already underway for Coventry City’s new football arena which was to be part funded by a regional casino developed by US operator Isle of Capri. Paul Fletcher,the chief execu-


tive of Arena Coventry, the company set up to manage the Arena development, remained optimistic. He said that one of many advantages for the scheme was that it was the only project in the country where construc- tion had actually started. He believes the casino would


tick all the governmental boxes as it was part of a regeneration scheme as well as a larger leisure complex,and was well located. But Coventry MP Bob Ainsworth said he was sceptical that Coven- try would be included in the first wave of regional casinos. Existing UK operators had


been fearing that the uneven introduction of category A machines could wipe out their existing small and large casinos. One UK operator,who didn’t wish to be named,said:“Our con- cerns about the legislation as it stood were fully justified.The DCMS cocked it up by trying to deliver an American solution to a British industry.Their solution would have led to a proliferation


of both regional casinos and Cat- egory A machines which nobody in the UK industry wants for both competitive reasons and also because it is socially irresponsi- ble.Thus the idea of a cap on both sites and Category A numbers is welcomed by almost everyone other than the American opera- tors. However we do need a better limit for Category B machines and also a triennial review for Category C machines.” Favoured locations are under- stood to include the Millennium Dome in Greenwich,Wembley Stadium in North London,Sport City in East Manchester and the Leeds United football ground,as well as possibly Blackpool and Glasgow,but it remains to be seen where the lucky few will end up. With claims that a ‘carefully


orchestrated campaign of misin- formation’ led to the cap, it will now be interesting to see what is written about the potential for proliferation of the middle tier of casino with 150 Category B slots casinos,which have no required mandate for regeneration. It will be 2008 at least before govern- ment reassess its decision to cap at eight, by which time the UK casino sector will have taken on a completely different guise to the one it upholds today.


Czech mate: industry leads calls for stronger


controls EUROPEANNEWS16


Brit bill


now needs a ‘miracle’


miracleworker UNITED KINGDOM


Britain’s increasingly unpopular Gambling Bill is in danger of being shunted off its political tracks and could be derailed altogether unless there are further significant climbdowns by ministers. With a general election scheduled for early May and only a few weeks to get the Bill approved in the Lords, Conser- vative shadow culture secretary Malcolm Moss has said that only a ‘miracle’ would see the Bill passed in time. He said the government had gone down ‘something of a cul- de-sac’ and had created a bill that ‘almost nobody wants.’ Claims by Derek Jeffrey, the chief executive of the British Casino Association, that govern- ment ministers, including Lord McIntosh and Richard Caborn, were ‘considering dropping the casino elements of the Bill in order to get it passed,’ were dis- missed by a spokesman for the department for culture, media and sport. “Anyone who is looking at this realises time is tight and it is possible it will run out of time before May elec- tions,” Jeffery warned. This 8:8:8 cap for the three


different tiers of proposed casinos has caused uproar amongst existing operators, who have also now been effectively told there will be a fourth cate- gory of casino, those smaller than the small definition, which won’t be allowed more than the existing 10 category B machines. If the bill does go through it will be the end of 2006 before anything is finalised concern- ing where the new casinos will be housed. A government-appointed panel will produce a shortlist of recommended locations for each category of style casino although the task will not be completed for another two years. The depressing time scale will then see local authorities in these areas invite applications to tender from gaming operators, who will compete for the chance to develop the licences. Existing operators are believed to have welcomed the prospect of the bill being shunned into the next parliament, with the hope that different minis- ters would prove more sympa- thetic to British companies.


Russia returns to gaming as usual, but the question is for


how long? EUROPEANNEWS22


All eyes are on London and ICE 2005. So, what will the highlights


be? ICEPREVIEW34


Following a three pronged approval by the EU competition authorities, France’s Directorate General for Competition, Consumer Affairs and Fraud Control (DGCCRF) and the guardianship judge, Groupe Lucien Barrière SAS has now officially become European gaming’s ‘numéro un’. Phil Martin reports on how with a 100m euros cash injection, a 500m euros loan and two 50m euros lines of credit, the new group is not only hoping to retain pole position but disappear over the horizon.


New European


Les Princes casino in Cannes: One of Groupe Lucien Barrière’s most recent openings


Moliflor go tapping into Spanish


market EUROPEANNEWS2


London shows its worldwide


pulling power ICE2005REPORT18


At 81, there seems no stopping


Len Ainsworth SUPPLIERNEWS42


powerhouse backed to the tune of 700m euros


and developed with talent and enthusiasm by my father-in- law Lucien Barrière and my wife Diane.


“I am convinced that the


givingcredit FRANCE


With the ink now dry on a deal which took almost a year to approve, the start of 2005 has given way to the creation of a new powerhouse in European gaming. The newly formed Groupe Lucien Barrière SAS has not only overtaken Partouche as the most powerful group in the French sector,but also now sees itself as leading the way in Europe in terms of the rev- enues that it generates. Combining the casino and hotel assets of Société Hôtelière de la Chaîne Lucien Barrière (SHCLB),Société des Hôtels et Casino de Deauville (SHCD),Accor Casinos, and their respective subsidiaries, Groupe Lucien Barrière SAS commands annual revenues of around 1bn euros. It operates 37 casinos


including Deauville, Enghien, La Baule,Montreux,Bordeaux, Biarritz, Nice, as well as 13 luxury hotels and a substantial restaurant business, including Fouquet’s on the Champs-


Elysées in Paris. Barrière will continue to be


majority-owned by the Des- seigne-Barrière Family,which owns 51 per cent of the new company.Accor owns 34 per cent and Colony Capital 15.In addition to its equity interest, Colony Capital has subscribed, via the Colyzeo European investment fund,100m euros in bonds issued by the new company to strengthen its balance sheet. But there is plenty more backing up the new entity as the supervisory board has approved a 550m euros syndicated loan and two 50m euros lines of credit from Société Générale, lead arranger and the traditional banker to the Desseigne-Bar- rière Family, and from BNP Paribas.The funds will be used to refinance the new company’s debt and to support its planned expansion in Europe. Chairman Dominique Des- seigne said: “I wanted the family-owned Groupe Lucien Barrière to enter a new phase in its history,backed by Accor, our steadfast partner since


1990, and its partner Colony. This alliance has been carried out in the interest of all our shareholders. For many years to come,my family will remain the majority owners of Groupe Lucien Barrière, which was founded by François-André


management board, in liaison with the strategy committee, will successfully pursue our harmonious development and the sustained improvement in our productivity,”he added. Sébastien Bazin, principal and managing director of Colony Capital’s European arm, added:“This excellent transaction has stepped up our participation in consoli- dating the European casinos industry, a strategic commit- ment undertaken in 2002 with our acquisition of a 50 per cent stake in Accor Casinos.The quality of the executives and of our partners, as well as the financial resources being com- mitted,will guarantee Groupe Lucien Barrière’s success in the European marketplace over the long term.” “By combining the recog-


nised expertise of Groupe Barrière and Accor Casinos,” added Jean-Marc Espalioux, chairman and CEO of the Accor management board, “the new company intends to position itself as a Euro- pean leader in an industry that is in the process of con- solidating.Accor will actively contribute to the company’s development and is fully con- fident in its potential for cre- ating value.” The ‘Lucien Barrière’brand


will now be licensed to all the casinos and hotels in the group,on terms set by an inde- pendent valuation, meaning the end of the Accor Casinos brand. From there on in,Groupe Lucien Barrière says it will ‘fully leverage its sharehold- ers’ expertise in marketing, operations and finance to attract new customers, improve its profitability and pursue the consolidation of the European casino industry.’


Brits launch media campaign to derail ‘killer bill’


In stark contrast to its initial promise, the government’s dramatic casino shift has left the existing UK industry with little to gain and the dream of a golden era has turned overnight into a nightmare vision of all-consuming foreign competition. Step forward then the BCA with its ‘Bill Will Kill’ campaign. Phil Martin reports.


billwillkill UNITED KINGDOM


The latest attempt to derail the government’s Gambling Bill has now hit the UK’s national papers with members of the British Casino Association, those who at one stage stood to gain so much,making their feel- ings known on the impact of ‘unfair’ foreigner-friendly re- regulation,which could force many existing players out of business.


The campaign has done little to effect the passage of the Bill this far however,with Lord McIntosh,minister for media, culture and sport, announcing only slight changes to the casino section of the government bill in its second reading last week. These minor changes amounted to a tightening on the ban of the use of credit cards in casinos to buy chips and the prohibition on gam- bling premises offering opportunities to bet on Christmas Day. The BCA’s PR campaign,


overseen by London-based firm M Communications,has been relatively high profile seeing a series of provocative advertisements in the national print media based on the premise that ‘the bill will kill.’


The campaign has also seen the launch of a website, www.thebillwillkill.com, based on its slogan and a series of high profile broad- cast interviews with cover- age kicking off on BBC radio programmes such


as


Weekend Business,Wake up to money and the all-power- ful Today Programme. Speaking on Weekend Busi-


ness,Roy Ramm director at London Clubs International, punched hard:“First of all,this


Bill was going to be about deregulation, then it was going to be about regenera- tion.But here we are now with nothing in it for the UK indus- try and the government talking bizarrely about some kind of experiment,some kind of test to see what the impact of their new regime will be. The new regime proposes 10,000 of the Category A machines,those described by government as the most dan- gerous gambling machines,in eight regional casinos, but nothing, absolutely nothing for the 136 casinos which have been operated success- fully by the major British oper- ators for more than 30 years. We’re completely excluded from it.”


Ramm added that whilst UK companies could bid against ‘cash rich’ foreigners for one of the licences,if they succeeded the uneven machine spread would mean that they would effectively be competing against one of their smaller casinos and steal- ing its business. “We’re also concerned


about what the government is saying about our cus- tomers,”he added.“The indus- try has 1.5m customers


Existing UK casinos are demanding a level playing field


making 11m visits to our casinos a year.Why can’t they be trusted to behave sensibly in the casinos that they have been going to for the last 30 years.The industry supports about 95 per cent of this bill but we have been trying unsuccessfully to get the gov- ernment to look at some of the matters that need to be changed, but they have ignored us.The only way we can get their attention, it seems,is to launch this cam- paign with a series of adverts in the newspapers explain- ing to the public and the gov- ernment quite clearly what it is we want and asking why they won’t talk to us.The gov- ernment has time to change this and really should if they care about British industry.” Rank’s head of gaming, David Boden,spoke on Wake up to Money, adding:“We’ve supported the progress of this Gambling Bill for a number of years now but there are certain areas within that bill that don’t provide an equal opportunity for exist- ing UK gambling operators particularly with regards to large jackpot slot machines. The new legislation only applies to the 24 new casinos.


The industry employs about 12,500 people and clearly if a casino operator has a com- petitor open next door who can offer a much wider range of gambling facility and enter- tainment,then the existing casino will be under extreme pressure to maintain its level of business and may in fact go out of business.We don’t fear competition but give us an equal opportunity to let us all compete on a level playing field.We don’t want an advan- tage just an equal opportu- nity for all.”


Neil Goulden,chief execu-


tive of the Gala Group, has gone further, accusing the government of losing the plot over its u-turn.“It will be like tying our hands behind our backs and asking us to fight Mike Tyson,”he said.“It’s no surprise that when the gov- ernment’s amendments were made, shares in quoted US casino companies went up, British ones went down. Continued on page 2


Record breaking ICE lifts curtain on 2005 casino collection


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New association formed for Europe


byassociation EUROPE


The European Casino Association (ECA) came into existence at a meeting held during the International Casino Exhibition in London on 26 January 2005. The ECA was formed from the European Casino Forum, which was an informal grouping, to strengthen the ability of the European casino industry to pursue its interests and develop further. Operating globally as a trade association, it represents over 800 casinos across 19 European countries, directly employing some 73,000 people and is expected to grow further. The European casino industry currently sees gross gaming revenues of over 8bn euros. The chairman of the ECA is Anders Galfvensjö from Sweden with Ron Goudsmit from the Netherlands assuming the role of vice chairman. The ECA will set up an office in Brussels, Belgium shortly from where the ECA board will operate.


That’s entertainment: Amorim bids to boost


Figueira profits EUROPEANNEWS2


Lords talk of increasing category B entitlements


planb UNITED KINGDOM


UK operators have been given a glimmer of hope that their existing operations will after all be able to offer a slightly improved product line in the new era of British gaming. The department for culture, media and


sport’s Lord McIntosh said during the Third Reading of the Draft Gambling Bill: “We think that it would now be reasonable, without weakening the overriding precau- tionary principle, to increase the entitle- ment to category B machines in existing casinos from 10 to 20. “If there is any requirement for it, we would be prepared to discuss some increase in the prizes-the maximum limit-for category B gaming machines. We could very well discuss that with the casino industry. Of course, any change of that sort would have to be very carefully monitored.” The classification of automated roulette terminals also looks like reaching the most appealing conclusion for the industry Lord McIntosh added: “We have dis- cussed the treatment of those terminals with the British Casino Association and others and we have come to the view that auto- roulette can be controlled effectively outside the gaming machine regime.”


The Gambling Commission is to control the specification and the number of player permissions by licence condition. McIntosh added: “We think that that is right because there is a reasonable basis for distinguishing the equipment from gaming machines. That will also mean that casinos do not have to count those machines against their allowance of gaming machines. In other words, casinos will not be penalised for innovation.”


The news came in a week when DCMS


secretary Tessa Jowell was criticised for side-stepping fundamental issues regarding the new Gambling Bill and deflecting cover- age by giving national newspapers column inches on more tabloid friendly stories. Jowell’s comments on banning the ‘psy- chological trickery’ used to keep customers playing longer in Las Vegas casinos were fea- tured prominently on newspaper pages recently and filled airtime on several radio shows.


But other political parties have preferred to focus on the very British issue of the domestic business. Don Foster MP of the UK’s third biggest party said: “Instead of setting up the bogeyman of American casino trickery – which the gambling regulator will prevent anyway – she should focus instead on ensuring a level playing field for the British industry. The welcome restrictions Tessa Jowell reluctantly placed on casino prolifera- tion last year have tipped the scales against the existing, predominantly British, industry.”


Europe takes the EZ way as Greeks sign up


at Thessaloniki SUPPLIERNEWS26


Russia shows its strength with


expo expansion EXHIBITION32


How will Estoril protect its jewel in the crown from its own precious jewel? EUROPEANNEWS2


Crackdown imminent as draft amendment reaches Czech Ministry


Casino Schenefeld: German casinos could soon be forced to pay even more tax


The newly opened American Chance casino near the border at Wullowitz is welcoming the draft amendments. But not all of the Czech Republic’s casinos will feel the same.


The Czech Republic’s Ministry of Finance is now considering the draft amendments which aim to clean up the market. Phil Martin reports on how that will involve tougher licensing laws, more financial back up and the removal of ‘casino’ signage from non-casino premises.


safetyczech CZECH REPUBLIC


The promised clampdown on Czech casino operations is garnering momentum as the gov- ernment and gaming authorities aim to tighten the licensing procedure by updating the 1990 Gambling Act No.2. During March,a draft gaming amendment


was passed to the Ministry of Finance and, subject to approval,it will then be presented to Government. In the interest of national security,the reform


will include the requirement for license appli- cations to be approved by the Ministry of Inte- rior.Additionally,new license applications will require consent from local authorities. Other amendments include an increase in the basic capital of operating companies and also an additional increase in the gaming bond. The bond is a significant assurance pledged to the Finance Ministry in the form of a bank guarantee that must remain valid and com- plete throughout the licensing period. Simon Newton,managing director of Amer- ican Chance Casinos,welcomed the draft law. “I believe that the proposed changes will provide a more stable operating environment and give the regulators the means to enforce the regulations by financial penalties up to and including the revocation of an operator’s gaming license,”he commented. License holders will appreciate a new para-


graph pertaining to the definition of casinos and permitted signage.Newton explained: “Currently you can often see ‘casino’ signage that has been applied to a slot room or other establishment.The reform will prohibit the use of the word ‘casino’as a whole or part on any signage applied to a building that does not hold a valid gaming license.” Newton believes,however, that due to the


extent of the controls and amendments needed to achieve a concise set of regulations and the necessary enforcement mechanisms, it will become necessary for the regulators to com- pletely replace the existing law. “Notwithstanding the welcomed reform, this should only be considered as the initial steps in the direction toward a new gaming law,”he advised. “In order to avoid any loopholes in the


system,new control and enforcement mecha- nisms must also be developed simultaneously to the law itself otherwise the regulators will once again be faced with accepting irregulari- ties caused by an inconcise and unenforceable set of regulations.After all,what purpose would


such a law have if it was not adequately sup- ported by a strong method of control and more importantly a lack of legal enforcement?” The current tide towards stricter regula-


tions was kick-started in August 2004 when a grenade attack was launched outside Casino Royal.Police believe the intended target was its alleged owner,Assaf Abutbul, an Israeli whose father was murdered close to the same venue in August 2004. But as well as cleaning up the market,there is another need for the new laws. “The rapid evolution of technologies have


somewhat outpaced the regulations,not only in the Czech Republic,but also in several Euro- pean jurisdictions,”Newton explained.“For example,there are no existing legal provisions that allow for use of a jackpot system across a wide area network.This does not mean that such linked jackpot systems would not be per- mitted in the Czech Republic but simply that technological advancements have outpaced regulation.”


Barriere’s Nicolas Ricat talks about growth and new European territories INTERVIEW16


This may be London calling but will anyone listen? COMMENT24


German casinos face extra VAT from May


sturmunddrang GERMANY


German casinos are to pay value added tax (VAT) from next month, if the Federal government manages to rush a surprise bill through parliament.


The 16 per cent tax would be in addition to the average 80 per cent tax that casinos pay to the states in which they are located. If Berlin has its way, the bill will be pressed through both the lower house and the senate in the last two weeks of April and come into effect at the beginning of May. The move, which has been met with shock and dismay by the casino industry, is a result of a decision by the European


Court of Justice in February that it is unfair that 7,000 privately owned arcades have to pay the tax on the profits from their slot machines while casinos, until now, do not. Under the judgement, the Treasury is obliged to level the playing field and has chosen to level it up, clearly fearful of finding a black hole in its finances of something in the region of 370m euros if it levels down. However, the bill as it stands would impose VAT on the


entire revenues of casinos, the GGR including table games and other activities. Spokesman for the German casino operators’ association DeSIA Matthias Hein said: “This would make casino operations no longer viable.” According to its figures, casinos would be forced to pay another 150m euros


Reaction to the government’s final U-turn in the unfolding serial drama known as The British Gambling Bill was predictably diverse depending on where one’s loyalties lay. Phil Martin reports on the mixed reaction to the UK’s new gambling legislation and how the ‘one’ might not yet be the ‘one and only.’


Brits salute reprieve but one might not be the one and only


royalsalute UNITED KINGDOM


Whilst the UK could initially miss out on billions of pounds of invest- ment from international operators, sources within the corridors of polit- ical power in Whitehall have sug- gested that the government’s decision to issue just one regional licence could yet be overthrown a lot sooner than first indicated. Local councils up and down the


country have bemoaned the likely success of Blackpool, the centre of Britain’s amusements industry, in securing the only regional casino licence.But with uncertainty being the only continuity in the formation of this Bill, the one regional licence could yet be increased and Black- pool,although the front-runner,still has nothing guaranteed. There is no doubting that follow- ing the Bill’s Royal Assent,its trade-off into an act of parliament has re- instated UK operators as the big initial winners.The last minute amendments drafted to enable the bill to beat the shut-down of parliament ahead of the general election in May has delivered several opportunities to improve busi- ness including a doubling of category B machines and a rise in stake and prize to £2 and £4,000 respectively. Alongside the abolition of the 24 hour rule and new allowances in the adver- tising world,the government’s much needed casino concessions have been greeted with more vigour due to the


reduced competition from category As which will now emanate from just one location in the UK rather than the eight pilot projects latterly proposed. “These amendments have gone


some way to alleviating many of the concerns over possible damage to the existing UK casino industry,” leading UK operator Rank said fol- lowing the news.“The fact that there will be only one regional casino in the UK,at least initially, is also sensi- ble.However, the government has maintained its position in allowing new large and small casinos to offer a greater range and number of gaming products than existing casinos, thereby creating a two-tier market.Whilst Rank will compete for each of the new casino licences, as and when they are identified and become available,we will also con- tinue to lobby aggressively for com- parable rights for existing casinos.” Bill Timmins,chief executive of London Clubs International, expressed optimism over some of the less controversial introduc- tions.“It’s not just doubling the number of slot machines,”he said. “Being allowed to advertise and getting rid of the 24-hour rule will have tremendous benefits.” Timmins added that if LCI could begin advertising to the interna- tional hotels of Park Lane close to LCI’s Mayfair casinos, the group would definitely be able to expand its casino business. For Bob Wiper, chief executive


of Stanley Leisure,it was the reduced threat of Las Vegas style gambling which will help protect British busi- ness,which was most pleasing:“All the Americans will pack their bags and go home,”he said.“As the UK’s largest operator,we benefit from the lack of regionals.” Las Vegas Sands,one of several


US operators no doubt disap- pointed that the best they can hope for is a phased introduction of their casino model,also seized on secre- tary of state Tessa Jowell’s talk of reviewing the number of regional casinos in the next parliament. “We were encouraged by the sec-


retary of state’s words in parliament and remain committed to our UK partners,” said a Las Vegas Sands spokeswoman,declining to comment further.But,undoubtedly,the foreign investors would have been left bit- terly disappointed.At one stage, international casino firms had ear- marked some £5bn for the UK. One source within the depart-


ment for culture,media and sport suggested that not all hope had been lost for them.“Following the general election, a panel will be appointed to advise ministers on suitable locations for this regional casino.The criteria for where that will be hasn’t changed – the main concern will be assessing the impact it has on problem gambling in the area.On that basis the panel may advise that we need more than one regional casino.


