internationalcasinoreview December 2002 • 002 www.coinslot.co.uk January 2003 • 002 www.coinslot.co.uk Cannes Can


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February 2003 • 004 COINSLOT INTERNA TIONAL


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The Hard Rock Cafe is the most recognised music, entertainment and dining brand in the world. But, following the launch of the first Hard Rock Casino in Europe, how will the brand transfer and can the casino side of the operation one-day emulate the café’s global success? Phil Martin investigates.


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COINSLOT INTERNA TIONAL


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With some of the highest tax rates on the continent and with burgeoning competition, some German operators believe their domestic sector is nearing saturation point. Phil Martin reports on how the risk factor is increasing for some smaller operators.


Competition and tax fuels German concern


taxassessment GERMANY


The German casino market has grown at an exceptional rate in the last few decades,but the clasp of a sector slowdown,it appears to some analysts,looms large.For an economy already under intense pressure, the last thing many German operators want to hear is that room for expansion is running out.


The Manchester Hard Rock: delivering music and gaming as a mainstream leisure activety


during the week strength- ens the claim that young Mancunian adults are including the Hard Rock as part of their overall night out - as nights out for the masses mean one thing - the weekend. “The aim was always to tout the casino as a main- stream leisure activity to rival the pubs and clubs, and I think that we are well on our way to achieving that,” Boden added.“The Hard Rock really is the first UK casino that has any point of differentiation against any other UK


casino. It’s the break form tradition, which is all- important, and it is the power of the Hard Rock brand that has allowed us to make this leverage.” Since its 1971 opening in London,Hard Rock Cafe has become a global phe- nomenon. Currently there are 105 Hard Rock Cafes in 45 countries, which begs the question could the Hard Rock Casino one day emulate the global success of the cafes? Boden cer- tainly wouldn’t rule it out. “It is a distinct possibility that further down the line


the Hard Rock casino brand will be taken further into Europe,” he replied.“The world recognition of the Hard Rock brand is huge. If you look at the Hard Rock café operations across Europe there is huge scope to exploit the brand aware- ness. Rank already has licensing deals for casinos in Tampa and Florida and if there’s an opportunity out there for Rank and Hard Rock we will certainly take it on.The important thing for now is to get these two UK sites up and running and see where that takes us.”


elgian casinos in 2003


ding towards a slot revolution the like of which hasn’t been laws over a decade ago. The date for this particular next year.


es of the eight gaming with some decisions o be made on slot intro- fore the end of the year. mmission’s Geert Dobbe- of the installation of slot in the Belgian casinos: t period is the midst of casinos should be able to lot machines or jackpots d’ table.” are currently restricted pa towns and coastal lthough new laws are to provide for a ninth


casino, the first in the Brussels region. Taxes are distributed throughout the state in which the casino is located.


As well as the eight A license casinos, there have now been some 7,000 C licences granted to pubs, 110 B licences to arcades and 100 E licences to vendors and mainte- nance firms.


Having issued these licences, the Belgian authorities have cracked down on unlicensed slot operations clearing their path into casinos.


Dobbelaere added: “Before 2001 jackpot machines were often installed in the arcades where a lot of young players could access them. That’s why, as a deterrent, the legis- lator has decided to move these machines to the casinos and allow only players older than 21 to play. Thus, the main purpose is to have an inhibiting effect.”


Although this may be true, federal government will no doubt be aware of the increase in taxes that slot machines will bring to their coffers.


The mood of the market has taken a definite turn: caution and concern have infiltrated the operator’s everyday lan- guage.So much so that some are now complaining of dwindling turnovers due partly to players gambling with smaller stakes, but mainly because competi- tion has increased at such an alarming rate.