New York theme is Storm’s crowning glory


April 26 saw the official opening of the New York Casino, Storm International’s latest Moscow spectacular. The opening attracted 2,500 people to its three


gaming halls, each designed in an Ar t Deco style to recr eate the atmosphere of the huge American metropolis. Casino general manager Helen Kornilova cuts the ceremonial red tape on page 16.


”We had initially decided on eight because this would have allowed us to test and compare the impact on the population in different kinds of loca- tions,such as seaside resorts and urban sites.This opportunity will be limited with only one casino but it will be pos- sible for a future government to come back and increase that number.” Despite those words, the ascen- dance is now very much back on the UK’s existing business.Leading market analysts KPMG was predicting a 40 per cent growth in gaming revenues


per year in addition to the near 1bn euros it contributes to local finances now. State governments have also been taken by surprise.


As VAT is paid directly to the Federal government, they are only likely to get partial disbursements of this potential windfall. More worrying for them, however, is that if the casinos, for which they license operations, go to the wall in the already depressed market, they will have an even bigger hole in their finances.


‘Quick And Dirty Solution’ Matthias Hein on German tax hike EUROPEANNEWS3


Barrière plan to break down the barriers at Toulouse


EUROPEANNEWS2


Russians looking at online opportunity


playerpotential RUSSIA


The Russian online casino market might well operate in an absolutely grey area, nevertheless internet gambling is accelerating fast in Russia as established operators rush to get on the bandwagon. Russian gaming regulators do not specifically include or exclude online services in their terms of licensing for land-based operators and no separate inter- net license is yet available. Though telecoms infrastruc-


Mixing the old with the new: Could Rank’s Grosvenor in Blackpool be the first casino to get a regional neighbour?


following the doubling of slot machines on their premises. Nick Patie, a KPMG director, said:“The casino industry still has the potential to grow, albeit it at a fraction of what the industry was hoping for. Slot machines present a golden opportu- nity to be the greatest source of revenue for gambling operators.” Suggestions that the new machine entitlements will be introduced as early as July have not yet been con- firmed but despite not being as revo- lutionary as once predicted in the


original assessment document, the Budd Report,the British casino indus- try is about to change for the better. Whether or not Blackpool is the


chosen one or, indeed,whether the legislation is amended to allow further regional sites, interest from local councils and foreign investors is unlikely to dissolve over night with the government assuring further developments in the future, either after the election or once the permutations of the pilot have been collated and analysed.


ture may still be patchy, band- width is cheap and Russian players, the statistics suggest, spend long periods online. Con- sequently, two of the country’s leading slot operators are now working on internet casino proj- ects. Sergey Kuzmine, CEO of Ritzio group, says that: “Ritzio is actively evaluating opportunities to enter the online market.” Meanwhile, Michael Boettcher’s Storm Casinos are within weeks of opening the Storm online operation. Peter Speight, director of


Storm’s online operations, says: “Support is very big in the Russian market. We estimate there are now 34 Russian language casinos on the internet, of which about 14 or 15 have customer support lines that appear to be operational.” But while Russian language sites are springing up few are


choosing to locate in the Russian Federation itself. Operators could, feasibly, base their servers in any region with a relatively tol- erant local gaming authority, but tellingly, perhaps, the best- known Russian language online casino, goldfishka.ru, operates from the Kanhawake reservation in Canada. Storm’s casino will be hosted in Curacao. Only one region of Russia, a small autonomous Asian repub- lic called Kalmykia on the Caspian Sea, has actually attempted to implement internet casino licensing, but the lack of infrastructure there has meant that even small operators have chosen to stay closer to the main cities where bandwidth is abundant, or else locate in off- shore jurisdictions familiar with the needs of online casinos. A look at the Russian pages of sites like Goldfishka.ru also reveals another fundamental dif- ference with the Russian market. Gone are the familiar Firepay and Neteller logos and in their place the most frequently used payment services are the domes- tic versions provided by Yandex, WebMoney and Rapida.


• This article is developed from ATE Intelligence’s report ‘Russia: Opportunities in Gaming,’ published March 2005 comprising 250 pages. See http://www.ateonline.co.uk


Moscow raises the ante as New York moves in on Vegas


EUROPEANNEWS16


A controversial ruling home have led the Ge But, reports Hugh So at least July and could


Germ over VAT p


treasurytorment GERMANY


Value added tax (VAT) on German casinos will be imposed from July 1 this year,if the German Federal govern- ment has its way.With argu- ments swirling around the measure, the original date for implementation in early May, put forward last month,had to be abandoned.However,it may well be unlikely that the law will be able to come into force at all as the German Lände (states) could block the pro- posals altogether. “We spoke to the represen-


tatives of the states on May 12,” Matthias Hein, spokesman for the German casino operators’ association DeSIA, explained. “Most of the states are under Conservative control and we believe that they will oppose the measure by the Social Democrat government.” Under the constitution,


Federal laws that impact on each states’ability to raise taxes have also to be approved by the majority of the regional parliaments in order to come into effect. Currently, casinos pay an average of 80 per cent of their Gross Gaming Revenue (GGR) into state funds;VAT would have to go directly to the Federal Treasury,which would then disburse only a part of what it receives. “All the states agree that


there would have to be a reim- bursement to casinos, so that the overall tax burden is not increased, otherwise they would not be able to continue in business,” said Hein.“This readjustment in the local tax regimes would require every state to change their gaming laws and if they are going to do that, there are a great many other issues that would need to be looked at. Gaming laws are due for review to take


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The official publication of EELEX


France starts to close the door on foreign


investors. EUROPEANNEWS3


Dutch court and European Commission challenge


Records tumble as EELEX gets ready for


summer switch EELEXREVIEW38


London


calling: a look at some of the products at


ATEI 2006 PRODUCTNEWS70


European Capital’s casino coronation


monopoly status


Foreign gambling companies have been trying for years to break through the barriers of the Dutch state’s gambling monopoly with little or no effect. But a ruling from within at the end of 2005 is prompting the Council of State to re-look at its gambling policy for the first time. Phil Martin and Hugh Sorrill ask whether the smallest of cracks are starting to appear.


doubledutch HOLLAND


A two pronged assault on the monopoly of Holland Casino has left the Dutch courts and the European Commission at loggerheads with the Dutch government over the viability of its ‘closed off’ industry. The first followed a bid by the state-owned Holland Casino, the sole licence- holder of the country’s 12 casino venues, for a three- year licence to exclusively operate games of chance over the internet as an exten- sion of its state monopoly. This met with some hostility from European Commission vice president Gunter Ver- heugen,who warned that such a policy would be incompatible with European Union regulations regarding freedom to provide services in other member states and was not compliant with article 49 of the EC Treaty. The Commission statement said: “It appears that the Dutch Government is mainly concerned by the lost rev- enues,estimated by the gov- ernment to be 144m euros in 2004,which goes to illegal and foreign service providers.” It argued that filling state coffers cannot in itself be regarded as an objec- tive justification for a monopoly.


It continued:“The Com- mission has not identified valid justifications why the Dutch legislator might believe that it is necessary to restrict all cross-border gaming services offered by licensed suppliers legally


established in another Member State where they are subject to appropriate controls.”


The second case, follow- ing in quick succession, saw a Dutch court ruling that the country’s casino monopoly does not comply with the Treaty of Rome.The ruling from the Netherlands Admin- istrative Court of Breda has the potential to impact sig- nificantly on future gam- bling-related court rulings and policy decisions by the Dutch government. This case centres on a


failed bid by French opera- tor Tranchant and Dutch machine manufacturer Orion Gaming, who joined forces in 2003 to form Com- pagnie Financière Régionale (CFR), to win a licence in Bergen op Zoom,in the south of the country bordering Belgium.


That proposal was


promptly rejected; it had little chance of succeeding as Dutch law states that only Holland Casino can operate, but what it did achieve could yet complicate things in Holland. Following ongoing appeals from CFR,the dis- trict court in Breda ruled in December 2005 that the Dutch State must give better arguments for its decision not to issue a licence for a casino in Bergen op Zoom. The case revolved around the government’s claim that its state monopoly on casino gaming was coherent in achieving its intended goals. CFR,meanwhile,based its case on EU anti-monopoly regulations. It argued that


It’s not all been plain sailing concerning Holland Casino’s monopoly but challenges are likely to remain just that for the foreseeable future at least


the restrictive casino monopoly goes against the principles set forth by the European Court of Justice in the Gambelli judgement and argued that a monopoly may on this basis only be main- tained if it combats crime, illegal gambling and gam- bling addiction.According to the Breda court,this was not the case and it ruled that the Dutch Ministers of Justice and Economic Affairs had failed to prove their case, opening the way to further contestations of the Dutch position that it has the right to exclude betting compa- nies from other EU states from doing business with its nationals.


The court added that Member States in principle do enjoy a wide margin of discretion as to how to regu- late their respective gaming markets but the restrictions need to be ‘coherent and con- sistent’and the restrictions need to be ‘justified by over- riding principles of general interest such as fraud pre- vention and player protec- tion’.


It also criticised Holland


Casino for ‘intensive market- ing campaigns’and said there was a lack of ‘reliable or recent research available on gambling addiction’, accusa- tions that Holland Casino would wholeheartedly dispute. The court also turned on the state saying its policies were ‘counterpro- ductive’ and that there was ‘no evidence’to ‘substantiate the envisioned effect of its policy decisions’. Finally, it slammed the state’s decision to ‘further


expand the offering of Holland Casino with two additional licences as research has clearly shown that expansion of the legal casino offering has negligi- ble effects on the illegal offer- ing’ due to ‘substitution effects’. The government coun-


tered by stressing that the casino monopoly was ‘required’ and that it had proved ‘effective’ as it allowed the State to ‘inter- vene directly and to control the activities of Holland Casino’. The fact that this has even


prompted a response from the Dutch Council of State, Holland’s highest adminis- trative court,is groundbreak- ing in itself.


But has Holland Casino’s monopoly really been chal-


lenged? “There are no conse- quences at all for Holland Casino at the moment,” said Karin Maks, spokeswoman for the company.“The law is still the same as it always was and we don’t foresee it changing for a few more years yet. The arguments used in the Breda case are all the same as have been used in previous cases,all of which have found that the monop- oly position is justified. It may not stay that way forever, of course,and if the situation changes,that will be not be a problem as far as we’re con- cerned but we have to be able to prepare.” The fact that the attack came from within the country is not as surprising as it may first sound.


Continued on page 4 >


grandentrance BELGIUM


The curtain has been lifted on


Belgium’s latest and greatest gaming floor with the Grand Opening of Grand Casino Brussels, a licence which has been eagerly awaited. Full story on page 4.


The official publication of EELEX


Casinos stay out of


Services


Directive EUROPEANNEWS3


The golden Ball of


Brussels EUROPEANNEWS4


The most extensive coverage of


ICE 2006 EXHIBITIONREPORT16


Hungary launches tender for five Euro Vegas venues


fiveaside HUNGARY


The tender for what has been dubbed Euro Vegas, a major, multi- casino project in the region of Bezenye and the nearby border town of Hegyeshalom, in northwest Hungary, has now been announced by the Finance Ministry and will include a battle for five casinos. The proposal grabbed the headlines in July last year following an approach by an American


consortium who suggested large scale gaming would bring much needed tourists to the area known as ‘The Golden Triangle’ due to its proximity to the big cities of Vienna, Budapest and Bratislava. But rather than launch a


competitive bid for just one licence, Hungary’s Finance Ministry has announced a tender for a 20-year concession to operate up to five casinos for a minimum annual fee of HUF 3.5bn. The ministry stated: “The smallest amount for the operation


fee is 900m Hungarian Forints a year for the first unit, 800m for the second one, 700m for the third, 600m for the fourth, and 500m for the fifth one, excluding VAT.” According to the announcement, the casinos must be located in towns along Hungary’s border with Austria in Gyor-Moson-Sopron county, northwest Hungary, although the region’s two main cities, Gyor and Sopron, are excluded. Other conditions include size and operation details with the casinos being


Unified pressure mounting as March deadline draws near


Pressure is building on Britain’s Labour government to revisit its rather conservative offering of one Las Vegas style casino to satisfy the needs of the country’s regenerative requirements and provide adequate evidence of the effects of this style of gambling. Phil Martin reports on how a unified response could prise open the door for more.


selfraisingpower UNITED KINGDOM


Having asked local councils to lead the charge towards the issue of more regional casino licences, the Department for Culture,Media and Sport has confirmed that 47 localities have so far applied for a chance to become the home of the one regional casino license offered under the guise of the new Gaming Act.


A total of 47 of the 131 local


authorities approached were interested in building the largest style of casino, with four more yet to decide. A further 28 local authori-


ties have lodged their interest in playing host to either large or small definitions of new style casinos.


Whilst these numbers may


speak for themselves,momen- tum is also building in the war of words behind the push for more pilot regionals with 11 local authorities joining together in a unified cam- paign.


In a joint statement, local


authorities in Birmingham, Cardiff, Coventry,Glasgow, Sheffield, Southampton, Sun- derland,Trafford, Southend, Havering and Yarmouth, said: “One regional casino would be much too restrictive,par- ticularly because it does not


allow for an objective evalua- tion and needlessly closes the door on much-needed inward investment opportunities. Limiting the UK to only one regional casino will deprive local areas of exceptional regeneration opportunities and deprive local people of very important new opportunities.” Great Yarmouth councillor


Barry Coleman argued:“Politi- cians need to reconsider moving it back to eight regional casinos because one is not a trial at all.Nobody in parliament can think one regional casino is a good idea but it’s a matter of them getting together to agree a change in policy.”


Academics are claiming that


the largest destination style casinos could even reduce problem gambling. Peter Collins,of the Centre


for Study of Gambling at Salford University, said:“Evi- dence from around the world makes it clear that, if new casinos are located intelli- gently and accompanied by an appropriate public awareness campaign,not only can signifi- cant economic benefits for non-gamblers be secured but also overall problem gambling numbers can be reduced. “I don’t know anyone in Par- liament or, for that matter,


outside who thinks that one regional casino is the right number,”he added.“It doesn’t make any sense whatsoever. All ‘one’does is deprive other local authorities from secur- ing the economic benefits in areas where there are high levels of disadvantage.” The Government has set up


a Casino Advisory Panel (CAP) to advise them in which areas the new types of casino will be located and even its chair- man has expressed his aston- ishment at the task in hand. Whilst saying that the exam- ination process would be fair and rigorous Professor Stephen Crow,who is leading the panel, said:“How are we going to make up our minds? I don’t know.” Even the Unions are getting in on the act to rewrite the Act. Paul Kenny,GMB Acting General Secretary said:“One license for the very large casino is not enough.The Gov- ernment should be bold and go for a minimum of four as these offer fantastic potential for regeneration with real quality jobs.” Not surprisingly, there are


many intriguing sub plots being hatched to accompany this unfolding drama with two new casino brands recently making their presence known. Waterimage, a joint company


owned by British night club operator Luminar and French casino giant Groupe Lucien Barriere, has just cleared the EU’s simplified merger proce- dure,whilst Malaysian billion- aire Quek Leng Chan, the owner of Thistle Hotels, has just seen his BIL Gaming approved to be a casino owner by the Gambling Commission, giving it the green light to move into hotel casinos.This avenue of business has opened up following the removal of


All lights may be leading to Blackpool’s Golden Mile for the UK’s first resort casino but 47 local councils are leading the charge for more such licences to be issued


the permitted areas and 24 hour cooling-off period as well as a ruling to allow direct access from hotels to casino receptions. Elsewhere there is a fair


degree of mainstream consoli- dation taking place with Stanley Leisure buying two privately owned casinos in Southend and one in Bristol, and Gala Group purchasing the Leo Casino in Liverpool from a single operator.Con- versely,at the other end of the


market,London Clubs Interna- tional is considering offload- ing its high end,high volatility Les Ambassadeurs venue to Putera Sampoerna, tobacco tycoon and Indonesia’s third richest man,for £115m. There are currently 161 licensed casino licences under the old 1968 legisla- tion in the UK,143 of which are currently operating. There has also been an unprecedented scramble for Continued on page 3 >


entitled to obtain licenses for other types of gambling activities as well. The casinos must operate at least 100 tables and 1,000 slot machines apiece.


The Ministry wants construction to begin before the year is out. The mayor of Bezenye Mátyás Schmatovich said that, given its role in spearheading the project, American Ellis Gaming should be regarded as the frontrunner in the tender. The Las Vegas-based company has already said it would


be happy to build all five casinos and five hotels with an investment of 460m euros over two years. Euro Vegas would provide jobs for 6,000 people from the region. Hungary’s six casinos generated


revenues totalling 47bn in Hungarian Forints in 2005, down 13 per cent on the year previous due to increasing competition from an escalating slot sector and the introduction of ‘multi-band’ taxation where charges were dependant on annual revenues.


The official publication of EELEX


Tranchant reaches for the stars EUROPEANNEWS2


Regionals to pay 6.25m pounds in machine duty


dutybound UNITEDKINGDOM


The lucky winner, or indeed winners, in the race for the UK’s first regional licence/licences will be hit with a bill for £6.25m just to cover the cost of being allowed to operate 1,250 Class A slot machines.


Annual machine duty for each unlimited jackpot machine has been set at £5,000 by Chancellor Gordon Brown as he declared his Budget for the coming year.


Alongside the immense outlay involved in developing the huge projects, the money needed to kit them out with the latest gaming technology and, of course, the all impor- tant tax on GGR, some ana- lysts are suggesting the machine duty is a further example of Brown’s distain for the casino industry. Benedict Brogan, journalist at the Daily Mail, wrote: “The raid on big casinos will be seen as a deliberate attempt by Mr Brown to sabotage Miss Jowell's hopes for a gambling revolution by making the set- up costs prohibitive.”


Steve Donoughue, CEO of the British-based Gambling Consultancy, believed it was within the realms of most operators’ models. He said: “It might initially seem like a rather steep approach by the Chancellor but as an overall percentage of what 1,250 unlimited slots are estimated to earn in a year it is not unreasonable. Working with the expected turnovers, it falls just within the 20 per cent tax ceiling already high- lighted by operators as work- able. I certainly don’t think it will be a disincentive.” Existing casinos, which


currently offer maximum jackpots of £4,000, will see the tax they pay for limited jackpot machines go up steeply too from £1,900 to about £2,500.


The Budget has also abol- ished tax on machines in family amusement arcades in an attempt to encourage the survival of family-run arcades in Britain’s seaside towns, perhaps with one eye on regional casinos being operated next door.


Golden age: Deauville venue is one of 30 odd Barrière venues hoping for a Gallic shake up


Efforts to improve responsible gaming with the launch of ID entrance checks to French slots could be balanced by the introduction of electronic roulette and poker as well as note acceptors on the slots and allowances to advertise progressive jackpots. Phil Martin asks if all this signals a new era in French gaming.


frenchrevolution FRANCE


French operators are heralding what could prove a ‘new era’for French gaming with the biggest proposed shake-up to the indus- try since 1988 when slot machines were first introduced. The initial headline grabbing


feature from a draft agreement on the ‘promotion of responsi- ble gambling’ is undoubtedly the introduction of systematic identity checks at the entrance to all French casinos,which the Ministry of the Interior has now confirmed will be introduced by November 1 this year. The removal of the entry fee


currently charged to go into the table areas and the chance to mix up the layout of the gaming floor are guarantees due to come in with the slot ID check points, but operators are also likely to be granted a series of concessions which will allow them more operational freedom to meet market demands.Aspi- rations for a market which many analysts believe to have plateaued in recent years are being buoyed by the promise of a smoother approval process


for new table games and elec- tronic roulette as well as being able to organise poker tourna- ments.There is also new tech- nology on the horizon in the form of note acceptors on the slots,as well as Ticket-In Ticket- Out and a national progressive jackpot. Loosening advertising laws on progressive jackpots, meanwhile, would allow for their accumulating totals to be advertised in public spaces outside of the casinos.These proposals have already evolved from their embryonic stage with the two largest casino associa- tions and the Ministry of the Interior agreeing a draft agree- ment in January this year.The majority of the changes are expected to be signed, sealed and delivered with the launch of the ID check points. Nicolas Ricat, marketing


director for Lucien Barrière, believes their chances of being approved are relatively high: “There is a strong political will for these changes to come in so we are both optimistic and excited by the prospect of their introduction.This could definitely signal a new and contemporary era for French


casinos and provide us with the same competitive advan- tages enjoyed by casinos in other countries. Given that these laws are over 100 years old,we think it is time for a change.” The French government is hoping to better address the small percentage of problem gamblers in existence across the whole of the French betting landscape, and as such, similar clampdowns are being intro- duced for La Française des jeux (the French lottery operator) and PMU, who holds the monopoly concession for licensed betting. “We think this is a really pos-


Dutch mull over Maastricht deal EUROPEANNEWS3


Harrah’s ready for Eurovision INTERVIEW26


France on verge of second casino revolution


itive move and brings a level playing field to the whole of the French betting and gaming landscape,”Ricat explained.“As responsible operators we already offer our customers a service of care and currently take it upon ourselves to bar slot players who we think are developing problems,but the ID on entrance can only be good for the promotion of responsible gaming.” Current proposals would see customers produce photo ID such as passports or driving licences, but Ricat is hoping that discussions with the authorities will ultimately lead to a casino membership card with photo ID being suf- ficient.


Despite the initial inconven- ience of requiring ID on every visit, Barrière’s slot director Jonathan Strock does not believe it will lead to a long term downturn in slot fortunes. “I’m sure commercially there will be a small price to pay in terms of immediate and short term economic pain,but we think this should subside over a period of two years,” he explained.“We’re hoping that any shift in consumer habit may not be felt with such force here compared to other countries because in France the general public are already required to carry ID at all times.”


The multitude of poten- tial pluses would more than make up for any period of


customer confusion. Operators are already


assured of the end of ‘stamp duty’ for access to the gaming tables,which will be brought in alongside the introduction of the slot ID points. Ricat said: “Financially,the removal of the 10 euro or so fee to enter the tables will not have much effect on regular table players but psy- chologically the effect on mar- keting traditional gaming to new players will be immense.It will remove the intimidatory impact of having the tables hidden away in an area and will allow us to demystify our most traditional games,which will be invaluable to us as we try and market to new players.As will the prospect of redesigning our gaming floors and reposition- ing our games.Mixing the slots with the tables will allow for a better migration between the two and so improve the flow of our customers.” Indeed,many of the propos-


als focus on improving the table offering throughout the French sector which has spiralled in recent years. Firmly on the agenda is more efficient approval processes for new games.One of the first to enter will be Caribbean Stud Poker and although not regarded as a cash generator, the ability to host poker tournaments would be a significant boost in the quest for new customers. Strock explained:“There’s > Continued on page 2


The official publication of EELEX


Estoril Sol shines bright in Lisbon EUROPEANNEWS2


Following predictions that half of Moscow’s street level slot halls have already been closed down, the whole sector has now been shaken to its core by reports that an auction pencilled in for 2008, could strip the city down to just 50 licences. Andrew Gellatly reports.


Brit of alright as UK


councils eye up licence EUROPEANNEWS6


Promotional couponing the next wave for TITO INTERVIEW24


French


Syndicat call to open online


virtualdemands FRANCE


A proposed bidding war for just 50 casino licences could cripple the glittering high end Moscow market as well as clean up the city’s street level slots


eet level slots


Russia paralysed by fear of licence auction


auctionfever RUSSIA


Russia’s casino industry has been paralysed by an unforeseen addition to the country’s draft gaming law that calls for the allocation of new ‘quotas’ – effectively licences- in an open auction process. With all 6,000 existing gaming licences set


to expire on December 31 2008 and reports of perhaps just 50 quotas up for grabs in Moscow, the scene is set for an unholy row over the outcome. IPO plans at slot operator Ritzio are now on hold and the whole industry is stalling invest- ment plans,as businesses try to make sense of the new system. While news coverage has focused on the immediate impact of the law’s size and loca- tion provisions – which will close between 1,100 and 1,900 of the country’s smaller non- compliant slots businesses by the end of May (see page 16), little has been disclosed about the new licensing system, though its impact could be even more draconian. “There is no indication as to how or when


this process will happen,or how it will be controlled,except that it says the quotas will be determined by open auction,” said Storm International’s CEO Michael Boettcher.“Right now no-one’s saying anything because no one has a clue what’s going to happen.” The latest draft of Russia’s gaming law con- tains much that the industry had expected – minimum capitalization requirements of 600m roubles ($22m) for license holders, and strict location limits on gaming business, but the auction of quotas, which translate into the right to apply for a gaming licence,on the basis of one quota per 200,000 inhabitants,is new. Gaming companies, such as Ritzio Enter- tainment Group, Jackpot and Storm Interna- tional saw profits boom, whilst the sector surged by some 34 per cent in cash terms to $5.6bn in 2004. “Operators like Ritzio and Jackpot will be dead in the water in two and a half years if this is put into place,”said one Russian analyst.“Are


they going to have to come up with $22m guarantee for each slot location quota?” In December last year, Ritzio indicated that


it would seek a London stock exchange listing in 2006,but the uncertainty of a licence auction that may happen in six months or two years has interrupted its plans.Another Russian gaming executive observed:“How could you back a company that may have an additional $500m in licence fees to pay next year- it would be an impossible investment decision.” At a regional level Moscow’s Deputy Mayor


Iosif Ordzhonikidzehas is continuing with the authorities’purge of the industry,which has halved the number of gaming locations in Moscow to around 1,300 in less than six months.Ordzhonikidze said the city would purge the gaming industry despite losing an estimated $90m in taxes.“Gaming establish- ments will be totally eradicated within 25 meters of metro stations,as well as from the streets, stores and temporary pavilions,” Ordzhonikidze told state-controlled TVC tele- vision. There has,however,been no public discus- sion of how the new licences will be allo- cated, but industry observers fear the worst. Bidding will be limited to existing licence holders though new entrants could easily buy up a dormant license in order to participate. The licence auction process should see the government make enormous amounts of money- a licence in Moscow,depending on its duration,might conceivably be worth $100m. One immediate result of the news is that


operators are now said to be scouting the cities of Russia for bigger locations where they could consolidate many slot halls under one roof and one license and get better value from each license:“This could lead to 500 or 1,000 or 2,000 machine operations,” said Boettcher.“Whether this will work in the suburbs or the regions I don’t know, but it becomes a whole new strategy.” The countdown to an auction process in


which the vast majority of the industry has no chance of winning a license will also create upheaval.“There will be asset stripping at


every level,”Boettcher predicted.“If you had two and a half years left the incentive to take the cash would be considerable- already there are issues with the halls that are closing on May 31,whoever loses loses,whoever wins gets thrown out.” A spokesman for the deputy mayor’s office,


Alexander Konygin countered:“No one is talking about closing down the business.We would just like it to run in an orderly fashion. All gaming salon owners have been given time to adjust to the new rules,” he said.“Since 2002,when the regional authorities lost their power to issue gaming licenses, gaming machines have sprung up like mushrooms in the rain, just everywhere;drugstores, toilets, metro underpasses,in front of supermarkets.” Konygin added that the city authorities met


with representatives of the gaming industry last year and said that the City Hall plans to work with the industry to help find jobs for those affected by the changes.


The Syndicat des Casinos Modernes, one of the main associations representing the interests of French casinos, has lodged a complaint with the European Commission’s Directorate General for Competition against the French State, complaining about the monopoly held by Française des Jeux in the country’s online gaming business. The French casino sector has been facing fierce competition in recent years from its domestic online sector which has been controlled by the Française des Jeux since 2001, in violation, claims the Syndi- cat, of the European Court of Justice requirement of ‘consistent gaming policy’ set out in the famous Gambelli ruling. The French casino sector has been unsuccessfully lobbying the French authorities for years in order to obtain the right to offer its services on the internet, as its European and national counterparts are allowed to do.


In face of the competition, the French casino industry’s growth has been slowing down resulting in the call for the French Prime Minister to bring an end to the Française des Jeux monopoly. A refusal by the French government could trigger a parallel national judicial action in front of the highest administrative court, the Conseil d’Etat, which many ana- lysts view would rule in favour of the casino sector. In May 2000 the High Court had already expressed its concerns over the ever expanding offer of the Française des Jeux, by referring the case to the European Court of Justice.


• Patrick Partouche gives his verdict on France’s online monopoly COMMENTPage 22


The official publication of EELEX


Barcelona poker comps fuelling footfall EUROPEANNEWS2


Ritzio waits for stability for IPO


stablingitsoffer RUSSIA


Ritzio Entertainment Group, which is said to control up to 10 ten per cent of Russia’s slot industry, has now confirmed it has postponed an initial public offering (IPO) of 15 per cent of its shares until a law regulating the gambling business in Russia has been adopted.


Some analysts believe that what would have been the first IPO of any Russian operator may now have been dropped indefinitely. The group had announced its intentions to float at the end of 2005, with the 15 per cent of its shares expected to raise $2bn on the London Stock Exchange but the uncertainties in Russia have scared off the level of potential foreign investment that Ritzio was looking for.


Unicum chairman Boris Belot-


serkovsky, part owner of Ritzio, revealed that foreign investors were afraid of the unstable market and that given the uncer- tainty of future legislation, would offer much less for shares. Russia’s lower house of parlia- ment State Duma has approved the first reading of a bill looking to slash the number of venues and replace them with a restricted number of quotas, as well as increasing net asset requirements for gambling companies. The bill has to face another two readings and then be signed by the presi- dent to become law. Ritzio controls a total of 35,000 slots in Russia, Ukraine, Kazakhstan and the Baltics. In 2004, the company’s sales amounted to US $325m, while its sales in January to June 2005 amounted to $289m. Although it is not clear how the changes in legislation will influence the Ritzio business and the evalua- tion of the company, the sugges- tion of one permit or license per 200,000 residents, would cut the sector down from 400,000 legal gaming machines to just 100,000.


The arch for the new Wembley stadium is symbolic of a new age for English football. Could it be a similar figurative landmark for the new age casino sector?


Eight runners left in race for UK’s super casino


piecesofeight UNITEDKINGDOM


The axe has fallen from the British government’s Casino Advisory Panel, crushing the hopes and dreams of all but eight of the proposals for regional casinos as the quest to find just one test bed for the so called super casino licence intensifies. Only Blackpool,Brent,Cardiff,


Glasgow, Greenwich,Manches- ter, Newcastle and Sheffield remain in the hunt for the prized regeneration tool although,as has been consistent with this mean- dering piece of legislation, there will be a right to reply. The door is still open for poten-


Riztio’s Vulcan brand alone has 25,000 slots


tial regional casinos on Black- pool’s Golden Mile, in London’s Millennium Dome and Wembley Stadium and at Manchester’s Sport City,to name but a few of the preferred developments. Chairman of the panel,profes- sor Stephen Crow, said:“I know that our decisions will cause dis- appointment to some,not least to authorities who had looked to their casino proposal as a means of alleviating severe problems of deprivation or even improving social conditions and meeting the need for economic regeneration. But the competition has been very strong, and so it is inevitable that some proposals, good enough though they may be in them-


selves, have to yield before more powerfully justified cases. “As for those who have suc-


cessfully accomplished this stage, they have further rigorous exam- ination to undergo before the final decisions are made.The pro- visional shortlists are now to be the subject of consultation before finalisation.This will be the occa- sion for consultees (Regional Planning Bodies,Regional Devel- opment Agencies and compara- ble bodies in Wales and Scotland) to pass to the Panel any further views and for members of the public to express their opinions on the proposals, whether of opposition or support.Here the public is reminded that national policy about casinos has already been decided by Parliament.The help here that the Panel is request- ing is for people’s views on the broad location of casinos. “We would ask that any such


representations be made to us by June 28 2006.” Blackpool has long considered itself leader of the pack having launched its bid for resort casinos before most other town councils even knew what they were. Alan Cavill,Blackpool’s head of


corporate policy and develop- ment,said:“Clearly there are other serious competitors to Blackpool and there is no doubt the panel has a difficult decision to make, but we’re still saying we believe


we’ve the best case especially when it comes to being a test case and demonstrating the regenera- tion benefits of a regional casino.” Elsewhere in nearby Manches-


ter, councillor Richard Leese, leader of Manchester City Council, said:“We know we’ve a very strong case.We believe the proposed site at Sportcity in east Manchester offers a robust test bed for the suc- cessful implementation of an, as yet,untested concept in the UK.” But as well as just different


Shangri La II bucks the Russian trend EUROPEANNEWS20


Of the eight remaining contenders for the UK’s first regional casino, two are based in London, four in northern England and one each in Scotland and Wales. Phil Martin reports on the new regional shortlist and how the UK’s casino landscape is already changing.


WMS success on rewriting strategy INTERVIEW22


regions, there are different country’s involved here,which could be critical in where the divi- sions will actually be formed. Up in Scotland, Glasgow Council leader Steven Purcell said:“We believe we have not only the infrastructure, but the best economic case for bringing a regional casino to Glasgow.” Over in Wales,councillor Nigel


Howells, executive member for sport, leisure and culture, fought his city’s corner.“Cardiff’s bid is unique as we already have a site, outline planning permission for a casino of this size, full support of the council and key stakehold- ers, and a chosen operator, Aspers,”he explained.“The regen- eration aspect is key to our bid. South Cardiff contains some of the most deprived communities in the UK and has very high levels of unemployment.” The Panel is now set to further test the strength of selected com- peting proposals.This will be done either through the medium of public ‘round table’ conferences based on the method of examina- tion-in-public (EiP) or through the examination and considera- tion of written representations and other material.“EiPs are likely to take place from the end of August to the end of September and will be limited to proposals for the regional casino.Proposals for large and small casinos will be examined on the basis of written evidence,”said Crow. Whilst the regional door has


now shut for MGM’s proposal for the NEC in Birmingham,that proposal must now be one of the leading contenders for a large or small licence.


The contestants in this cate-


gory now comprises Bath & NE Somerset; Bournemouth, Brighton, Canterbury; Chelms-


ford;Dartford; Dudley; Dum- fries and Galloway;East Lindsey, Great Yarmouth;Hastings, Hull, Leeds, Leicester, Luton, Mans- field, Middlesbrough,Milton Keynes, Newham, North East Lincs,Peterborough,Restormel, Scarborough, Sefton, Solihull, Southampton,South Tyneside, Swansea,Thurrock,Torbay and Wolverhampton. Even before the 17 new style licences are granted,the effects of the 2005 Gambling Act are set to be felt with local authorities given more power over the location of casinos, prompting operators to apply now under the more relaxed regime. Indeed, the number of casinos in operation up and down the United Kingdom could boom in the next two years following a late rush last month for 1968 Gaming Act style licences. In the final week of applica-


tions, 39 new proposals were lodged with the Gambling Com- mission meaning decisions are waiting to be made on a total of 60 potential new venues. On top of this, 31 casino licences have


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Partouche fires up its latest pasino EUROPEANNEWS2


Signe Birne-Republic of Latvia ministry of finance lotteries and gambling supervisory inspection spins the first roulette ball in Olympic’s new casino at the Latvian Reval Hotel watched by casino manager Viktors Roznieks and Olympic director, Armin Karu.


Ticket tape the Russian way as NY turns one EUROPEANNEWS14


Canadian Polishes up its Euro portfolio BUSINESSNEWS39


ID intro sees attendence dip but no real problems


molinotflawed FRANCE


French operator Moliflor has been using one of its venues as a test centre to monitor how being forced to show ID on entry will affect attendance levels at French casinos.


The new stipulations forcing casino goers to carry identification will be introduced across all French casinos at the start of November but Moliflor has tested the water by introducing a pilot scheme in Le Tréport, providing a test of the new legislation in casinos for the Ministry of the Interior. Director Jean-Marie Pieggi confirmed that the Moliflor


already been


granted by the commission but are still awaiting a premises licence hearing, and 26 casinos which have both a gaming licence and a premises licence are not yet in operation.Whilst there is little chance of all these being consid- ered, the total potential number of new casinos of 117,certainly proves how local operators view the potential of the market. There is no doubting which of these will be the most eagerly anticipated. But with different countries as well as different regions coming round the final bend of this enthralling race, could national fairness prove crit- ical in determining where the final finishing lines are called?


Olympic Casino casts its spell on Riga


Olympic Entertainment Group’s aggressive international expansion has seen it open ‘the most remarkable’ casino in the Baltics. With 19 in Estonia, 40 in Latvia, eight in Lithuania and six in Ukraine, Phil Martin found out about this latest masterpiece and also asked where expansion would take the group next.


voodooritual LATVIA


Having been described as the ‘biggest’, the ‘best’ and the ‘most beautiful’,there was no doubting where executives at Olympic Entertainment Group were placing their latest Baltic beauty. The Estonian- born opera- tor has just lifted the curtain on its 1,800 square metre Voodoo entertainment centre, which cost a cool 100m Estonian kroons (6m euros) to develop as part of the overall Reval Hotel complex in the Latvian capital of Riga. It opened for 1,000 invited guests on June 1 to beating drums and an atmos- pheric,African theme with Voodoo masks and African paintings gracing the walls. The casino also has a full-


size stage offering a show pro- gramme designed specially for the Voodoo and featuring daily drums and dance numbers.


Alongside the theme and


the size, one aspect that sets the venue apart is in the games on offer and indeed the channels in which they are offered. Olympic Casino hasn’t been afraid to invest, with chairman Armin Karu, claiming the largest casino in the Baltics is also one of the most technologically sound across the whole Europe.“Of course, this is definitely one of the most impressive casinos – or more accurately entertainment centres – in the whole of the Baltics,”Karu offered.“While until now the most remarkable casino in the Baltics was located in Reval Hotel Lietuva in Lithua-


nia,Riga has now unquestion- ably taken over that position. In most casinos in the Baltics, there are only slots to play,so for us it’s also a matter of pres- tige to offer various forms of casino entertainment,” he added.“Alongside 24 gaming tables and 115 high-tech slots, we are happy to offer to our customers the possibility to relax in a bar, comfortable lounge, sushi-restaurant and separate VIP-premises.” Karu also highlighted the high investment in gaming technology which has seen slots bought from IGT, Atronic, Austrian Gaming Industries and WMS as well as table technology from TCS John Huxley, CTC and Pro- gressive Gaming Interna- tional. Given the investment in both traditional and tech- nological, Olympic Casino expects gaming revenues to be evenly split between the tables and the slots. It is also proudly launching


Latvia’s first foray into more cashless variations. IGT’s EZ Pay Ticket-In Ticket-Out payment system is unique to the domestic market. Olympic Casino has also gone that extra mile in terms of


games with auxilliary add ons such as the American Roulette mystery Jackpot from TCS, card tables jackpots from DEK,and a table management system from PGI. IGT’s Jackpot Hunter multi-level progressive systems marks the first such installation in Europe whilst Cash Fever Continued on page 12 >


group wanted one of its establishments to act as a test case for our supervisory authorities. Le Tréport was chosen because of its geographical proximity to those supervisory authorities, which are based in Paris, and because there is no direct competition in the vicinity. This lack of competition was clearly essential as otherwise customers could have simply migrated to another nearby venue not yet having to operate the ID scheme. Operators are concerned that the new measure will bring about a temporary drop in admission figures, and the casino at Le Tréport can already confirm this. Pieggi revealed the venue recorded a 10 per cent fall in admissions during the week and 25 per cent at holiday weekends since the measure was introduced and that the principle for checking identity was very simple. The 800 clients (on average) who visit the casino each day (the number doubles at holiday weekends such as May 1) present an ID card, driving licence or passport to the security guard standing at the entrance to the room. The guard swipes the card or keys in the name of the client. He added that the procedure did not enable the casino to identify visitors or record any data, which they are actually forbidden to do, instead the swipe is matched with a file containing the list of banned individuals which takes less than three seconds. He added that since it was put in place, the system had not caused any problems in relation to clients with the exception of those individuals, few and far between, who refused to reveal their identity. In contrast to what many had expected, older clients said the check made them feel more secure.


The official publication of EELEX


Investigation mars build up to Campione EUROPEANNEWS2


Familiar brand re-enters Britain EUROPEANNEWS7


Hyatt cable car lifts the drop EUROPEANNEWS8


Britain to move forward with just one ‘super’ casino


In the clearest language yet, the British government has insisted that the casino pilot of one/eight/eight is the way forward. The trouble is, you won’t find many in the gambling sector who back that formula. Chris Murphy reports


formulaone UNITED KINGDOM


The British government appears to have drawn a line in the sand over the initial number of regional casino licences. It will remain at one,accompanied by eight large and eight small,with no increase in the offing until the full social and economic impacts of each have been assessed. With the north west seaside


town of Blackpool still the clear favourite,it looks like many of the huge projects proposed, such as those at the Millennium Dome


Confirmation that there will only initially be one regional casino has shortened the chance of success for every proposal including London’s Millennium Dome


and Wembley Stadium in London, will have to wait at least three years after the first regional casino opens to have a chance of being realised.


Announcing what appears to be a de facto policy was Andy McLellan,head of the DCMS gam- bling and National Lottery licens- ing division, during the Regional Casinos Debate organised by the Social Market Foundation. He said “Ministers have made


clear that they have no intention of going to Parliament to change the existing numbers.It is and will be one,eight,eight.And the impact


of those casinos will be evaluated very carefully before there is any further expansion.These licences are,of course,important and very valuable.That’s why the Secretary of State established the Casino Advisory Panel to advise her on the locations for those licences. And I think its worth, in terms of setting the context, remembering what the role has been set for the panel.


“The primary consideration is


to ensure that the locations for the 17 licences provide the best pos- sible test of social impact.They need to provide a good geograph- ical spread and a good range of locations – seaside resorts,edge of town,centre of city and so on.But the overriding criterion is social impact. Subject to that, the panel also has to be sure that the area’s local authority is willing to license a casino.”


McLellan offered an update on


progress, adding:“The panel is already well advanced with its task.It has short-listed eight areas for the single regional licence,31 areas for the large and small.Their evaluation of these is moving forward. They will be holding examinations in public in each of the eight areas short-listed for a regional licence.They are also inviting representations from anyone with an interest,whether it’s for or against.


“The panel aims to make its rep-


resentations to the Secretary of State by the end of the year. She will then bring forward an order for debate in both houses of Par- liament to establish where those licences will be available. So the panel makes its recommendations and there is a Parliamentary process to decide which areas will benefit from the 17 licences.”


Lord Andrew McIntosh, presi- dent of problem gambling charity GamCare and chair of the debate, had called for more common sense in his opening remarks, specifically in relation to media coverage of the Deputy Prime Min- ister John Prescott’s alleged influ- ence on casino locations.Prescott is accused of accepting hospital- ity last July from Philip Anschutz,a US billionaire whose company AEG owns the Millennium Dome and wants to develop a casino there.This was one of seven meet- ings with Anschutz.The opposi- tion Tory party are questioning whether this close relationship between Prescott and Anschutz gave,directly or indirectly,the US businessman any undue influence or,indeed,whether he was able to use this contact for commercial gain in any way.