And one can understand why. Some 30 years ago, there were only about a dozen casinos in existence in the whole of Germany; today,there are more than 50 in operation with more concessions planned. In fact, over the last decade alone the number of casinos in Germany has doubled.On the one hand, such extensive growth is a great indicator of market opportun- ties;on the other, it beggars the current question - are there are enough players to go round? The Saarland region, with eight casinos for every 2,600km2 of land,has the highest concen- tration of casinos for any of the German counties.Couple this


with some of the highest tax rates in Europe,at between 80 and 90 per cent,and it is no sur- prise that some operators are viewing their casinos to be as much of a gamble for themselves as they are for their customers. However,it would be fair to


say that not all operators are trapped in the cycle of concern.Many established casinos are still performing well enough, despite the high tax and competition. In the region of 90 per cent of gross gaming revenue at the Wiesbaden Casino goes to the City of Wies- baden and the state of Hessen, but the dividends are sustain- able as the growth in gaming revenue at the casino has been much stronger than that of the overall German market. But you don’t have to look


too far for that all important reality check.In contrast, there are new casinos which are finding it more difficult to estab- lish themselves. Spielbank Potsdam’s Jokers Garden,which opened in January 2002,is expe- riencing something of a crisis which has forced the regional government to consider a change to its tax rates before the casino is forced to close.Current law dictates that the casino must hand over 65 per cent of its gross income to the town and regional councils.This percentage then rises to 80 percent in five-per- cent increments.


Recommendations made by the Ministry of Finance suggest,


Slot machines are performing but in some casinos the so called Big Games of Roulette and Black Jack aren’t. Established German casinos such as the Spielbank casino in Wiesbaden are bucking the trend but some smaller casinos have reached crisis point


however,that the casino could in future pay a percentage of between 60 and 80 per cent depending on turnover.Internal calculations by Lotto GmbH have confirmed that the Joker’s Garden could slip into the red fairly shortly.Managing director Horst Mentrup had demanded a softening of this law as far back as last summer. The town’s coffers will be


short of around 1m euros next year because the casino money is simply not arriving as plenti- fully as expected. During the current year, Potsdam has received only 335,000 euros, half of the anticipated amount, and whilst the slots are per- forming reasonably, the play level on the tables is falling short of the mark. Bavaria is another example of


Record breaking ICE to move in 2004


iceshaker UNITED KINGDOM


The 2003 International Casino Exhibition will be the last to be held on level 2 of Earls Court 1. The burgeoning show, which in a decade has grown from just 37 to 150 exhibitors, will make the short move to Earls Court 2 for the 2004 expo. Peter Rusbridge, chief executive of organ- ising company ATE, explained: “In ICE we have one of the fastest growing exhibitions in the show calendar. The simple fact is that the current home on the upper level of Earls Court 1 is not capable of accommodating any future expansion, hence the decision to take advantage of the opportunities offered by Earls Court 2.” The decision to relocate will be welcomed by exhibitors, many of whom have been lobbying


for such a move. With the large rides manufac- turers, who were the previous occupants, now being catered for by Euro Amusement Show, ICE organisers have seized the opportunity. Sales manager Karen Cooke believes that the benefits of relocating go beyond the need to accommodate continued expansion of the show. “By being on the ground floor, build-up will be far easier, giving an improved service to our customers. Also the same height restric- tions will not apply, providing stand designers with a freer hand,” she said. “Few would have predicted the develop- ment of the show from its modest origins in the Pillar Hall at Olympia to its current status,” she added. “The move to Earls Court 2 represents a significant ‘coming of age’ for a show which many feel is the best gaming and gambling event in the world.”


the over competitive environ- ment with several casinos deliv- ering large slot sections opening over the last few years. Frank Mühr,press officer for the West- spiel chain of casinos in Aachen, Dortmund, Bad Oyenhausen, Berlin and Bremen,is somewhat sceptical about this expansion. He believes the market is now saturated and that the trend of new openings is not sustainable. Frank Heiden, managing


director of the Spielbank casino in Bad Homburg,endorsed this viewpoint recently, confirming that the bubble may be about to burst for some operators. The high tax rate is undoubt-


edly a contributing factor. For example,in North Rhine West- phalia,80 per cent of the gross gambling revenue from all four casinos,in Hohensyburg,Aachen,


Duisburg and Bad Oeynhausen, goes directly to the public purse. With a total of nearly 120m


euros paid in tax in the last year by these four casinos,it is not sur- prising that many view casinos to be the cash cows of Germany. The economic equation for


the operators is that with such high tax rates they have less spend devoted to modernising and marketing their casinos. The draft budget for the coming year for tax from the North Rhine Westphalia casinos is 25.5m euros.With some ana- lysts predicting a 20 per cent drop in casino revenue in the next year,it remains to be seen if the casinos can deliver in the increasingly competitive climate.And this is certainly not the kind of news an uneasy German economy wants.