Continued on page 3 >


The official publication of EELEX


Barriere clears the hurdles to give racing a European run out


EUROPEANNEWS2


UK field is level despite Dome being in front


fieldofplay UNITEDKINGDOM


Despite naming London’s Millennium Dome as the offi- cial front-runner to become the United Kingdom’s first Las Vegas style ‘super- casino,’ the government’s Casino Advisory Panel has since confirmed that the next stage of judging would start on a ‘level playing field,’ unaffected by the initial first round scores. The Greenwich venue is leading Glasgow, Blackpool and Sheffield after the first round of judging by the Panel, with Wembley Stadium, in the London borough of Brent, ranked fifth.


The announcement came after weeks of controversy over the deputy prime minis- ter John Prescott’s stay at the US ranch of Dome owner Philip Anschutz.


The Casino Advisory Panel looked at 67 licence applica- tions from local authorities countrywide. Professor Stephen


Poker and electronic roulette set for Belgium


bearingfruit BELGIUM


An amendment to Belgian gaming law, which would see poker machines, electronic roulette and live poker games permitted for the first time, is scheduled to be enacted by the end of July. Director of Grand Casino Brussels, Tim Cullimore, wel- comed the move. “Poker machines are found Europe-wide and are an essential part of the mix,” he said. “We’re already seeing our slot revenues build by between seven and eight per cent per month and we are looking forward to offering the new games in order to help boost that growth.” It will take some time before any new machines can be installed given the complex demands that exist in the Belgian approval process, including the stipulation that


client loss may only reach 70 euros in any one session. Current legislation also limits the number of slot machines to 15 for every table active for at least five hours a day, so there will not be a vast amount of new machines suddenly on the floor. “We have 17 or 18 tables active every day,” said Cullimore, “so we’re looking at about 25 poker machines to start with. We are not sure how electronic roulette terminals will be counted yet, so we have no idea how many we will have. However, we will be able to choose whether to run electronic roulette terminals off a live wheel or an automated wheel. We’ve already done studies with groups and they’ve shown that betting on a live wheel pleases the clients more, so I imagine that is the way that we will go.” Live poker games will also be a valuable addition to the gaming floor. “We’re hoping to have a cash games available every day and a major tournament every year,” said Cullimore. “We’re talking to other casinos from all over the country and are just now finalising rules for all kinds of poker from Texas Hold’em to Omaha et cetera. We will not have any problem fitting poker in: we already have a card room that was built into the original design in anticipation.”


Crow, the panel chairman, said: “The panel is pre- pared to extend the short- lists if, taken together with the existing information previously submitted, a local authority produces information that the panel considers justifies its inclu- sion on the relevant short- list,” he said. “It should be noted that the shortlists previously announced have been confirmed and the further period for sub- missions will not affect the position of those already on the shortlists.” Hugo Swire, the shadow


culture secretary, said: “Greenwich are in the unenvi- able position where, if they are successful, their competi- tors will cry foul because of the unprecedented access to the government enjoyed by the Dome’s owners.”


The CAP will make its final


recommendation to the gov- ernment by the end of this year with a series of examina- tions in public (EiP) being held up and down the country in August and September.


Technology puts German law makers to the test


EUROPEANNEWS12


Criminal killing Cy


Prohibition rarely works when it comes to casino gaming and despite warnings at the time that an underground industry would develop, Turkey’s decision to outlaw gaming in 1998 has failed on all accounts. Phil Martin reports on how legal operations in Northern Cyprus are being hit hard.


turkofthetown TURKEY


Having introduced an almost overnight blanket ban on its casino sector back in February 1998,the Turkish government has failed to prevent the devel- opment of a murky, under- ground ‘industry’which police say they cannot control. Almost 150 illegal venues


have developed in the shadows, many in private villas in Turkey’s big cities with the capital Istan- bul being identified as some- thing of a criminal casino paradise. Insiders claim that there are over 90 illegal gam- bling dens in Istanbul in Acarkent,Atakoy,Etiler,Kadikoy, Levent, Sariyer, Taksim and Uskudar.Away from the capital and there are widespread illegal operations in Ankara, in central Turkey,in Izmir,just east of Istan- bul,and in Antalya in the south on the Mediterranean coast. Analysts believe there are over 50 gambling houses in these three cities. As well as taking taxes away


from the government and pro- viding unregulated playing experiences for the customer, the illegal operations in Turkey are having a seriously negative impact on their regulated coun- terparts in the nearby Northern Cyprus Turkish Republic, where the number of people travelling to has been reduced by around 50 per cent. The Turkish ban was imposed as one of the last acts of the


country’s out-going Islamist-led coalition government. An attempt was initially made to shut down the industry on moral grounds.That ban was vetoed by the president but the new right-wing secular parlia- ment reimposed the measure in August 1996 after allegations that the casinos were being used by organised crime. In July 1996, Omer Lutfu


Topal, who owned one of Turkey’s five gaming organisa- tions was killed,reportedly in a battle over laundered money. The owners of Turkey’s 79 casinos appealed against the ban in the Constitutional Court, but their appeal was struck down the following January. But demand to gamble in


Turkey remained high spawn- ing the development of a sec- ondary industry in Northern Cyprus with 24 casinos now stretching along the northern coast. Many of


Turkey’s


respected operators relocated to the island and continued to cater to their Turkish customer base through junkets with a high degree of success. However, in the past two


years, the trend has reversed due to the onset of the under- ground casinos sector. Naturally, those operators


who have tried to do things by the book are dismayed at the Turkish government’s failure to enforce its legislation. Hakan Atici, assistant


manager at the Jasmine Court casino – one of the most impor-


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Monopoly bored, But can Cataluña keep sole status? EUROPEANNEWS3


Culture secretary


Tessa Jowell: facing fresh scrutiny


Revolt from within, UK ops demand level playing field


EUROPEANNEWS8


Blair slams casino opposition as ‘old fashioned’


oldtimers UNITED KINGDOM


British Prime Minister Tony Blair has defended his culture secre- tary Tessa Jowell’s stalled casino policy, chastising those who opposed the plan to build 17 casinos on morality grounds, saying they were ‘old fash- ioned’. The Prime Minister con- firmed that new casino plans would be brought forward after the May 3 local elections. Speaking in the House of Commons, during Prime Minis- ter’s Questions, he defended the government’s mired casino policy, insisting that the casinos would bring much needed investment and regen- eration to some of Britain’s regional cities.


His comments came follow- ing the news that Jowell’s plans would face further scrutiny with the promise of a Judicial Review of her propos- als as demanded by the exist- ing British industry, who are crying foul over the imbalance of new products being offered to the new venues.


On the issue of the location


of Britain’s first ‘super casino’, Blair said he was “entirely sym- pathetic to the concerns that Blackpool have expressed”. “It is a pity that in the end we ended up with Manchester being the site for the super casino - although I think it’s perfectly justified there - but then having Blackpool being unable to make the regenera- tion plans it wanted to make. What we have to do is look very carefully at this issue...and recognise that in a world where there is online betting, where there are huge opportunities for people to bet, that casinos...are not something that are against the proper norms of society but can, in places like Black- pool and Manchester, bring much needed private invest- ment in (and) regeneration that will provide jobs and higher living standards.”


Polish Sunrises for Olympic amid 30m investment


Olympic is shining its light on the Polish sector with a 30m euros cash injection which will see it consume 80 per cent of one local operator and launch what it says will be the country’s undisputed leading casino. Phil Martin reports on how Olympic Casino Sunrise will be looking to overshadow the rest.


polishingup POLAND


Baltic’s juggernaut Olympic Entertainment is speeding ahead with its expansion plans by acquiring 80 per cent of Polish operator Casino Polonia, entering its seventh gaming jurisdiction along the way. Having secured this


footing in the market, April will see it transfer over an existing licence to the recently opened Hilton Hotel in Warsaw where it will open Poland’s largest casino. To be called Olympic Casino Sunrise, the venue has cost 7m euros to develop. “Olympic Casino Sunrise in the newly completed Hilton Hotel in Warsaw will be defi- nitely the most modern entertainment establish- ment in Poland,” said Andri Avila, member of the Board of OEG. Olympic Casino Sunrise will be about three times larger than the Casinos Poland operation in the Hotel Marriott which was the largest casino in Warsaw until now. It will sprawl over three storeys on 1,600 square metres and offers winning opportunities on 20 gaming tables and 100 slot machines. “Construc- tion of Olympic Casino Sunrise began last Novem- ber and complied with OEG standards already in the design stage,” Avila added. Olympic is adamant that


Sunrise will bring new quality to the Polish casino landscape both in terms of size and gaming technology. Almost all the technical solu-


tions to be found in the venue, including loyal cus- tomer programmes and systems such as the cash-free EZ-Pay accounting system, are the first of their kind on the Polish market. Avila added that the rest of the gaming equipment will com- prise the latest technologies boasting further firsts never been seen before on the Polish market. Sunrise will benefit from


fantastic views over Warsaw from the confines of the 29 storey Hilton hotel. It should also benefit from the interna- tional visitors staying at the hotel, which offers


the


largest hotel convention facilities in the heart of the city. Hilton will also provide 3,000 meters square of prime meeting space, as well as a ballroom and a health spa, a business centre on two f loors and underground parking for 350 cars. It could prove quite a loca-


tion for the ever expanding Baltic-based group, which envisages a total investment of 30m euros into the Polish casino market over the next two years. The next few weeks will


see Olympic completing the transaction for the acquisition of shares of Casino Polonia, pursuant to a preliminary agreement for the acquisition signed back in September 2005. Early April this year saw Poland’s Ministry of Finance give its approval to the Estonian-born business to buy 80 per cent of Polonia’s shares. “This has removed the final obstacle for enter- ing the market, something that has taken one and a half


years to prepare,” said Armin Karu, chairman of the Board of OEG. According to a pre- liminary agreement, the total amount of the deal is 9m euros. Casino Polonia has seven casinos in four Polish regions; Warsaw, Wroclaw, Szzcecin and Gorzow Wielkopolski. After closing the deal, all the casinos will be re-branded to comply with Olympic Casino requirements. Staying true to its vision of becoming the largest opera- tor in Central Europe in 2010 and of operating in at least ten countries, Olympic is now present in Ukraine, Romania, Belarus, Lithuania, Latvia and Estonia. After the acquisition of Casino Polonia comes into force, it will have a total of 103 casinos.


Ballyhoo to Bally well everywhere 75 years of the GameMaker INTERVIEW32


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Soft Touch: 3,000 guests see Campione open


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Sun Stroke: Sun goes down on Russian rumour


EUROPEANNEWS16


Packer Hungary for Euro investment


Having just spent $US583m opening Crown Macau with its 220 gaming tables and 500 slot machines, gambling magnate James Packer is looking to invest again to ensure that Hungary’s EuroVegas project sees the light of day. Phil Martin reports on how it would eclipse anything that has been built before.


crownpleaser HUNGARY


Australian media and gaming group Publishing and Broadcast- ing Ltd (PBL) is partnering with US-based resort developer Eighth Wonder and a collection of other investors for his third casino foray in the past few weeks and this time their sights are set firmly on Europe.


The aim is to create Europe’s


closely on the completion of Century Casinos’


News of the deal follows part


takeover of Casinos Poland.


The Canadian operator has spent over US$8m on acquir- ing 33.3 per cent of the Polish company’s shares.


biggest casino with 3,000 slots and deliver the continent’s first real destination, resort casino, including a 300 room hotel, spa and theatre. PBL, owned by James Packer, son of the late Kerry Packer, wants to invest an unknown sum as part of an initial 137.5m euros money raising bid to build EuroVegas,


the Hungarian project, which has been doing


the rounds searching for poten- tial investors for a few years. Developers


are hoping


EuroVegas will be a Las Vegas in the heart of Eastern Europe, with five super casinos to be located close to the town of Bezenye, now home to 1,650 people, in the Gy r-Moson-Sopron region in north-west Hungary, close to the Austrian and Slovakian borders. The project will include a collection of hotels, as well as an amusement arcade centre. The latest blueprint is believed to involve just two Las Vegas sized casinos, downsized from the orig- inal five, being built in Bezenye, a region known as ‘The Golden Tri- angle’ due to its proximity to the big cities of Vienna, Budapest and Bratislava. Latest reports suggest that the first of these would have 200 tables and over 3,000 slots. But there is scope for more with


rumours of a football themed casino, which would at a later date provide extensive sporting facilities for the region. The devel- opment is looking to attract wealthy Russian gamblers to what is aiming to be Europe’s largest casino resort. The three firms fronting the


equity are Packer’s Publishing & Broadcasting, Guggenheim Part- ners, the wealth and investment management firm with links to the philanthropic family of the same name, and Eighth Wonder Capital, controlled by casino developers Mark Advent and Mark Vlassopulos. London hedge funds will also be called upon to fund the development and will be used to support the land acqui- sition and to kick start develop- ment. Work on the 240 hectare site is expected to begin in April next year. The deal has been made


Outgoing PM calls for more than one super casino


superfan UNITED KINGDOM


Britain’s outgoing Prime Minister Tony Blair left a leaving present for the casino indus- try as he slammed the opposition for blocking Labour’s casino plans and he told MPs that both Manchester and Blackpool should get super-casinos.


Blair said that only Conservative interven- tion had jeopardised the Manchester casino, whereas Labour’s plan would have allowed super-casinos at both Manchester and Black- pool. He added that if the government’s origi- nal plan to introduce eight super-sized venues been passed, many cities would have bene- fited from investment and regeneration. “Personally, I have never seen the reason why


we should have Blackpool and Manchester pitted against each other,” he said. “If the invest- ment is there and able to be done, let’s do both of them. I think it is extraordinary you have got a situation where, as a result of what the Conser- vatives have done, they have put in jeopardy the casino in Manchester and they go around the streets of Blackpool telling people that they support the casino there, whereas if we had had our way originally, without their intervention, we would have been able to do both.” Blair said the government hoped to bring


forward proposals ‘very shortly’ to introduce regional casinos. Initially, the government had said there should be a free market approach yielding about 40 regional casinos, but that was scaled down - first to eight, then to four then to one.


possible by a change to Hungary’s gambling law in 2005. The remaining 20 per cent will be controlled by the Asamer Group which is selling the 80 per cent stake and will be the local partner for the development. PBL promised international


expansion earlier in the year and has certainly delivered having just opened a six star casino resort in Macau spending $US583m along the way. It has also just embarked on its first foray into the US casino market buying 19.6 per cent of Fontainebleau Resorts for US$250m, the developer of a major new casino/resort prop- erty on the Las Vegas Strip and the owner of the Fontainebleau Resort in Miami Beach. This followed on the back of a 50/50 joint venture between PBL and Macquarie Bank to buy the


seven British Columbia venues of Gateway Casinos, one of the largest casino operators in Western Canada at a US$1.45bn. It also has a foot in the door of the British market with a 50/50 venture with Aspinalls for the Aspers brand, which has one casino in Newcastle, in the north east, and one set to open in Swansea in Wale. But for many, the investment into Hungary is seen as the biggest gamble. PBL will be carefully looking at the business plan to ascertain what visitor levels the project can attract. In its favour it benefits from convenient access to major highways, airports and railways with a population of approxi- mately 11m within a two hour drive. It is 45 minutes away from Vienna, 25 minutes to Bratislava and 1.5 hours to Budapest. The team behind it will also


point to several unique market entitlements, already approved into Hungarian gaming law, such as a low tax rate of around 12 per cent. The government has also promised exclusivity which has been granted within the Gy r- Moson-Sopron county. Perhaps representative of the


gamble involved, PBL has split its businesses into two publicly listed companies: a gaming company called simply Crown and a media company called Consolidated Media Holdings. Packer’s PBL teamed up with Eighth Wonder in its failed bid for Singapore’s second casino resort in October 2006. With the competition already hurdled for this project, it seems only the logistics of funding stands in its way, and that, of course, depends on whether investors think it will work.


Electronic Edge: Table gaming the electronic way


PRODUCTFEATURE34


The official publication of EELEX


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EUROPEANNEWS2


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INTERVIEW20


RFID: Chipping a way to the future


PRODUCTFEATURE22 An artist’s impression of how Euro Vegas might look


Touch of glass as Las Vegas hits London


Las Vegas came to London’s Leicester Square last month, find out where on page 6


British casino claims kicked out of court


Having lost its High Court battle, the British Casino Association is now asking the Department of Culture Media and Sport, which oversees gambling, to look again at its policy regarding existing casinos and how they will fare against new, bigger competitors.


countedout UNITED KINGDOM


The British Casino Associa- tion (BCA) lost its High Court action against the government fought on the grounds that plans to create 17 new casinos would result in unfair compe- tition to existing casinos. Mr Justice Langstaff


rejected accusations by the BCA that culture secretary Tessa Jowell had failed to provide “a level playing field” for existing casinos to compete with the new breed of incoming small, large and regional casinos. Lawyers for the BCA told


the court that they faced being treated as “second-class citi- zens” with the daunting prospect of losing up to £120m a year in profits. Justice Langstaff ruled that the legal challenge failed on all counts. Michael Beloff QC, repre- senting the BCA and four of its member companies - Gala, Grosvenor, London Clubs International and Stanley, stated that Jowell was “closing her mind” to the possibility of making greater provision for existing premises, including access to gaming machines. Beloff added that govern- ment consultation had been inadequate, saying that Jowell had been “materially mistaken on a number of material facts”. He also argued that the Transi-


tional Order, made under the 2005 Gambling Act to pave the way for the new wave of casinos, was “fatally flawed”. Justice Langstaff said: “My


conclusion is that each point, whether taken separately or together, fails. No basis has been made out before me for challenging the propriety of Paragraph 65 of Schedule 4 to the Transitional Provisions Order of 2006. It was properly made, whatever the merits of arguments about its conse- quences. The claim must fail.” In a statement to press,


Lady Penny Cobham, chair- man of the BCA, said: “We welcome the judge’s recogni- tion of our concerns about the introduction of the new regulatory regime and the unfairness created, leading to two tiers of casino. “It is important to note that the court was concerned purely with process. It was not making a judgment on the merits of the govern- ment's policy of discrimina- tion. Our view is that the very substantial competitive advantage granted to the 17 new casinos is disproportion- ate and will pose a serious threat to long-established British businesses and jobs.” Sports minister Richard


Caborn was swift in backing Langstaff’s ruling, saying: “I welcome the judgment which has dismissed BCA’s case on


all grounds and found that our policy was fairly and properly made. We have always put social protection and proper regulation above commercial interests and this judgment supports that approach. It is only right that the new enti- tlements granted by the Act should be limited to the 17 new casinos while we take time to assess them properly.” Having acknowledged the


court’s ruling that the process was “adequate”, BCA chairman Lady Penny Cobham was less than con- vinced in relation to other comments made by the judge in his statement. “It was sober- ing to read the judge’s view that to be treated fairly you only had to be allowed to actually give your views or post a letter in,” she said. “They (the DCMS) didn’t have to look at or read those views. That has far reaching effects.” As a consequence of the BCA action, it was inevitable that the issue of discrimina- tion against existing casinos would come to the fore at some stage. And while Cobham was keen to stress that the court case was purely brought on the grounds of process, she welcomed the additional focus on what many will view as unfair com- petition to existing stakehold- ers. “We were grateful to the judge for explicitly acknowl-


edging that the existing indus- try actually feels that that it has quite legitimate commer- cial concerns,” she added. As for where the judgement


leaves the BCA in the run up to the implementation of the Gambling Act, Cobham said: “There is a whole host of issues that needs to be dealt with between now and Sep- tember. We’re keeping a watching brief - pausing for thought. We want to main- tain our positive relationship and good communications with the DCMS.” The response of BACTA,


the UK’s amusements trade association, meanwhile, was to welcome the judgement. In a press statement, the association said: “The BCA


had argued that the secre- tary of state should have acted on the grounds of ‘fair competition’ to grant an increase in machine entitle- ment to existing casinos alone to assist them to com- plete with the new casinos being introduced by the Gambling Act 2005. “But BACTA had also argued if this were to be the case then there would be no ‘fair competition’ between a number of BACTA members (in particular AGC operators) and current casinos. This is because any increase in the number of gaming machines for current casinos would increase their profitability at the expenses of AGCs as they would be allowed to provide


a far greater number of Cate- gory B machines.”


Responding to the judge- ment Nick Harding, BACTA president, said: “I welcome the judgement and am pleased this issue has been resolved. BACTA’s prime concern was to ensure fair competition and protect the interests of our members and I am pleased the High Court has accepted our arguments. “While BACTA and the


BCA may have taken a differ- ent position on this issue there are many other matters in relation to the implemen- tation of the Gambling Act where we concur and we will continue to work closely with them in the weeks and months ahead.”


The official publication of EELEX


Flight or Fantasy: Portuguese look at airport casino


EUROPEANNEWS3


Maltese Cross: Huge expense for euro switch


EUROPEANNEWS10


Super casino ‘farce’ now ‘dead in the water’


The shambolic stumble towards super casino legislation in the United Kingdom looks like it has finally hit the deck with new Prime Minister Gordon Brown felling the plans with a swift delivery that was neither expected, nor, it would seem, consulted on. Phil Martin reports.


supersizeduturn UNITED KINGDOM


What looks like the British government’s final u-turn on the issue of a super casino was met with little surprise from operators at home and abroad who have wasted US$20m on their UK plans. The timing and the manner


in which Gordon Brown’s message was delivered was all that shocked an industry which has seen its invest- ment plans turned on its head several times. The new Prime Minister


casually batted aside the Blairite blueprint for a super casino based in Manchester, during Prime Minister’s ques- tion time, with little or no consultation with anyone. “I hope that during these summer months we can look at whether regeneration in the areas for the supercasi- nos may be a better way of meeting their economic and social needs than the cre- ation of supercasinos,” he said, pointing to yet another


report due in September on the scope and social impact of gambling. Jonathan Galaviz of Las


Vegas-based consultancy Globalysis estimated that the casino industry had spent something in the region of US$10-20m (£4.9- 9.8m) on UK business devel- opment efforts over the last couple of years. Neil Murphy, director of


development at South African operator Sun Inter- national, said: “The UK has descended into classic comedy. The government has wasted people’s time and money with their promises to investors, which have made a mockery of UK plc.” Speaking alongside


Murphy at the Gaming Exec- utive Summary in Madrid as the news broke, executive vice president of Genting Berhad Andrew McDonald stressed that operators of such large scale projects require a good canvass on which to design a successful casino model. He presented


US brand hits British Isle


delegates with a toilet roll commenting that unfortu- nately the UK’s canvass resembled little more than a roll of toilet paper. Brown’s intention is to


drop the largest venue, while proceeding with the other 16. Whilst the timing of his announcement came as a sur- prise, Brown’s stance on gambling has never been in any doubt. He has never been an enthusiast for gambling and raised the top rate of gaming duty to 50 per cent in the last budget. One Whitehall source said:


“He’s alright about smaller casinos, but I don’t think he [ever] liked the idea of this larger one.” Certainly the timing of


Brown’s remarks raised eye- brows in Westminster. His spokesman said the Prime Minister had not discussed it with the cabinet, but had agreed a position with the new culture secretary James Purnell. Jeremy Hunt, the shadow culture secretary, said: “This


There was a certain irony in the fact that the first US casino brand to open in the UK, Isle of Capri, did so in the week that the British government all but ruled out the development of Las Vegas sized super casinos. But that didn’t dampen the spirits in a rain soaked Coventry. Full story page 6


raises serious questions about Gordon Brown’s credibility. We know how much influence Brown had under Tony Blair’s govern- ment - why didn’t he say something then?” “The government are in complete disarray over this issue,” added Liberal Democ- rat shadow culture, media and sport secretary, Don Foster MP. “Local councils were encouraged to apply for these licences, spent a huge amount of money during the bid process, and could now be left high and dry. Gordon Brown didn’t mention any concerns about the impact these casinos could have when he was voting in favour of them back in March. If there are con- cerns over the impact of these casinos then the final decision should be made by local people through a refer- endum, not with yet another consultation. We are entitled to ask what has prompted this sudden change of heart and more importantly how much


this complete farce has cost the British taxpayer.” For UK operators it was a


bittersweet victory. Of course they had been all in favour of revolutionising the industry until it emerged that only one super casino would be allowed to operate unlimited jackpots, thus creating one super power in the sector. The British Casino Associa- tion had taken its members’ fight to a Judicial Review over claims of inequality in the Bill. Chair Lady Penelope Cobham said: “It is important that this situation is resolved quickly and decisively. Like all businesses, we need cer- tainty - an ingredient con- spicuously absent from much of the passage of the Gam- bling Act.”


A spokesman for UK big- hitter Rank said: “We cur- rently operate five casinos in the Greater Manchester area (including Bolton) and our casino managers will no doubt be relieved if the super- casino does not go ahead.” Rank said it was planning


to bid for “a number of the new (large and small) casinos should the opportunity arise”. But its chief executive, Ian Burke, had already warned that the chancellor’s decision to raise casino duty to up to 50 per cent would call into question the viabil- ity of some of them and limit the funds available for regen- eration.


The Manchester project


was expected to generate 2,700 jobs in east Manches- ter through its 5,000 square metres of gaming floors and bars and in surrounding cinemas and hotels. Graham Stringer, MP for


Manchester Blackley, said Brown’s was a ‘weak and bad’ decision. “The idea that Man- chester City Council haven’t thought of all the possible ways to regenerate east Man- chester is, quite frankly, insult- ing. Unless the government is going to replace that level of investment ... nothing is going to happen in one of the most deprived parts of this country,” he said.


Moscow Rules:


Gambling ban begins to bite


EUROPEANNEWS14


The official publication of EELEX


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EUROPEANNEWS10


In complete contrast to the recent ruling of a British court, a Danish judge has said that poker should be classified as a game of skill and not a game of chance. Analysts believe this could set a precedent with similar court action expected across Europe and the US.


Danish judge rules that poker is a game of skill


skillfactor DENMARK


A Danish judge has ruled that tournament poker is a game of skill and not chance, allow- ing poker competition organ- isers to avoid prosecution under Danish law. The decision is being closely


examined by poker tournament organisers in other European jurisdictions and the United States, where similar court actions are expected to follow. The case was brought against the Danish Poker Association, who represents poker clubs, by the Police Commissioners Pros- ecution Service arguing for a violation of the criminal code, but indirectly supporting the view taken by the hotel and restaurant trade association Horesta, acting on behalf of licensed casino operators. Casino operators believed that the Danish Poker Association were organising gambling events, illegal under Danish law. “This case is unique in that


we believe it is the first time anywhere in the world that the rules of poker have been closely scrutinised,”


said Anders


Hansen, the managing partner at DANDERS & MORE, the Danish law firm representing the Danish Poker Association. The municipal court of


Lyngby’s ruling is one of the first rulings in the world that analyses the various elements of poker and concludes that a poker tournament is not a


game of chance. “We have not been able to get a confirma- tion, but apparently a Russian court has recently reached the same result, whilst a district court in Nevada has recognised poker as a trade for the purpose of income taxation and tax deductions. Similar cases are pending all around Europe,” Hansen added. “The court has recognised that a poker tournament played over many hours requires a range of strategic, analytical and mathematical skills, and without these skills a player is unlikely to win.” The ruling, handed down


on July 13 2007, specifically relates to Texas Hold’em, one of the most popular versions of poker played at tournaments the world over. Hansen adds: “The rules of


Texas Hold’em are internation- ally recognised. Poker federa- tions in many countries with similar restrictions have been watching this court case closely and we expect to see similar actions occur. There is an almost identical case currently pending in the Netherlands, Germany and France.” However keenly the Danish


ruling is welcomed by those running poker clubs in the UK and seen as a sign of hope, it is still far from clear as to whether the case will provide grounds to challenge a UK ruling in January this year on the Gutshot Club. A London court ruled that Gutshot Poker club was in


breach of gaming laws as it was operating without a casino licence. As poker contained an element of chance it ruled it should be classed as a game of chance and so should remain the exclusive game of a casino licence holder. Hansen explained: “The


reason for the different out- comes of the Danish case and the Gutshot case shall therefore mainly be sought in the legisla- tion on which the rulings are based rather than in the reason- ing of the courts that decided them. The Gutshot case was decided under the Gaming Act of 1968. This act does not apply the predominant test like the Danish Criminal Code does. Under the Gaming Act of 1968 a game is considered a game of chance even if the game con- sists of chance and skill com- bined, and in this context the possibility of superlative skill eliminating the element of chance shall be disregarded.In other words, if there is any element of chance, it is a game of chance and, if played for money, gaming under the Gaming Act of 1968. “Further,” he added, “since the Gutshot conviction was a jury conviction as opposed to the Danish case where a judge- ment was passed by a judge these two cases are not directly comparable from a procedural point of view either.” Trevor Watkins, partner and


acknowledged sports law expert at Clarke Willmott, com-


ments: “The decision in Denmark is at variance to earlier rulings in the UK. Given the recent EU intervention on online gaming, it is possible that eventually there could be an EU wide decision on how poker clubs should be regulated. We have seen this happen with foot- ball which has had international implications. Given the views of the new Prime Minister Gordon Brown in the recent decision on super casinos, it must be unlikely that there is any political will in the UK government to see the EU adopt the Danish position.” In Denmark, poker is a very popular game with some


300,000 people playing every week and some 500,000 people playing regularly. Most poker playing in Denmark takes place online, but more and more poker clubs are being established around the country to accom- modate the need for live tourna- ments. There is still the possibility that the case may be eventually heard before the Danish High Court, where a judge may take a different view, but Hansen believes the impli- cations could reach toward a much wider audience. “This Ruling is the first step towards international recognition of poker as game of skill, which is


predominantly decided by the players’ application of mathe- matical, economical and psy- chological analysis skills as well as strategic thinking,” he pre- dicted. “At the moment, the EU is mainly concerned with sports betting, and there are no indica- tions for the time being that the EU will take a European wide stance on the status of poker. Several similar cases are pending around Europe at the moment, and it is likely that this ruling will result in even more cases.” The decision will see some of the big poker brands looking to increase the market activity in Denmark as a result.


Good reef! Casinos Austria tables 200m euros African bid


WORLDNEWS20


Money walks. Just the ticket or on the cards?


CASHLESSFEATURE34


Poker: A game of skill in Denmark, a game of chance in the UK. Image courtesy of Casinos Austria International


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British Act implemented but ‘golden age’ hinges on study


Britain introduced sweeping new laws in September to overhaul its gaming industry for the 21st century, regulating everything from online gambling websites to television advertising. But without the promise of the super casino, it isn’t quite the golden age once prescribed. Phil Martin reports on prevalence studies, tax reviews and, of course, the new Gambling Act itself.


actingup UNITEDKINGDOM


From a liberalising piece of legislation to a watered down legislative mess, Britain’s new Gambling Act was aired at the start of September but without the drama of the super sized lead part, it was the support- ing acts which were left to carry the storyline. With no super casino yet,


and a prevalence study, due out as Casino Review went to press, set to shape the futures of the small and large new styles of casino, the most dra- matic change will most likely be felt in the living rooms of potential new players with the industry allowed, for the first time much greater freedom in how it advertises, most perti- nently through the powerful medium of television. With the much quoted per-


centage of three to four of the British adult populace having actually stepped into a British casino, the opportunity to educate and stimulate the masses as to what actually takes place once passed a casino reception desk holds untold potential. UK casino operator Aspers


was quick on the advertising uptake, launching its first tele- vision advertising campaign on September 1. The campaign featured an inexperienced and nervous roulette player. As the ball is spun it jumps from the wheel and spins instead around the Aspers casino showing a panorama of the slot machines, live enter- tainment, TV screens, bars and restaurants. Damian Aspinall, chairman and chief executive of Aspers Group, said: “Aspers is about having a fun night out. Our world-class leisure, entertainment and gaming


complexes give our cus- tomers everything they need to have a fabulous time. We want viewers to be aware of the full range of facilities that we offer and are glad that we can now compete on a level playing field with the off- shore online gaming busi- nesses that been advertising in the UK for years.” The potential impact of TV


advertisements, subject to an agreed code of practice, clearly appeals to operators across the country.


A spokesperson at Rank,


which operates the Grosvenor, G-Casino and Hard Rock Casino brands, said: “We believe that this presents us with a major opportunity both to stimulate interest in our casinos from potential cus- tomers and to help demystify the wider public perception of the nature of casinos and casino gaming. In September we will launch our first major advertising campaign for casinos, focusing on local and regional press and radio, to heighten awareness and to stimulate growth in new members.” The government is currently


reviewing its stance on taxes paid on player-to-player games in casinos, such as poker, where gamblers’ so-called participa- tion fees are subject to VAT but not gaming duty. The Treasury conceded that ministers had made several incorrect state- ments relating to gaming duty in casinos since April 30. Exchequer secretary to the Treasury, Angela Eagle, said the mistake was first made by the then financial secretary to the Treasury, John Healey, when he implied that poker players, like bingo players, pay both gaming duty and VAT. Eagle explained: “In fact,


the Finance Act 1997 does not apply gaming duty to partici- pation fees for poker played in casinos, so participation fees for poker played in casinos are liable only to VAT. I apologise to the House for this misunderstanding.” A Treasury spokesman


revealed that no date had been scheduled for any conclusion from this review, but did suggest that with tax changes typically announced in the pre- budget report, due in October this year, or the annual budget speech in the spring, these were the most likely dates. The British casino industry


already believes it is more heavily taxed than several international jurisdictions. Before taking on his current role of Prime Minister, Gordon Brown earmarked a 50 per cent tax on the GGR of any future super casino. Roy Ramm, compliance


director of London Clubs International, believes any tax rises will have the opposite effect to the one desired. “The financial burden on the indus- try is growing all the time,” he advised. “But you could make an argument to say that if you


want an operator to build well- appointed venues where people will take their wives or girlfriends and enjoy a good night out, you have to leave operators with enough money to do that.” So what of the prevalence


study, due out in mid Septem- ber, on which the futures of


small and large casinos hinge? Some findings from the Gam-


bling Prevalence research study among problem gam- blers carried out by Birming- ham University academics working with the National Centre for Social Research, have already been leaked to the national newspapers. Commissioned by the UK


Gambling Commission, the study hopes to map out how gambling habits have changed as it will be compared to a similar project carried out eight years ago which found that problem gamblers account for 0.6 and 0.8 per cent of the adult population. According to several sources, the new figure is nearer two per cent of the adult popula- tion. The Observer newspaper reported that the studies high- lighted an increase in online gambling, with nearly a million ‘regular online gamblers’ in Britain, accounting for almost a third of the European total. On average, these gamblers spend about £1,000 a year. The Times newspaper said that ‘casino operators were in fear that, despite the govern- ment’s protestations to the contrary, it will seize on any increase to clamp down on the industry or hit it with puni- tive tax rises.’ One industry source said: “It’s time to put our tin helmets on”.


Others remain where they


have been for much of the meandering legislative process - in the dark. Ian Burke, chief executive


of Rank, said: “There have been mixed messages from govern- ment.”


Neil Goulden, chief execu-


tive of Gala Coral, which owns bingo halls, casinos and betting shops, added: “We all need some continuity to be able to plan our businesses.” Other executives went


further, claiming they have been used as a ‘political football.’ Culture minister Gerry Sut-


cliffe said that he would find any rise in problem gambling unacceptable although offi- cials from the Department for Culture, Media and Sport confirmed the prevalence study will merely be used as ‘a base-line’ on which to gauge any future growth.


Whilst the medium of TV should boost footfall in exist- ing casinos, certain newspa- pers won’t need much encouraging to try and derail the new style casinos of the future, even further. Lady Penny Cobham, chair- man of the British Casino Association, said: “If some quarters of the press come out virulently, it won’t take much to unsteady ministers on the receiving end of unwelcome bad publicity.”


The official publication of EELEX


Olympic’s games: Estonians continue race across Europe


INTERVIEW26


Europe’s biggest casino market


could finally be allowed access to legal online casinos.


Concessions on internet gaming


could be used to temper demands about access to online betting


operations from the EC. Hugh Sorrill reports.


French open door on relaxation of online restrictions


opportunityknocks FRANCE


The French government could finally be bowing to pressure from both the European Com- mission and from the gaming industry to allow online casinos and to open up online betting to operators from other countries. After Éric Woerth, the


Budget Minister, indicated that he was open to a more liberal approach,


the minister


holding the gambling portfo- lio, Interior Minister Michèle Alliot-Marie said on October 17 that she too was minded to allow existing French casino operators the right to launch online games. However, if Alliot-Marie


allows French operators to go online, she may well also be forced to allow other Euro- pean companies to do the same. The government’s stance on online betting, par- ticularly sports betting, has been under fairly constant attack from the European Court of Justice for some time: the current law allows only the French companies PMU and Française des Jeux to offer their services on the internet, contrary to the principles of the free market in services. The government is due to


The French Interior Minister, Michèle Alliot-Marie


meet Charlie McCreevy, the Internal Market Commis- sioner, in November to discuss matters further and try to per- suade him to put off referring the matter to the ECJ again for another four months. In a message read out to a


conference on the evolu- tion of the French model for gaming, Alliot-Marie said: “As for online gaming, I would like a future without taboos,” adding also that there must be agreement “in finding ways to allow the profession to be present in these new markets without lowering the level of vigilance that state opera- tors have to maintain in the quality of the offering and of the games.”


This is a statement that will


be of acute interest to the French casino industry. The country’s largest operator Lucien Barrière is set to launch its online gaming site in markets across Europe within six months, as a pay site where legal, and as a free site in other places, including its home market. (See p4 for more details). The Partouche Group, the


next biggest operator, has already tried to force the issue, launching an online casino in January. However, the frustrated president of the company, Patrick Par- touche, was not only told to remove the site, he was also prosecuted, found guilty, fined 40,000 euros and given a one-year suspended sen- tence for his temerity. Larger casino operators


in France are showing them- selves extremely keen to get into the online market in order, they say, to counter a stagnation in their rev- enues and fight the compe- tition from illegal sites. The government could do well out of it, too, taking a tax of about 60 per cent of gross gaming revenues. France’s tug of war with


the European Commission about online gaming has been hard with neither side willing


to give much ground. The Commission has even rejected the French argu- ments concerning gambling addiction. Woerth has said that the government will stay firm on this question, allow- ing only that it would take note of the European context: that context is, of course, that all governments are con- cerned about gambling addic- tion and how to prevent it - the politics of the issue


matters everywhere. In order to address those issues, designers and operators of online casinos are building protection measures and pro- cedures into their software. While the French govern- ment wants time to find a compromise, the European Commission might decide anyway to involve the ECJ once again in a case that will have continent-wide ramifications.


Putting on the Ritz: Ritzio ready for life after Russia


INTERVIEW30


Vegas show time: What’s due out for the new season?


G2EPRODUCTS58


Long live King Eric: a relaxation in French law could soon see King Eric Cantona return to host Partouche’s online offering


Russian businessman gambles on casino in Iraq


gamblingman IRAQ


The war torn Republic of Iraq has opened its first casino with Russian busi- nessman Vitaly Kouznet- zov financing the


development in the north- ern Iraqi city of Suleimaniya.


The table and slot venue is located near the border with Iran in an area considered a bastion of liberalism in a country otherwise torn apart by civil unrest and religious tension.


Kouznetzov is confident that the casino won’t increase tensions despite gambling being strictly for- bidden under Islamic law. “For 500 years people have been fighting, now there is a democracy we can open a casino,” he said. “I don’t see this being a problem. We have excellent security. Everyone carries Kalash- nikovs, but we have a room by the door where they can check them in for one hour, two hours or however long they need to.”


Kouznetzov added that the client base was devel- oping nicely. “We have a lot of nice cars in the car park and good cars mean good customers.”


The official publication of EELEX


The die is cast Harrah’s/LCI launch new boutique brand


EUROPEANNEWS8


Ostracised Princess. Princess Casinos on life out of Turkey


INTERVIEW24


Spain’s city of every historica


A massively ambitious project earmarked for the Spanish region of Aragon is aiming to attract gaming operators to fill 32 casino sites, on an area the length and breadth of the Las Vegas Strip. Phil Martin reports on how the single project wants to deploy 40,000 slot machines into central Spain.


timeteam SPAIN


A casino project, stretching for 4.5km in each direction into the deserts and alluvial plains of the Ebro Valley in Aragon, central Spain, has been presented to the casino industry at the Global Gaming Expo. Being touted by British company International Leisure Development, the blueprint is for 32 themed casinos to form a gambling nucleus for a wider project spanning water parks, theme parks, residential districts, golf courses, hotels, restaurants, a horse racing course, a conven- tion centre, concert facilities and a 250 shop retail outlet. The working name for the


project is Grand Scala, although this is likely to change as the plans come to fruition. The 32 casinos will operate under strictly themed guide- lines, representing 16 differ- ent historical stages in the evolution of man. They will be


set out in a huge circle around a central figure of a clock. Each casino will operate up to 1,250 slots, the size of the UK’s so called, stalled super casino. The 16 themes include classic casino themes such as ancient Egypt, Ancient Greece, Rome, the Middle Ages, the Renais- sance and the French Revolu- tion, although there are some more obscure titles such as the Century of Enlightenment up to the capture of the Bastille in Paris. Each of the casinos will include a themed hotel and a museum focusing on relics and topics of the period which it is representing. The projects literature


states: “The idea is to bring in young people, families, gam- blers, people interested in sport and OAPs. The plan will unify 16 periods. In each one of these stages, two com- plexes composed of a museum, a hotel and a casino are going to be developed around the topic of the period. Our proposal is to plan to ulti- mately build two casinos for


each of the periods which make up the ring. Each casino will have maximum width of 360 meters and will be 250 meters long. In front of each casino, a mini-museum will serve to underline the casino’s historical theme. Like a cul- tural ‘anteroom’ it will become a kind of reference point and will enable visitors to enrich their knowledge.” “Most of the contributory activities of the project are going to be concentrated on cultural topics, such as inform- ative museums, creating understanding by means of recreation and a wide range of


Sweden close to melting monopoly freeze


Sweden’s ruling Moderate party wants to break up its gaming and betting monopoly to make it more competitive as a market.


State-owned operator Svenska Spel is expected to be privatised to allow the company to compete more effectively in the new market either through a


stock market listing, or by a purchase by another operator.