Moscow slots to treble in two years


leisurelygrowth RUSSIA


The Eastern European Leisure Expo (EELEX) is mirroring the growth of the Moscow market. This year’s show,taking


place from December 14- 16 at the Moscow Expo Centre,is set to reach new levels of visitors and exhibitors participation. So much so that the event has been forced to split into two large sectors simply due to the sheer numbers of companies wanting to exhibit. Russia itself is gearing up to have more gaming machines than ever before in its capital city. Deputy mayor of Moscow, Joseph Ord- jonikize has said that during the next two years the number of slot machines in Moscow will be increased by more than three fold. At present, there are


around 1,300 gaming halls in Moscow, housing 16,000 slot machines. City authorities intend to increase the quantity of slot machines to approxi- mately 50,000 units.They consider that it will help ‘to satisfy the need of Muscovites in leisure time and increase tax pay- ments to the budget’.


French looking to revive growth percentage in 2003


It wasn’t the best of year ends for the French market. Coming to terms with the fact that slot revenue has slowed like never before was never going to be easy. But this month, news has filtered out that growth in the whole sector has slowed. Phil Martin asks what 2003 will hold for French casinos.


slowgrow FRANCE


For so long the epitome of casino boom time, growth in the French industry is begin- ning to slow.Although its 170 odd casinos registered record revenues of 2,456bn euros for 2001/2002, this was the first year for well over a decade that growth has been restricted to just one single digit. Records are records,and it


is somewhat difficult to be con- vincingly downbeat on the back of such impressive rev- enues. But this is the French market;a sector accustomed to revenue progressions of between 10.5 and 14 per cent over the last few years.All of


which provides a very different canvass for the economic artist.This year’s growth has seen casino takings increase by only 7.81 per cent.Whilst most European jurisdiction’s would be happy with such growth, the so-called slow down is raising a few Gallic eyebrows. Results in the next year will


be critical in any long-term pre- diction for the market.There will certainly be some areas, namely Evian,Annemasse and Divonne, affected by the com- petition from casino openings in Switzerland. But there should be several boosts in the next year for the French casino industry,which has been in full bloom for so long. The Partouche group will


be hoping to continue the growth published in its annual results ending October 31, 2002,which saw an increase of 28 per cent to 371,9m euros. Revenue for Accor should be accelerated by the intro- duction of more slot machines in places such as Bordeaux, whilst the top earning casino in Enghien,operated by Lucien Barrière, will also have a full year of slot revenue rather than the seven months recorded in this year’s figures. The sector is also awaiting


several modifications to its reg- ulation, such as the potential withdrawal of the tax on entry fees to casinos,which will cer- tainly lift revenues. But, it is changes to betting denominations that should prove the biggest plus on the horizon for French operators. The euro has been widely


The introduction of more slots, such as the 150 expected in July at Accor’s Bordeaux casino, should help boost French revenue in 2003


criticised for the slowing of the casino sector with players unable to bet with their usual amounts.The changeover saw a shift in betting culture with players who could previously bet in multiples of FF100 being reduced to playing in lower denominations of euros equat- ing to FF13.For many,the thrill of the game has been reduced


London welcomes the world of casinos


icedup UNITEDKINGDOM


Casino buyers planning their visit to this year’s International Casino Exhibition in London will be party to the most comprehensive gath- ering of suppliers and manufacturers ever seen at an industry event. ICE 2003,to be held on January 21-23,was


officially sold out at the beginning of Decem- ber,two months before the doors open at Earls Court, with organisers introducing a waiting list for the first time in the show’s history. Whilst ICE 2003 is already the biggest on


record,with 150 companies occupying 7,300 m2


of booth space, January’s showcase will


also involve exhibitors from 27 nations cover- ing a complete range of product sectors from slots to security, i-gaming to live gaming and components to consultancy services.