FULLSTORY europeannews p12


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Bunnies are Back: Playboy in London


EUROPEANNEWS2


Loyal Following: PGI & Concise Play the Loyalty Card


INTERVIEW18


Regulation on the cards following Irish report


The long overdue report from the Irish government-appointed commission on gambling regulation has now finally been published. The U turn from former Minister for Justice Michael McDowell’s blanket ban is now all but complete. Simon Banks and Phil Martin report on how there would be no guarantees for the existing industry, if the report is implemented.


powerplay IRELAND


Black and white could become the new grey in Ireland following the publica- tion of a government commis- sioned report which strongly advises regulation not prohi- bition is the way forward. The report by the Irish gov-


ernment’s Casino Committee on the regulation of gambling in the Republic has finally been published, two years after it was commissioned by former justice minister Michael McDowell with Reg- ulating Gaming in Ireland making 32 recommendations, including the licensing of casinos and the establishment of a new regulatory authority. The report was commis- sioned in July 2006 after McDowell threatened to close down a number of private members clubs that were offering casino style games such as roulette and black- jack. Under the 1956 Gaming and Lotteries Act, casinos are illegal in Ireland but private members clubs claimed that they were exempt from the Act because of their member- ship status. Since the report was commissioned,


the


number of private members clubs offering casino style gaming has increased from under 20 to over 50. The report argues that casinos should be licensed with operators undergoing rigorous background checks. It also calls for a dis-


tinction to be made between betting and gaming and sug- gests that they be regulated separately, the upshot of which is that betting shops will not be allowed to install Fixed Odds Betting Termi- nals as all gaming machines will be restricted to licensed premises. Another recommendation that will boost the new licensed casino sector is removal of powers over amusement arcades by local authorities. Slot machines and amusement with prizes machines will be regulated by the new authority and only be allowed in licensed premises. David Hickson, a director


of Dublin’s Fitzwilliam Card Club and of the trade associa- tion the Gaming and Leisure Association, welcomed the report. “We feel it is a very pos- itive report and is a move in the right direction,” he said. “The recommendations are


appropriate as the current law is obviously outdated. If the recommendations find their way into law then there will protection for the public and the vulnerable that doesn’t exists right now,” Hickson added. The report also calls for a


review of gaming tax and sug- gests that it be set above the current one per cent of stakes paid by bookmakers, although it concedes that the issue is ultimately one for the finance minister. It looks at the internet and notes that currently many Irish opera-


tors base their online opera- tions offshore. It calls for remote gambling to be regu- lated separately from terres- trial gambling but under the same regulatory authority. The report suggests that by offering online operators a trusted jurisdiction to operate from, the Republic could benefit from inward invest- ment while online gaming remains illegal in the US because of the UIGEA. Justice minister Dermott


Ahern has said that he will try and achieve cross party consensus and conduct con- sultations with interested parties before any of the rec- ommendations find their way on to the statute book. Hickson, however, questions whether achieving consen- sus is really necessary; “I think there was an idea that there would be opposition to the liberalisation of gambling but this is not liberalisation it is tough regulation.” Ahern described existing


laws on gambling as ‘past their sell-by date’. Referring to the 50 odd private members’ clubs in existence already he added that the time to outlaw them had gone. “What we need to do is regulate them in a way that is fair,” he explained. The report ushers in the


start of a new era in Irish gaming, one of legal clarity and strict regulation aimed at protecting children and the vulnerable, while at the same time allowing for the devel- opment of new and legitimate


sector of the Irish leisure industry. Although the owners of private members clubs that currently offer casino games have broadly welcomed the report, its authors warn that they should not expect favourable treatment when licences are awarded: “The Committee recommends that the government send a strong message to those currently engaged in casino-style or other unlicensed gaming activities to the effect that currently unlicensed opera- tors should be advised that, in a new and strict regulatory environment, they must not assume that they will receive an operator’s licence. The fact


The Sporting Emporium in Dublin


that they are engaged in such activities at present will not necessarily, under any new regime, guarantee them a licence,” the report says. Licences will be awarded


according to criteria set by a regulatory body and should not be auctioned off in a bidding or ‘beauty’ contest. There are already several high quality ‘casinos’ in Ireland. The Fitzwilliam Card Club was developed by Hickson’s father who had already established the Merrion, back in 1985. Hickson highlighted that an average night at the Fitzwilliam Club sees 200 to 350 people pass through the


doors and expects the club to generate a break even gross profit of up to €4m. And investments into these clubs have not come cheap. Dermot Desmond invested €5.5m on his Dublin-based Sporting Emporium,


a


13,000 square-feet premises that opened in 2005. With no guarantee that


existing operators will obtain licences the new market could attract interest from new businesses. Cer- tainly local betting giant Paddy Power has confirmed it will examine the possibil- ity of entering its domestic casino market if legislation is ‘sensible.’


globalgambles THE WORLD


The world is in a strange eco- nomic spin at the moment with the global casino sector caught up in a vicious circle of rising living costs, the credit crunch and spiralling gaming revenues, all of which are sending casino share prices plummeting. High fuel prices and rising living costs are curbing visits and spend on gaming floors once thought to be resistant to recession with bankrupt- cies to major casino firms, the plug being pulled on several large scale projects and lenders now less likely to part with their investment funds. Indeed, investors into casino bonds have been hit hard losing an estimated 14.2 per cent on shares in the last year. Having thought casinos were recession-resistant, investors and bankers were keen to inject cash into the business during the credit surge but with the economy on its knees, GGR is suffering and casino operators are finding their businesses with little revenue to support their


debt causing apprehensive lenders to back off. Gaming shares have been the second- worst performing junk-rated bonds after diversified media companies, which are down about 15.9 per cent. But the worst is not over with Moody’s Investors Service’s Keith Foley warning that smaller, single-venue oper- ators with large debt were most at risk and believes things haven’t hit rock bottom yet. “The expectation was that


in a down economic cycle that gaming would still do well, but gaming is showing that it’s vulnerable,” he said. In the United States three


operators have filed for Chapter 11 bankruptcy pro- tection already in Greektown Casino in Michigan, Tropicana in Kentucky and Legends Gaming in Illinois, but shares of other major American gaming companies are operat- ing at ‘distressed’ level, a red- alert warning that suggests the chance of serious default. Analysts MarketAxess


explained that several more operators are perilously placed explaining that Bonds are considered distressed


when they yield 10 percent- age points over the Treasuries. Donald Trump’s Trump


Entertainment Resorts has bonds due in 2015 which are yielding 25.6 per cent with losses of US$29.8m in the second quarter.


Station Casinos, mean- while, has some bonds yield- ing nearly 20 percentage points more than Treasuries. In total, US casino compa- nies also have about $10.6bn of loans which will need to be repaid or refinanced next year and with banks charging higher borrowing rates that debt could mount. According to JPMorgan, some US gaming companies have accumulated up to 10 times more debt than earnings before interest, taxes, depreci- ation and amortization. With income down many are now on the verge of contravening lending agreements. With many operators dependent on developing huge casino-based projects to fuel growth, and investment not coming anytime soon, many parts of the sector look stuck in an economic rut. Rather ominously JPMor-


gan said in a recent report: “We do not see any meaningful pos- itive catalysts on the horizon.” For some of the bigger oper-


ators, the impenetrable rev- enues in Macau had offered a huge safety net but shares for their Asian divisions have also fallen in recent weeks follow- ing the news that Chinese gov-


ernment was looking to limit visits from the mainland from October. Visitors are now per- mitted to go to the gambling enclave once every two months but the new restric- tions would make that once every six months. Jefferies and Company analyst Lawrence Klatzkin said


concerns over slower gambling revenue were ‘way overblown’ and predicted that slower revenue growth in the second half of 2008 and the first half of 2009 due to no significant capac- ity boost would be offset by a resurgence in the second half of 2009, when three major proper- ties are scheduled to open.


Flush with Success: Poker stokes the casino industry


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Railroaded Why Vegas could remain off track


INTERVIEW34


Distressed US casinos at risk of defaults


A confluence of economic woes, high taxation and regulatory restrictions have ganged up on gaming revenues across the world. Phil Martin reports on troubled times for the once recession resistant market of Las Vegas and on how even Macau could be set for a dip in its own amassed fortune.


Third Degree Harrah’s rolls the dice with third


EUROPEANNEWS6


International Force. Why IGT is more international than ever


INTERVIEW34


First signs of trouble as Macau growth nears zero


herotozero CHINA


oncern is growing in the Asian gam- bling capital of Macau where opera- tors are predicting zero growth in gross revenue in the first half of Sep- tember this year compared to last year. This would be the first time this has happened since 2004.


GGR between September 1 and September 15 totalled to 3.6bn patacas, which if maintained until the end of the month would represent only a single digit growth compared


to September of 2007. Operators believe September 2008 will gener- ate GGR of between 7.2 and 7.5bn patacas. Last year’s corresponding figures equated to 7.1bn patacas. Whilst August saw an increase of just over 44 per cent, to 9.61bn patacas, September was sub- jected to tighter controls on entry into Macau.


A source blamed China’s limita- tions on visas and the tough global economy, predicting that from Sep- tember until the end of 2008 the gaming sector would see ‘very slow


or even negative growth.’


“In October of 2007 casinos posted gross sales of 9.2 billion patacas and if you take into account what is happening in September, it is possible that October will see nega- tive growth,” the source said. GGR for the first nine months of the year are expected to see contin- ued strong year-on-year growth of around 45 per cent.


Analysts believe this will dip to a more modest 30 percent with gross revenue totalling between 110bn and 115bn patacas


London High Court rules credit only where credit’s due


As if the credit crunch, the struggling economy, soaring taxes and the smoking ban weren’t enough to contend with, six of London’s most famous casinos are now being taken to court. Phil Martin reports on how one former high roller is suing on grounds of undue credit.


with Justice Teare rejecting the Mayfair casino’s claim for a payment owed of £2m. Al-Zayat claimed the casino had allowed him credit which was unlawful under the Gaming Act. Justice Teare did,


Aspinall’s private members club in London’s Mayfair


creditcrunched UNITED KINGDOM


The Middle Eastern high- roller Fouad al-Zayat, known throughout the London casino scene as the Fat Man, is suing six presti- gious London venues for what he says was illegally construed credit. Last month Al-Zayat had a


victory of sorts in his High Court battle with Aspinalls


however, reject a counter- claim by al-Zayat who also wanted the return of a further £10m which he lost at Aspinalls over the next six years. Undeterred, the Middle Eastern business- man has now told his solici- tors to proceed with court action concerning his treat- ment in another five casinos who he claims gave him illegal credit of up to £67m between 1989 and 2003. Al-Zayat said after the


ruling: “I have won against Aspinalls and now the others will see that I will win against them too. This is a long game.” His fall out with Aspinalls began on March 10, 2000, when he changed four house cheques for £500,000 of roulette chips and lost it all. He allegedly demanded a change of dealer but was told there was none avail- able and then became angry when he discovered that


there were actually new croupiers who could have dealt his game.


The casino had allowed


Zayat a 12-month delay in repayment, during which time he continued to gamble. The judge found the postponement amounted to illegal credit under the act. It was claimed that at 3.30am he found out there had been croupiers who could have taken over at which point he became angry and demanded the return of the house cheques. When Aspinalls refused


al-Zayat told his bank not to honour the cheque. The argument took place in the middle of a 12-year run of gambling in which he staked £91.5m and which cost him £23.2m. Al- Zayat asked Aspinalls to allow him 12 months to repay them during which time he gambled £40.8m in the club between March 2000 and April 2006, losing £10.5m along the way. He said he would make repay- ments from the winnings. Justice Teare said: “Not


surprisingly he was regarded by the club as an important client who


demanded and was shown respect.”


Aspinalls lodged a claim


against the cheques three days before the end of the six-year limitation period in 2006. Al-Zayat had some spec- tacular wins at London’s tables in the 1990s with claims he took up to £80m a year. In 1997 he won


£42m in a year from Crock- fords alone topping the £20m he won at Les Ambas- sadeurs in 1996. Over 15 years of gambling in the British capital, the Fat Man is said to have lost £191m. His dispute with Aspinalls is not his first in the London casino sector with the Ritz issuing a writ against him in March 2002 for allegedly not


honouring seven cheques worth a total of £3m. Whilst officially London casino sources remained tight lipped over the court’s ruling one source said that both Aspinalls and the industry as a whole felt the High Court ruling ‘flew in the face’ of what they had understood in relation to the case.


Dozens of slot arcades to shut as Estonian Gambling Act passed


The proliferation of small arcades with big machines in Estonia is to cease after the parliament passed a new Gambling Act in October that will see fewer, bigger venues and higher taxes. The country’s biggest casino operator, Olympic Entertainment, is very happy with the outcome. Hugh Sorrill reports.


tightership ESTONIA


The Riigikogu, the Estonian parliament, has passed a new reforming Gambling Act that will quickly force dozens of small slot arcades to shut and concentrate the gaming industry in the hands of companies with more and better experience of player protection. There are currently as many as 90 locations where gaming takes place in the capital Tallinn alone, with increasing public concern over the spread of casino-level slot machines in the country and a rise in problem gambling. The new law comes into


force on 1 January 2009 and will immediately require any venue with fewer than 20 machines to close and for all visitors to be registered. The current legal minimum number of slots required to operate is eight. The monthly levy on gaming machines will also rise from 7,000 kroons


(€447) to 10,000 kroons (€640). On 1 January 2010,


Andri Avila, CEO of Olympic Entertainment


the minimum machine requirement will again rise, this time to 40 - at the same time all machines will have to be certified. Under the terms of the new


law, local authorities will also have more power to ban com- pletely gaming establish- ments in certain areas, for example, near schools. Andri Avila, chief executive


of Olympic Entertainment Group, the respected Eston- ian operator that has expanded well beyond its borders in the last decade, said: “As the minimum require-


ment for casinos will increase step by step, the new legisla- tion will affect the whole market. Compared to the beginning of this year, already today, the number of slot casinos has decreased by about ten per cent as a result of the downturn in the number of visitors this summer due to the recession.” He continued: “Because of the concurrence of the reces- sion and the requirements of the new Gambling Act, we think there will be an overall decrease in the number of casinos in Estonia of about 25 per cent. But the Act will not affect Olympic Entertainment that much because the group’s activity today is very wide: we operate in eight dif- ferent countries and most of our casinos in this country already comply with the new requirements.” Tõnis Rüütel, head of the Estonian Association of Casino Operators, said that the casino industry, like any other, is suffering in the current economy. He said: “People are spending less money on entertainment because of the economic situation and this shows in the company’s balance sheets. Almost all operators have been losing money for the last two quarters and the third quarter will be no different. One consequence of this is that casino opera- tors will pay about 100m kroons (€6.4m) less into


the state budget in 2008.” Rüütel believes that the


new legislation will force between 60 and 70 slot casinos to close because of the minimum requirement of machine numbers. “I don’t know how many more will go out of business because of slow business.” There will be an inevitable


effect on tax receipts for the government: last year it col- lected 466.7m kroons


(€29.8m), not an insignificant sum in a country with a popu- lation of 1.34m. The inevitable drop in income will be par- tially offset by the rise in the monthly levy on machines,


expected to bring in an extra


210m kroons (€13.4m). The new requirement to


register everyone who goes into a casino brings Estonia into line with the majority of other EU member states. “It may at first lead to a


decrease in customer numbers,”


said Avila,


“however, the experience of other countries has shown that the requirement does not have a long-term nega- tive effect.” He added: “The new Gam-


bling Act should result in a better quality of casino serv- ices: it sets higher require- ments and improves the


supervision of service providers. It should, there- fore, have a really positive effect on the overall credibil- ity of the gaming sector. Estonia has needed this regu- lation for a long time, even though several casino opera- tors will face difficulties after it comes into force. “The main changes include setting clearer rules for both operators and for the state - current legislation allows too much space for different interpretations. All the casino operators who provide quality services and act trans- parently will definitely win from the new Act.”


Service with a smile. TCS John Huxley unveils £1.5m service centre


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Hot Stuff What’s set to wow at G2e Vegas


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Online Stand Off: Partouche ready to go live


EUROPEANNEWS4


Macau’s casino operators will have to ride out the storm generated by tighter visa controls and the economic crisis without the help of a tax cut. With some developments suffering from delays, the government has said it will step in if any existing casino looks like going to the wall.


Arcade Wars: Austria favours big business


EUROPEANNEWS12


CSR: Why there’s opportunity in responsibility


INTERVIEW30


Downturn in G2e attendance but business still brisk


downbutnotout UNITED STATES


Despite a slight downturn in visitor levels, exhibitors said they gen- erally had a successful year at this year’s Global Gaming Expo held at the Las Vegas Conventions Centre.


The Venetian looks over Macau as nearby


development work grinds to a halt


Macau says no to reduction in gaming tax


fromboomtogloom CHINA


The Macau government has refused to lower the SAR’s tax rate for casino companies despite Las Vegas Sands putting the brakes on the development of its US12bn Cotai strip project in a move which will see the axe fall on 11,000 jobs. Earlier this year, operators called for a reduction in taxes but Macau's chief executive Edmund Ho, who offered a raft of measures to help residents and small busi- nesses in his annual policy address, has said he will not cut the 39 per cent tax on gaming revenues, nor would his admin- istration support casino investors in trouble. “A tax cut for the gaming business has never been in our consideration,” he said adding that the territory, which has autonomy under Chinese rule, would survive the gambling industry’s problems. In Macau, the downturn in casino busi- ness has been blamed on the visa restrictions introduced to curb visitations from the Chinese mainland. Macau’s gross domes- tic product grew by 26 per cent


in the first half of 2008 but its gaming revenues fell 10 per cent in the third quarter to $3.2bn after four years of growth. Last year, gaming income grew 30 per cent. Ho said that he expects the


average monthly casino revenue for next year to come in at 7bn patacas, lower than the 8bn average of last year. Casinos are not just important to Macau’s economy, they are Macau’s economy. Ho feels that none of the SAR’s casinos would be pushed to the brink of closure. “People will come to play be


it in a good or bad economic environment, which is a trend, and the same situation exists in the world’s other gaming hubs.” He said the government was in discussion with the casino owners on how to survive their operational difficulties but added: “We believe the revision of gaming taxes are the only thing not being considered at present, which is a matter of principle. We will not allow any casinos to shut down,” he added. “If necessary, the govern- ment will take over.” With a total population of


over 530,000, the SAR reported a relatively low unemploy- ment rate of 3.1 per cent in September 2008. The chief executive prom- ised that the government will further reduce the number of imported workers next year, which will mostly concern the large gaming companies. Macau’s visitor arrivals rose 8 per cent in October from a year earlier even as China took steps to rein in growth of the territory’s gambling industry, the government said. The visitor growth rate has


slowed in recent months as China tightened visa rules that now limit to once every three months the times Guangdong residents can go to Macau. Total visitor numbers, at 2.6m in October, grew 2.1 percent in September and 8.5 percent in August. Arrivals from mainland China rose 12.2 per cent in October from a year earlier, but the number of mainland Chinese from Guangdong and other major cities under the tightened visa scheme fell 25.9 per cent from a year earlier, the Statistics and Census


Service said on its website. Macau, the only place in China where casino gambling is legal, has overtaken Las Vegas as the world’s biggest gambling centre. It received 25.2m visi- tors in the January-October period, up 14.5 per cent from the same time last year, the gov- ernment said. Many of the new casinos were counting on visi- tors to Macau spending 3.5 nights a visit but the average is currently 1.4 nights. As well as Las Vegas Sands halting its construction work in Macau, Galaxy Entertainment will delay the opening of its new casino to 2010 from the middle of next year because of a difficult market. Galaxy said it was ‘well capitalised’ with about HK$6bn. “Construction work on Galaxy Macau continues and we have revised the develop- ment schedule to better align the opening with market con- ditions as they improve,” the company said. “This is in no way a change in our strategy for Cotai. It is a commercial deci- sion motivated by our objective to achieve a balance between development and the optimisa- tion of shareholder returns.”


The American Gaming Association said attendance dropped by around a seven per cent at this year’s expo due mainly to compa- nies cutting costs, including travel expenses. More than 750 exhibitors were showcasing the latest products and services for the gaming industry in 335,000 square feet of exhibit space, including 117 international exhibitors from 28 countries outside the US, and 65 companies debuting new products.


AGA senior vice president Judy Patterson said that although attendance was down, exhibitors said they were pleased with the quantity of decision makers they have spoken with. Several exhibitors said casino companies sent key decision makers this year rather than the entourages they have sent in previ- ous years in an effort to save money.


Ed Rogich, vice president of marketing for International Gaming Technologies, summed up the mood of most exhibitors by claiming that there was ‘more on-the-floor activity than any other year’ with decision makers in attendance rather than entourages of people there just to enjoy the show.


IGT chief executive officer TJ Matthews said at the adjoining con- ference: “Attendance may have been off but the quality of the cus- tomers was on par. It’s a challenging environment out there for us and our customers, but that won’t stop IGT from growing and helping generate revenue for our customers.” The first day saw packed crowds on the stands of the big US companies where technology, rather than celebrity licenses was the star of the show. International Gaming Technology was showing a host of new technology including Multi-Layer Display and Reel Flex which allows the player to view and play dozens of their favourite games by switching from a three-reel to four-reel to five-reel to video reel to poker within seconds - all on the same machine. IGT’s European sales director Ali Civile said: “We’ve seen pretty much everybody that we’ve needed to see. As well as the huge interest in Reel Depth, server based gaming is set to go live in 2009 in several properties including Europe.”


This year’s adjoining conference focused heavily on the eco- nomic crisis affecting the gaming industry. Speaking at the conven- tion’s State of the Industry roundtable, Harrah’s chairman and chief executive officer Gary Loveman described the current situation as an ‘arms race’ to develop new properties to grow their revenues, but said the economic difficulties had forced a ‘significant sea change in the way in which their balance sheets are constructed.’ He said casino companies had been caught spending cash like ‘drunken sailors’ when the economy crashed with many building with cheap credit and bringing in very low investment returns. “I think the industry is going to have to get accustomed to the notion that not every project is a good project and US$1bn is a lot of money,” he said.


Communist Vietnam will become the latest Asian gamble for a Las Vegas-style casino project with Canadian property developer Asian Coast Development funding a US$4.2bn project carrying the MGM Grand brand destined for the southern coast. Phil Martin reports on what will be called the Ho Tram Strip.


newfrontiers VIETNAM


MGM Mirage is to lend its brand and expertise to Canadian developer Asian Coast Devel- opment (ACDL) to build a new project called MGM Grand Ho Tram, which will not only prove to be Vietnam's first Las Vegas style integrated resort but also the biggest foreign investment to date in the country. ACDL will own and finance the project, whilst MGM Mirage will provide develop- ment assistance, brand equity and operate the five-star inte- grated resort property upon completion. Investment will be split with


ACDL leading with a 30 per cent share. Its main partner in the project is New York hedge fund Harbinger Capital, which has a 25 per cent stake.


The cost of the first phase will be $1.3bn which will fund the development of two five- star hotels with a combined 2,300 rooms and a casino with approximately 90 gambling tables, 500 slot machines and an area for VIP customers. Designed by renowned Las


Vegas architect Paul Steelman, and themed on the concept of environmental preservation and conservation, Project I of the Ho Tram Strip will resem- ble a wildlife preserve, high- lighting the lush natural beauty of the area while showcasing Vietnamese and


Asian


culture.When completed in 2015, the resort will comprise five hotels with 9,000 rooms and a second casino. MGM Grand Ho Tram will


anchor the $4.2bn multi- property Ho Tram Strip resort complex being developed by


ACDL along the pristine beaches of the South China Sea. The Ho Tram Strip is set on a 2.2 kilometer strip of white sand located in the Ba Ria Vung Tau Province of southwest Vietnam, eighty miles from Ho Chi Minh City. MGM Grand Ho Tram will be the first component of what is planned to be the largest tourism complex in Vietnam. Gamal Aziz, CEO of MGM


Mirage Hospitality, said: “The MGM Grand brand is interna- tionally recognised for its energy, excitement and ability to provide the broadest array of luxury hotel, resort and gaming amenities, all under one roof. MGM Grand Ho Tram’s prime beach-front loca- tion affords us an even greater opportunity to provide our guests with a spectacular experience. Our international


gaming development team, led by Lloyd Nathan, execu- tive vice president of MGM Mirage Global Gaming Devel- opment, will, with their coun- terparts at ACDL, make MGM Grand Ho Tram a showplace for the further development of high-end international tourism in Vietnam.” ACDL, an international


development and real estate company specialising in inte- grated resort destinations, has already broken ground for the MGM Grand resort. MGM Grand Ho Tram, expected to open in 2011, will be sur- rounded by an 18-hole, Greg Norman designed, PGA cham- pion level golf course. It is planned to be the first of five stunning resorts being devel- oped by ACDL along the Ho Tram Strip.


“This is a landmark project not just for our company, but for the people of Vietnam,” said Mike Aymong, chairman of ACDL. “By creating partner- ships with world-class opera- tors such as MGM Mirage, this burgeoning destination is poised to transform Vietnam’s


tourist industry and designed to compete with integrated resorts in neighbouring China, Malaysia and Singapore. Our goal is to develop a five-star coastal paradise that attracts tourists year-round with its temperate climate, breath- taking views, and concentra- tion of high-quality resorts and entertainment.” David Subotic, CEO of Asian


Coast, added: “We’re extremely pleased to welcome MGM Mirage, one of the world’s leading hospitality brands, to the Ho Tram Strip team. MGM Mirage’s involvement with the Ho Tram Strip will add signifi- cant value for the shareholders of ACDL while solidifying the development’s position as one of the most exciting new tourist destinations in South East Asia.” Asian Coast Development is


close to securing a US$780m syndicated loan for the resort in Vietnam. The money is needed to fund the first phase of the $4.2bn project. “It’s more expensive to


borrow money now but if you have an exciting and interest- ing project, you can negotiate


MGM Mirage’s Grand Brand is destined for Vietnam


some of the terms and condi- tions,” he said. Ho Tram also will look to


attract holidaying families, with amenities including a Cirque du Soleil theatre, and a site for guests to swim with dolphins. The project has the backing


of Vietnam’s ruling Communist Party with Prime Minister Nguyen Tan Dung saying he will ‘create favorable condi- tions’ for the investors although gaming floors will remain off-limits to Viet- namese, as is the case in the country’s existing casinos. Aymong said he expects Ho


Tram to draw at least two- thirds of its customer base from China although he envis- ages large visitation from South Korea, Japan, Taiwan, Hong Kong and even parts of Russia, as all are within a short flight of Ho Chi Minh City. The company is also in discussion with a further 10 casino oper- ators who have expressed interest in running the resort’s gambling operations although Aymong declined to identify any of these potential collabo- rations at this stage.


www.CasinoReview-Online.com • January 2009 • 075


Taiwanese Tease: Legislation set for New Year?


INTERNATIONAL NEWS2


Vegas Investments: What best to buy from G2e


EXHIBITION REVIEW27


London Calling: The new wave of innovation


EXHIBITION PREVIEW56


MGM Grand to star on Vietnamese Strip


Technology Personified: A decade of growth for Casino Technology INTERVIEW46


Taiwanese vote brings casinos one step closer


After nearly 20 years of debate, the start of the New Year saw the Taiwanese Legislative Yuan vote in a draft amendment that legalises casino development on one outlying island. With a local vote now the only stumbling block, a new Asian casino market is surely now within touching distance. Phil Martin reports.


gettingwarmer TAIWAN


Early January saw Taiwan’s ruling Kuomintang party pass an amendment to end a decades-old ban on casino gaming, by a vote of 71 to 26, meaning only a local referen- dum stands in the way of gaming floors being devel- oped on the country’s offshore island of Pengu. The referendum would only need to draw support from over half of the voters partici- pating to signal the green light. Penghu County Commis-


sioner Wang Chien-fa said that the public vote would be held in either April or May. A study commissioned by the Council of Economic Plan- ning and Development (CEPD) said that foreign investors with the minimum investment fund of US$1bn should be allowed to develop on the island, with a licence of up to 30 years. CEPD Minister Chen Tain- jy suggested that developers


should be multi-national companies with significant capital and experience, adding that his council would recommend limiting the number of licenses to two. The Cabinet will now


establish a committee to detail the measures behind the governing of casinos, such as the number and size of casinos to be licensed and the minimum capital. The aim is for Penghu to


attract half a million tourists each year, generating US$3bn in GGR.


AMZ Holdings, a UK-listed


property development company, owns the only land in the region currently ear- marked for commercial devel- opment. Michael Treanor, AMZ’s chief executive, said they


had already been


approached by up to 15 inter- national casino companies and that AMZ hoped to ‘explore a strategic joint venture and partnership’ within the next three months.


The end of 2008 saw snow falling on the Las Vegas Strip. Whilst temperatures plummeted analysts were encouraged by the gambling destination’s performance over New Year. Whilst 2009 promises to be a tough year, the hope is that a stronger than anticipated finish to 2008 could restore some investor confidence. FULL STORY NEWS PAGE 28


He believes the agreement will most likely be with an operator that missed out in the tender to operate in Macau and Singapore. There is interest from Macau though. Lawrence Ho, chief executive of Melco, said: “Subject to the credit market, we are very interested. I have given a few speeches in Taiwan. We've looked at that market quite extensively in the past few years. [But] our relationship with China is key


to us. Our foremost considera- tion before taking any steps to open casinos outside such as in Taiwan and Japan is whether such expansion will cause any impact to our investment in Macau.”


MGM Mirage spokesman


Alan Feldman confirmed the company had already investi- gated investment possibilities in Taiwan several years ago. He said a professional team would be charged with compiling a report on the new opportunity.


Sweet Sixteen But has the crunch soured UK opportunity? FEATURE42


www.CasinoReview-Online.com • February 2009 • 076


Dancing on ICE Another 32 of the London floor fillers PRODUCTNEWS80


iCheat. Warnings over iPhone app


NEWS3 The snow must go on


Eastern European Electroncek secures Nevada licence


neversaydieattitude SLOVENIA


After five years of litigious effort, Slovenian multi-player specialist Electroncek has been granted a Nevada licence to sell its Interblock range of automated roulette and its G4 Organic range of mechanical products across the State of Nevada, including the Las Vegas Strip. The unprecedented move for a Slovenian company completes a ‘rags to riches’ story for business partners Tomaz Zvipelj and Joc Pececnik, who began designing and manufacturing automated casino products in 1991 following Slovenia’s independence from Yugoslavia.


It also demonstrates the company’s refusal to give up on an expensive, arduous process, from which they had already been rebuked in 2006. Having been rejected by the Nevada Gaming Control Board, Elec- troncek employed the services of several former Gaming Control Board investigators in John Maloney, Sam Weaver and Gordon Dickie alongside former FBI investigator Steve Rybar to fight its cause.


Despite being advised of the likely expense of the licensing process and the fact that there was little guar- antee of success, Electroncek con- tinued to plug away and in 2007 employed PricewaterhouseCoop- ers to prepare its company records eventually leading to its success in December 2008. Board Chairman Dennis Neilan- der said: “I think the applicants have done a pretty remarkable job.” Only two year’s previous, Neilander had slammed the application as ‘irreparable.’ The group has already achieved notable success in several North American gaming markets including California, Arizona and New Mexico and is currently involved in a similar licensing process in New Jersey, which if successful could see it enter the Atlantic City market.


Next Chapter. Harrah’s denies bankruptcy move


NEWS16


The world’s economic woes look to have claimed its most spectacular casualty yet as unable to regain power of the company he founded Donald Trump has walked out. As Phil Martin reports, the action of the remaining directors was swift; to file for bankruptcy protection for the third time.


Trump resignation leads to third Chapter 11


downinthetrumps UNITED STATES


Trump Entertainment is in disarray having filed for bank- ruptcy protection for the third time, this time following the resignation of its founder Donald Trump, who labelled his investment ‘worthless.’ The Chapter 11 petition


was lodged days after Trump left the board. The filing listed company assets of $2.06bn along with amassed debt of $1.74bn as of the end of 2008. It owns the Trump Taj Mahal Casino Resort, the Trump Plaza Hotel and Casino, and the


Trump Marina Hotel Casino, although the sale of the Marina to Richard Fields’ Coastal Marina is still expected to be completed in May. Trump, who remains the


largest shareholder, with a share of more than 25 per cent of the company, high- lighted that it accounted for ‘substantially less than 1 per cent.’ He had offered to repurchase the company outright but was rebuked by the board spurring his resignation and that of his daughter. He had previously been forced to relinquish control as part of an earlier


bankruptcy restructuring. In a heated interview with the Associated Press, Trump stated: “If I’m not going to run it, I don’t want to be involved in it. I’m one of the largest developers in the world. I have a lot of cash and plenty of places I can go.” Trump is believed to be considering legal action regarding the removal of his name from the company. “I don’t like that my name


is still going to be on it,” he said. “While The Trump Organ- ization grows and flourishes, Trump Entertainment Resorts, of which I am a stock-


Casinos Au


feelingchampion AUSTRIA


The CAI board, CFO Josef Leutgeb, CEO Paul Herzfeld, chairman Dr Karl Stoss and director Dietmar Hoscher celebrate their win


Casinos Austria International scooped the top European operational award for the second year running at the International Gaming Awards, organised by


www.CasinoReview-Online.com • November 2009 • 085


You’re Hired. City Centre boosts Vegas job market


NEWS2


Profit and Loss. Penghu’s no boosts Kinmen’s chances


NEWS3


Numbers Game. Brazilian bingo op boosts SAGSE


REPORT30


Hotel casinos the tip of Italian expansion


Having overseen the expansion of several gambling sectors in recent months, the Italian government is now considering whether the casino business should be next. As Phil Martin suggests the five star proposal may not be just pie in the sky.


starryeyed ITALY


Italian tourism minister Michela Vittoria Brambilla has proposed that five-star hotels should be able to operate ‘small casinos’ as part of the bill to support tourism and boost government taxes. Although Italy boasts some


254 registered five-star hotels, the minister emphasised she didn’t want ‘a proliferation of casinos’ and that only a few hotels would currently meet the required standards to qualify. Brambilla has sug- gested that whilst tax rev- enues from the new casinos would fund local councils, some of the earnings would go towards the renovation of historic venues such as Taormina in Sicily. The idea has so far received a positive if somewhat cau- tious response from hotel owners.


Alessandro Cianelli, direc-


world over, the legislation granting the introduction of an estimated 50,000 VLTs (Video Lottery Terminals) is the pinna- cle of Italy’s expansion. The new VLTs to be known as Comma 6b will initially be launched in the bingo halls and betting shops of the existing ten slot operators who will have to pay E15,000 for the privilege of operating each of this new type of machine. Machine quotas will be dic-


tated by the size of the venue with divisions set for 10, 30, 70 and 150 machines. New jackpot mechanisms for both local and wide area progres- sives will also be introduced at caps of E15,000 and E50,000 respectively. One international slot man-


tor of the Italian hotel federa- tion, Federalberghi, said: “Our view would be yes, with reser- vations. There is a risk that it could lead to some dangerous mechanisms, especially those that have always revolved around some casinos.” The body that represents


Italy’s five existing casinos, Federgioco, is reluctant to take on more competition at this time and has asked the minis- ter to defer the opening of new venues for the time being. As everywhere, the casinos are suffering the effects of the recession, with even Casinò di Venezia being forced to ask the city to reduce the amount


it takes from the venue. The new proposal is cer-


tainly radical for a casino sector that has so far remained fairly closed off. It has allowed only five casinos near the northern borders, each positioned to deter Italian gambling spend in nearby casinos in France, Switzerland or Slovenia. But with the government


recently seeing how expan- sion in various betting sectors equates to greater govern- ment spending, approval of Brambilla’s Bill, which has already been put before the Council of Ministers, could be politically achievable. Prime Minister Berlusconi


Split down the middle: Casino di Venezia on the Grand Canal in Venice. Opinion in Italy is split on future expansion.


has already overseen the expan- sion of the AWP (Amusement With Prize) market through the development of Comma 6A machines. There are cur- rently around 350,000 Comma 6 and 6a gaming machines in operation in Italy by ten autho- rised concession holders. He has also given his


backing to the online poker sector, which he hopes will be worth E400m within 12 months of operation. For slot companies the


ufacturer said: “In our eyes the VLT expansion in Italy will prove the biggest single thing to happen to the European gambling business for at least a decade. We’ve heard estimates that 49,000 to 65,000 machines could enter the country.” The expansion so far adds


up to a fair bit of competition for the existing casino indus- try which has been up in arms about the new VLTs claiming they will further eat into their shrinking revenues unless, of course, they can have a slice of the action. Two are believed to be trying to do just that. Rumours persist that Casinò di Venezia is planning to open six ‘small’ venues with Cortina, in the north of the Veneto region, and on the Isle of Capri, already mentioned. Foreign operators are also getting involved. In May this


year Austrian operator and manufacturer Novomatic bought Adria Gaming Interna- tional becoming the 80 per cent majority owner of Punto Italbet, which in turn owns eight gaming/betting opera- tions featuring sportsbetting and 24 Comma 6a gaming machines per operation as well as online sportsbetting and poker on the website www.zonabet.it. Franco Rota, new President of Punto Italbet, stated: “The experiences in the various European countries have shown that the VLT-sector is a very important market segment. It is a highly secure form of gaming and at the same time very attractive to the guest. We expect much from the VLTs, even though we still have to wait for the regulatory framework. We hope that the Italian legislator will, in his decisions, follow suit with the positive example of other European jurisdic- tions. The 30-years experience of the Novomatic Group will without doubt be of consider- able benefit; in fac,t I am con- vinced that it will be a major factor of success in the Italian market. We have made signifi- cant investments in Italy, and the takeover of Punto ItalBet shows that we will place our initial emphasis on betting. But I can already foreclose that Novomatic will invest over the 360 degrees of the Italian market including the online gaming sector. We will also put one major focus on the new opportunities that are opening up in this segment.”


Is Ireland getting ready for a super casino? NEWS2


The battle is on for Atlantic City


NEWS14


www.CasinoReview-Online.com • December 2009 • 086


Internationalism sets IGE agenda


EVENTS28


‘Golden week’ marks golden times in Macau


Whilst Macau was celebrating three of a kind with its third successive record month, Las Vegas was suffering something of a blackjack with a record 21 successive months of decline. Phil Martin compares the October hands of the world’s two leading gambling destinations.


goldenchild CHINA


The games are pretty similar but the fortunes couldn’t be further apart. Whilst baccarat is continuing to lead the charge for Macau, the slots of the Las Vegas Strip are beating a hasty retreat in what was once the battle for world supremacy in terms of gam- bling hotspots. Admittedly boosted by sea-


sonal factors, namely China’s Golden Week holidays in the first week of October, Macau’s casino sector gener- ated over 12.7bn patacas (US$1.57bn) in gross receipts in October, making it the highest monthly amount on record. This was up by 42 per cent from the same month last year and has helped the casino sector produce GGR of around 95bn patacas (US$12bn) in the first 10 months of this year, showing an increase of 3.5 per cent for the same period in 2008. With the effects of the global downturn seemingly crunched,


analysts now


expect 2009’s receipts to reach a record 115bn patacas ($14.5bn), an increase of nearly six per cent on last


year’s gross figures. Over 420,000 Mainland vis-


itors arrived in Macau during the National Day Golden Week holiday period between October 1 and 7, an increase of 2.12 per cent com- pared to the same period last year.


The hotel industry experi- enced a strong performance during the China National Day golden week. Average occupancy rate of three-to- five-star hotels during the first week of October reached 87.3 per cent, a 5.6 percent- age points increase com- pared to the same period of 2008.


The figures show a change in the behaviour of visitors, with more choosing to stay in hotels, while their spending sentiment is also on the rise, both of which will spur the US operators in Macau who are trying to increase average stay in the region. Credit Suisse analyst


Gabriel Chan, however, is not convinced that the surge in revenue is sustainable explaining that year-on-year gains in revenue had been distorted by catastrophic results in October last year as Chinese gamblers stayed


away from the tables as the global crisis first took a hold. October saw the market still dominated by the 20 casinos of Stanley Ho’s SJM Holdings which secured market share at 30.9 per cent. SJM’s revenue for the month increased by12.4 per cent to 3.89bn patacas. With the Venetian Macao supplementing the Sands Macao, Las Vegas Sands has taken the biggest advantage from the market revival. Its market share surged to 24.2 per cent from 19.7 per cent


in October, while its revenue totalled 3.05bn patacas, marking an impressive 41.4 per cent compared to GGR in October 2008. Wynn Macao’s market share slipped slightly to 12.1 per cent from 13.8 per cent, whilst Melco International, operator of the City of Dreams, was reported to have a market share of 12.5 per cent.


At the start of October, Macau totalled 4,610 gaming tables, more than four times the number in 2004 when Sands Macau became the first


casino to quash the monop- oly held by Stanley Ho. October also saw a total of 14,175 slot machines, a figure that has multiplied by six times since 2004. The situation in Nevada is


much bleaker. Casinos in North America’s first gam- bling state saw winnings from gamblers decline in September for the 21st month in a row, a sure fire sign that the tourism-centric economy is continuing to suffer in the recession. The Nevada Gaming


Las Vegas in Macau: The MGM brand is entrenched in the


world’s two biggest casino markets


Control Board reported that casinos statewide won US$911m from gamblers during September, a nine per cent fall compared to the same month in 2008 and a long way short of the US$1.57bn logged in Macau in October. Looking for a bright side, the month in Nevada marked the second consecutive month that the fall in results have stayed in the single digits. August posted the first single-digit decline since May. Results on the Las Vegas Strip make up 50 per cent of all state gambling revenue and dropped to $506.4m, a fall of 3.6 per cent, which marked the smallest decline since June 2008. Ironically, it was the game of baccarat, which accounts for around 87 per cent of Macau’s play that eased the rot. GGR from the game was up 29 per cent com- pared to last year’s figures. Nevada control board


analyst Frank Streshley believes drop on the Las Vegas Strip will recover faster than the rest of the state, as the national and international economies demonstrate signs of recovery. There are of course many


differences between the player habits of Macau and Las Vegas but as only the former operates as a monop- olistic destination, its ability to rebound from the eco- nomic problems will be much more heightened than in the States, but the results in both markets show a recovery of sorts.


Golden Lotus: Macau charges to record GGR NEWS3


Big Launch: All the new games from G2e REPORT24


www.CasinoReview-Online.com • January 2010 • 087


International Fixture: Who’s doing what at IGE PREVIEW62


CityCenter ups the ante as MGM reinvents Vegas


Towering high over the resorts of Las Vegas, CityCenter represents the biggest gamble ever taken by the world’s biggest operator and the biggest bet ever placed in the city. MGM Mirage’s chief executive Jim Murren is confident that a recovering economy will help it succeed. Phil Martin reports.


cityslicker UNITED STATES


The biggest opening in the 2009 casino calendar took place in mid-December with the unveiling of Aria, the casino resort element of MGM Mirage’s sprawling City- Center on the Las Vegas Strip. Opening to a canopy of


fireworks illuminating the night sky, optimists see City- Center as breathing new life into a struggling Las Vegas. Pessimists view it as adding thousands of high-end rooms to an increasingly saturated market. The fear is that it could further cannibalise room rates, which are at their most competitive for a long time. Aria itself has 4,004 hotel


rooms, over 150,000 square feet of gaming floor, 10 bars and nightclubs, 16 restau-


rants and a new Cirque du Soleil show, called Viva Elvis. The battle cry from MGM


Mirage’s chief executive Jim Murren was certainly emphatic. “We believe that Las Vegas is a better place today and a different place today,” he said. “We are no longer in a declining economy. We are in a recov- ering economy. Room occu- pancy is at 90 per cent and if


we can get back to levels of spending in 2005 and 2006, we will once again be a very profitable business. Our foe is weakening, the economy, the recession, the financial crisis, our opponent is now the one that’s close to its knees and we’re just gaining momentum and gaining strength. CityCenter will become the benchmark by which all new developments


will be measured, and it won’t be surpassed in scope and grandeur for decades.” Two hotels opened earlier in December: the 47-storey Mandarin Oriental and the 1,500-room, non-smoking Vdara. The Crystals mall of shops and restaurants also opened before the casino. The final elements of this colossal project, the Veer con- dominium towers, which will


open early next year, and the Harmon hotel, which is sched- uled to open later in 2010, complete a concept that has taken sixty months and a great deal of stress to construct. The key to success in the competitive Las Vegas market is, of course, to differ- entiate from the neighbours. Conceived as a true centre to The Strip, CityCenter aims to be much more than a collec-


tion of resorts and resi- dences; it wants to be a com- munity. Alongside themed properties such as Paris and New York New York, City- Center is more a real life, cut and paste from midtown Manhattan than anything the city has seen before. Bobby Baldwin, president and CEO of CityCenter, believes its great pedestrian corridors, dynamic public spaces, authentic richness and diversity of experiences evoke the energy of the world’s most exciting places. “CityCenter bridges the vitality of Las Vegas with the experiences travellers seek when they visit great cities around the world, whether London, Hong Kong or San Francisco - spectacular archi- tecture, culturally significant art, great public spaces, sophisticated hotels, unique restaurants and incredible amenities,” he explained. “It is an evolutionary destina- tion that aims to transform Las Vegas as a new symbol at its core, like the Guggenheim in Bilbao, the Pompidou in Paris or the Sony Center in Berlin. We believe this moment marks a turning point in the financial future of our community.” William Grounds, the pres- ident of Infinity World Devel- opment, the Dubai World subsidiary that partnered with MGM Mirage, added: “I truly believe this magnifi- cent project is destined to join the pantheon of urban icons that not only symbol- ise a great metropolitan area but also shape its future.”


Float Your Boat: MGM Mirage plans Macau IPO NEWS3


Vegas rebounds for first time in two years


The New Year did bring some new cheer to Las Vegas with the news that Gross Gaming Revenues (GGR) in November saw their first monthly rise in almost two years. With a stronger than expected December as well. Phil Martin asks whether these are the first signs of the green shoots that the industry has been hoping for.


bouncebackability UNITED STATES


As the clock ticked across to 2010, it was just like the good old days in Las Vegas, which welcomed over 315,000 New Year revellers with a spectac- ular fireworks display and a car-free Las Vegas Strip. The end of a tumultuous 2009 and the start of an ever hopeful 2010 was signalled by seven minutes and US$500,000 of fireworks shot skywards from seven casinos on the Strip. The city’s 148,000 hotel rooms were 96 percent full with an estimated 3,000 more people in town compared to last year’s New Year’s Eve. Analysts were also buoyed


by the first sign of a bounce back in terms of GGR with gambling revenue in Nevada in November showing a modest increase but more sig-


nificantly the first monthly rise in almost two years. On the Las Vegas Strip,


which accounts for more than half the total,


revenue


increased more than eight per cent to $473.8m. GGR for the current fiscal


year, which runs from July to June, is still down by a depress- ing 7.9 per cent to $4.3bn, with the Strip falling more than five per cent to $2.3bn. All this has left analysts mixed on their predictions, which given the state of the economy is perhaps the best casinosexecutives could have hoped for. Joe Greff, an analyst at JP


Morgan, said: “For the first time since December 2007, statewide and Strip gaming revenues were positive. We think November’s relative strength has been well under- stood by investors. It is encour-


aging nonetheless. After all, we note that the November calendar was unfavourable with eight weekend days in 2009 compared with nine in 2008, though the comparison was a relatively easy negative 14.8 per cent.” Bill Lerner of Union Gaming


added: “On the heels of a strong New Year’s in Las Vegas, the Consumer Electronics Show in Vegas looks to have drawn about six per cent more attendees than in 2009. City- Center and Bellagio foot traffic have been quite strong based on our observations across a significant number of days and day parts. Multiple restau- rateurs that we have spoken with are experiencing growth in key metrics such as covers and average checks. We are more confident that 2010 will represent the posi- tive inflection in Las Vegas.”


Bond rating agency Fitch Ratings believes however there is worse to come for the US economy as a whole with unemployment peaking in the second quarter of 2010. “Profitability will remain under pressure as operators will be aggressive on pricing and marketing through 2010, as new capacity needs to be filled, corporate travel budgets remain under pressure and consumer spending patterns improve only modestly,” the Fitch report stated. Fitch’s gaming outlook


predicts that Las Vegas casinos will suffer another three to five per cent of dwin- dling Strip revenues in 2010, even though footfall could be up by five percent. The analytical group’s senior director Michael Paladino said any Las Vegas recovery would be ‘slow’ and over ‘the


next few years.’ Deutsche Bank bond


analyst Andrew Zarnett is even less hopeful predicting that GGR on the Strip will drop by a further 10 per cent during 2010, along with a 20 per cent decline in cash flow. The glut of hotel rooms is a


concern for Dennis Forst, a gaming stock analyst with KeyBanc Capital Markets. He commented: “The economy is going to continue to be weak next year and with all the new rooms there will continue to be pressure on room rates.” There are currently more than 145,000 hotel rooms with more to come following the completion of several projects. Total visitor volume to Vegas in 2009 is likely to come in at 36.4m people, similar levels to those in 2004 when there were far fewer rooms. New ‘must-see’ attrac-


tions have traditionally been successful in boosting tourism figures but analysts remain sceptical that the Strip’s latest offering from MGM Mirage will persuade people to visit Vegas. However, David Katz of Oppenheimer and Company, said: “CityCenter bears unique amenity offerings that should drive trial and long-term growth. Visitation should rise on the Strip in 2010, although cannibalisation of wholly owned properties by CityCen- ter could offset a rebound in somewhat of a zero-sum game.” Whilst a new year brings


new optimism and determina- tion to improve, most experts are positive in believing there’s a recovery in sight for Las Vegas but in light of the worst recession in 80 years, many believe that it is still hov- ering on the horizon.


Penn To Paper: Pennsylvania says yes to tables NEWS22


www.CasinoReview-Online.com • February 2010 • 088


Games Games Games: More products set for IGE London PREVIEW70


Fireworks signal the end of a depressing year in a packed Las Vegas (Image courtesy of Las


Vegas News Bureau)


Deal Me In: Harrah’s linked to


Macau entry NEWS2


Azov Now: Russia’s first zonal casino opens NEWS3


www.CasinoReview-Online.com • March 2010 • 089


Earl’s of Wisdom New games unveiled at Earl’s Court EXHIBITION20


Genting shuffles up for Sentosa opening


Resorts World has stolen first mover advantage on Marina Bay Sands, by becoming the first casino to open in Singapore following the abolition of a 40-year- old gambling ban. At US$4.7bn, it is not quite the same level of


investment of City Center (US$8.7bn) but it is still one of the world’s costliest casinos. As Phil Martin reports, owner Genting now wants to replicate its Singapore model in other climes, with the US already being touted.


firstresort SINGAPORE


Malaysian operator Genting opened Singapore’s first Integrated Resort (IR), Resorts World Sentosa (RWS), on the first day of the Tiger year with the soft-opening of its casino and a preview opportunity to stroll through Universal Studios Singa- pore and enjoy the specially themed dining and shopping venues that will complement the incredible attractions, rides and shows that soon will be revealed. The casino, the resort’s much- anticipated attraction, saw its first piece of action with a private cere- mony welcoming its first public guest at 12.18 pm. When articulated in the Can- tonese dialect, 12:18 is pronounced like the word for ‘prosperity.’ A middle-aged Singaporean woman was the first gambler allowed in, fol- lowed by an initial crowd of approx- imately 200. Whilst the casino alone attracted some 35,000 people over two days, more than 75,000 people visited the island on the first day of


the Lunar New Year in 200, a 20 per cent increase from last year with a further 67,000 people visiting the island the next day.


The casino is home to 530 tables, 1,300 slot machines and a 12-table poker pit. There are 19 different games available with a strong focus on baccarat, although roulette, money wheel and three card poker are also on offer. Felix Ling, senior partner of gaming consultancy Plat- form Asia, said: “The games are very Chinese and are like what the Macau casinos are offering. Western casinos offer more poker games and jackpots.”


The casino opening is part of the initial phased opening of Singapore’s first IR that began on 20 January 2010 with the launch of its four hotels: Crockfords Tower; Hotel Michael; Festive Hotel; and Hard Rock Hotel Singapore. Its shopping and dining promenade, FestiveWalk, soft-opened on 30 January 2010. Chairman of Resorts World Sentosa and the Genting Group, Tan Sri Lim Kok Thay, said: “In less than three years since the time we broke


ground and commenced construc- tion for Resorts World Sentosa, we have taken our vision from drawing board to reality. This is a significant milestone in Singapore’s business history. We promised to deliver a true Integrated Resort, and we have not deviated from that.” Chief executive officer of Resorts


World Sentosa, Tan Hee Teck, said: “We know a lot of Singaporeans are looking forward to the opening of both our major elements, the casino and Universal Studios Singapore. We are ready to soft-open the casino but are still fine-tuning the rides and shows in the theme park, which are still on schedule to open in the first quarter of 2010. However, since its Chinese New Year, we decided to offer Singaporeans a week long preview of Universal Studios Singa- pore with a special and unique first- to-see walk-through opportunity. The theme park’s unique restau- rants and shopping venues will be open for guests, although rides and shows will not be operational. However, we are confident that the park’s design, vistas and photo


opportunities will truly excite and impress guests and motivate them for return visits when fully operational.” “We celebrate the New Year with the people of Singapore and are thrilled to provide a sneak peek of Universal Studios Singapore during this festive holiday period,” added Tom Williams, chairman and CEO, Universal Parks & Resorts. “It’s an exciting time for all of us and a great opportunity to share a glimpse of the action, thrills and adventure that Universal will bring to the region.” Visitors to Resorts World Sentosa


(RWS), Singapore’s first Integrated Resort (IR), will get to enjoy the resort without having to pay for Sentosa island admission charges. Michael Chin, executive vice-


president for projects at RWS, said: “We are Singapore’s IR, and we believe we should be a destination that Singaporeans can enjoy at all times. This is a resort that Singa- poreans can call their own, so we have put in a lot of effort to ensure that the resort is accessible to all. Not only will there be dedicated


Atlantic Pity MGM sacrifice Borgata for Macau NEWS3


Natural Disaster Chile casinos battered by quake NEWS16


Future growth of Macau industry to be controlled


Macau’s new leader wants the SAR to lessen its reliance on the gaming industry slightly by promoting alternative and ancillary activities, but also by taking a more critical view of casino development in the future. But a feared cap on tables has not materialised, yet, as Hugh Sorrill reports


steadystate CHINA


The gaming floor at Resorts World Sentosa


bus services into the resort, we will also absorb the island admission charges for all our visitors.” The waiver for visitors takes effect


from 20 January when RWS opens its four hotels to the public, and visi- tors would have to pay only for their transport fares or parking charges. However, the casino will charge a


levy fee of 100 Singapore dollars (US$71) per day and 2,000 Singa- pore dollars per year for all Singa- poreans who want to come onto the gaming floor. Lim Kok Thay, chairman of Resorts


World Sentosa, believes that 13m people will visit the resort in its first year with 60 per cent of this, 7.8m, coming from overseas. Lim believes the experience of building Resorts World will stand Genting in good stead for devel- opments in North America. “We will be the most exciting gaming resort in the world,” he said. “Sin- gapore’s project would be a good model for our future investments going forward. We are actively looking at the US and we see great opportunities.”


Casino developments beyond those already agreed will in the future be more closely regulated, Macau’s new chief executive Fernando Chui Sai On has said in his first policy speech since taking over from Edmund Ho in December. In a wide-ranging address to the Legislative Assembly of the Special Administrative Region (SAR) of Macau, he said: “We will continue the policy of the proper diversifica- tion of the economy, focusing on the promotion of its co-ordinated development. The extent and speed of growth of the gaming industry will be controlled by the SAR gov- ernment, which is committed to the industry’s competitiveness and to ensuring its contribution to sus- tainable development of other eco- nomic activities.”


He also announced that the Macau Special Commission for Gaming, which he chairs, had been reorganised and given powers in the formulation of policies for the development of the gambling sector, the supervision of its opera- tion and its regulation. In remarks to the press following the speech, he elaborated: “Apart from those we have agreed in prin-


ciple in the past, in construction and those already approved, we will regulate [the approval for new casinos] in the future.” Under political pressure both at home and from Beijing to do some- thing about the price and quality of housing in Macau, he also said that as many as 19,000 apartments will be built by 2012 in a social housing programme. The land for them will be acquired from casino operators with unused or idle plots by the government “following legal proce- dures”. With around 540,000 resi- dents on just 29sq km of land, Macau is the most densely populated national entity in the world. “The whole process will be made


very transparent but the hand has to be taken back and some of it will be used for social housing,” said Chui at the press conference. Macau, being a small peninsula


and a few islands, is land-poor so real estate can command serious prices; much of the Cotai Strip, where the Venetian, the Plaza and City of Dreams and the recently restarted Sands project on plots five and six are located, is on reclaimed land. Wynn, MGM and SJM, all of which have their main operations on the peninsula, have each previ- ously stated their intention to develop plots on Cotai. It is likely


less, 2010 is likely to be a record year for Macau’s gaming industry, proving that the market is not yet saturated. The move to limit development


slightly is part of a wider move to see the SAR’s economy diversify into the conventions sector as well as into non-gaming tourism and leisure activities and cultural and creative industries.


Fernando Chui Sai On, Macau’s Chief Executive


that as major investors already any plans they may have will get the nod.


The announcement that there


would be no free-for-all in casino development, will only serve to strengthen the positions of the exist- ing operators. Macau has shot out of a short period of slightly depressed activity that resulted from a cap in the numbers of visitors permitted to visit from the mainland imposed by Beijing in April 2008. At the same time, a complete moratorium on new licences and a freeze on con- struction put several wrinkles in the smooth fabric of the industry’s development. Gaming revenues are once again


rising at a phenomenal pace, although not all the operators have seen the same benefit. Neverthe-


Chui said in his speech: “The policy of liberalisation of the gaming industry has allowed rapid development and evolution of this dominant sector in Macau’s contin- ued economic growth…thereby creating more favourable condi- tions to improve the quality of life of the population and social devel- opment… We will invest our efforts now in encouraging diversification of the economy. “Macau’s conference and exhi- bition industry is lagging in devel- opment and experience, so we have established development commission with a view to spe- cialisation and internationalisa- tion of the business.” There was considerable specula-


tion before the speech that it would include a new restriction on the number of gaming tables that could be operated - a move that would have had a severe impact on all of


the operators. The idea was floated by the previous chief executive Edmund Ho. Although it did not make it into the policy announce- ment, it doesn’t mean the issue is a dead duck; Beijing’s view of Chui’s progress in diversifying the economy is an important factor. The People’s Republic will apply pressure at pinch points, and this could be an effective stick to hold over the industry.


The phenomenal gaming rev-


enues generate vast taxes, which means that personal levies in the SAR are low: a popular - or pop- ulist - measure introduced by the last administration was an annual payment of 6,000 patacas (about E545) to every Macau resident will be continued, as will an addi- tional 5,000 patacas (E455) to the elderly and a universal subsidy for on electricity. Chui said: “We promise to be prag- matic in the development and opti- misation of public service in the face of challenges to tradition but also be innovative in the pursuit of progress for the SAR. The govern- ment firmly believes that with…the protection of…the entrepreneurial spirit and the solidarity of the people, we can building a better land ensuring the sustainable devel- opment of Macau’s future.”


www.CasinoReview-Online.com • April 2010 • 090


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A new dawn for Macau as a new administration decides on policies that could strengthen existing positions while diversifying the economy


Crowning Glory: Melbourne aims to roll high


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www.CasinoReview-Online.com • May 2010 • 091


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Macau caps table growth at ten per cent over three years


Having heard new chief executive Fernando Chui Sai On allude to as much in his first policy speech since taking over, Francis Tam, secretary for economy and finance, has now revealed how Macau casino developments beyond those already agreed, will be more closely regulated. And, as everyone predicted, it has come in the form of a table cap.


citylimits CHINA


The Macau government has confirmed it will not be allow- ing any new casino projects and will permit only 500 addi- tional baccarat tables in the next three years, limiting table growth to just ten per cent. The move casts doubt on


the viability of current expan- sion plans that have been in the pipeline for sometime. These plans currently pitch the increase in tables at 1,300 in the next year alone and so will need to be revised. The decision comes as the


government, which draws around 70 per cent of its revenue from casinos, looks to diversify Macau’s economy and transform the city into a more varied leisure and enter- tainment destination with the casino industry playing only a supporting role. Macau cur- rently houses around 5,000 gambling tables and six licensed casino operators, some of which have projects under construction that could add around 1,300 tables by next year. Francis Tam, secretary for economy and finance, explained that the govern-


with an annual growth rate of around four to five per cent. It’s a double edged sword


for operators in the Special Administrative Region pro- viding protection for existing gaming floors but curbing any plans not yet approved. Sands China president


ment wanted to better control the pace of casino expansion by promoting healthy and orderly development instead of a free for all approach. “Those casino develop- ments that have already been approved may continue to complete their construction. All those that haven’t been


approved or haven’t applied for approval have already been halted,” Tam said. “So within the next three years, casino tables will only reach 5,500.” Tam revealed that the casino industry’s develop- ment in the last few years has become much more orderly


Trump name wins out over Icahn


chapterended UNITED STATES


The bitter battle for control of Trump Entertainment Resorts came to an end on April 12 as the judge in bankruptcy court, Judith Wizmur, decided to award control of the company to the bondholders of the heavily indebted company, who were backed by the man whose name is over the door. Carl Icahn, the billionaire


investor who bought the Trump Entertainment mort- gages in order to gain signifi- cant leverage in his attempt to add the three casinos to his increasing large portfolio, is believed to be preparing an appeal.


After the decision was announced, Donald Trump said: “I’m really happy about it. It’s a great victory for us and for Atlantic City because good things are going to happen.”


A major factor in the judge’s decision was the value of the Trump name; the bondholders had agreed rights to use the Trump brand in return for up to ten per cent of the reorganised company’s equity. No such agreement was in place with Icahn, who would almost cer- tainly have had to rebrand, losing millions in intangible value.


The successful plan sees the bondholders paying


$225m (E168m) for the company, while reducing its debt from $1.8bn (E1.35bn) to $335m (E250m). The winners are preparing a rights issue to help fund the payment. Icahn’s lawyers have said they will appeal a “fundamen- tal error in the opinion”. In the meantime, however, they have already negotiated seniority for the mortgage, valued at almost half a billion dollars. Although Trump Marina and


Donald Trump and Carl Icahn have fought long and hard for control of Trump Entertainment Resorts


Trump Plaza are among the worst performing venues in Atlantic City, combined with Trump Taj Mahal, together they accounted for 20 per cent of gaming revenues last year at $176.5m (E132.0m). The best


performing casino was Borgata, which last year took in $175.4m (E131.2m). This was third time the


Trump casinos have been in bankruptcy protection meas- ures since the 1990s.


Steve Jacobs said: “The Macau government is sincere in its efforts to diversify and that it recognises the integral part sites five and six play with regards to growth in hospital- ity, business, and leisure tourism. We believe in the future of Macau and Sands China remains committed to working in partnership to help diversify the economy.” The reference to sites five and six concern the current expansion underway by Sands to build three hotel casinos with 700 tables. Com- pletion of phase one is expected by mid 2011 with the second phase opening six month later.


SJM Holdings said the cap


wouldn’t affect the company because it had no short-term development plans. SJM chief executive Ambrose So said: “We think that the critical mass hasn’t grown to such an extent that would warrant our invest- ment there. We can always reshuffle our tables to boost efficiency. There is enough for us to do in the next 10 years.”


So said he expects Macau’s GGR to rise 13 per cent to 15 per cent this year, up from a 9.7 per cent rise in 2009. GGR for the first three


weeks of March was close to US$1.68bn. SJM Holdings held the biggest share of the market, at around 30 per cent, while Sands China was second with around 20 per cent. The last monthly record was set in January 2010 when GGR increased 63 per cent from a year earlier to 14bn patacas (US$1.8bn).


Showing Steel: Steelman casts his design mind over the downturn INTERVIEW2


Sands predicts five years to recoup


Marina Bay investment


After four years of construction during the most torturous economic times, the world’s second-most expensive casino-resort at US$5.7bn has finally opened. Phil Martin details the magnificent three towered structure and reports on how its owner Sheldon Adelson expects to recoup his investment within five years.


fiveyearplan SINGAPORE


Singapore’s second casino-resort, the eagerly awaited Marina Bay Sands, opened at the end of April, a few months late but lacking nothing in splendour. It is clearly one of the the most ambitious and architecturally stunning leisure and convention facility ever built. The US$5.7bn project by Las


Vegas Sands, which has reshaped Singapore’s skyline at the far side of a marina facing the downtown, wants to be a must-see tourist magnet. Originally expected to debut in December, the opening was forced to February and then to April because of bad rainfall and the bankruptcy of some of the devel- opment’s subcontractors. Sands has now opened the casino, more than a third of the 2,560 hotel rooms and parts of a shopping mall and convention centre. The Sands SkyPark, which sits 60 storeys off the ground and is perched atop


the property’s three hotel towers, will debut on June 23 while a theatre opens in October and a museum in December. At the Feng Shui approved time of 3:18 pm, Las Vegas Sands chair- man and chief executive officer Sheldon Adelson snipped the cele- bratory ribbon and with it Marina Bay Sands opened its doors and welcomed its first guests. “Singapore’s reputation as a


world-class international tourist destination will be further enhanced with the opening of Marina Bay Sands and our company’s reputation for building economy-changing tourism devel- opments will be cemented around the world. For both of those reasons, I am happy to be in Singa- pore to open the first phase of the property and look forward to the grand opening celebration,” declared Adelson.


Adelson said its unique urban location provides Marina Bay Sands an opportunity to become one of the world’s most successful hotel-


resort propertie of operations fo is midweek, as t business travell for resort hote weekend when time. For us, wi convention bu tude of leisure a week is our pea The compan the MICE (mee vention and ex was a key r selected Las Ve Marina Bay San 160 events bo Expo and Co Those events, 2010, are expe than 250,000 to Marina Bay S


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48 February 2011 • feature


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