ICE sales manager Karen Cooke,who was


involved with the show for 14 years as an exhibitor before joining the organising team, believes that the blend and calibre of exhibit- ing companies confirmed for 2003 is as note- worthy as the size of the exhibition. She explained:“Although it’s natural to focus on the numbers – and the numbers for 2003 are more impressive than at any other time in the show’s history – the spread of exhibitors is astonishing.”Cooke continued:“The simple fact is that the London show provides the most comprehensive overview of the indus- try. Buyers travel to London secure in the knowledge that the product offering is both complete and contemporary.” The ICE show’s popularity with buyers is


backed up by the level of pre-registrations, which are five per cent up on the same stage for ICE 2002.


COINSLOT INTERNA TIONAL Moscow show mirrors growth of the market COINSLOT INTERNA TIONAL ICE 2003 rewrites the record books


icebreaker UNITEDKINGDOM


Christmas time at the Metilista in Moscow, one of Moscow’s 42 fully fledged casinos


merryeelex RUSSIA


With over 16,000 legal machines and estimates of 40,000 illegal ones, the Moscow slots market has just grown and grown. Matching this growth, December’s Eastern


European Leisure Expo went down as one of the best in the show’s 11-year history with more exhibitors and first day visitors than for many a year.


Although still waiting for official show atten- dance figures, it was clear that the packed aisles


to such an extent that they have voted with their feet and simply stopped going to the casino. A proposed return to more


recognised gaming values of 5, 10 and 20 euros would help return slot play to the high denominations of old and allow for the return of certain customers seemingly lost since the changeover. David Marshall,Accor’s inter- national operation’s director, certainly questions the success of the euro’s introduction into France.“It depends on your per- spective really,”he said.“As far as the government is con- cerned, yes,it has been an out-


on the first day, a public holiday in Moscow, would take some beating. Although attendance slowed on the last day, exhibitors reported brisk business and quality visitors to their stands. This year’s exhibition, held December 14 to 16, marked a move into two pavilions, brought about by the sheer numbers of exhibitors. And, to cap it all, the casino side of the expo enjoyed a a strong presence with virtually all of the top manufacturers represented, proving the growing importance of the market.


EELEX Review page 23


standing success. But then, if something is taken away and compulsorily replaced by another and there is no choice but to use the replacement, well, yes, it will be a success. But is it a success in the hearts and minds of the French popu- lace? The vast majority of the French public still think and talk in Francs,but the reference points of the Franc - 100 Francs, 200 Francs.Even the favourite of the supermarkets 99,99 Francs - has gone and hasn’t been replaced in the public mind by Euro references.How much is 123,50 Euros and what can it buy? Who knows? Also to


bear in mind is the French con- sumer’s deep and innate suspi- cion that any change to the currency means that he will be bound to be ripped off by someone.As long as this lasts, and even the shops and super- markets do not help by still con- tinuing to double mark prices, the confusion will continue.” The French industry will no doubt be pinning its hopes on the new denomination play and a return to the gaming growth of old, for if revenue growth slows at the same rate in 2003,some will be asking if the French bubble has finally burst.


The 2003 International Casino Exhibition (ICE) was the biggest in the show’s 13-year history with a total of 6,388 visitors attending the London Show. The figure marks a 26 per cent increase on last year’s attraction, and in the process set a new all-time atten- dance record. These figures, announced this month by the organiser, were further boosted with 8,582 visitors registered in ICE’s sister show,


ATEI, crossing over into the casino exhibition – resulting in an overall attendance of 14,970. ATE chief executive Peter Rus- bridge said of the show: “The growth of ICE has been phenome- nal. Of course, it helps to have a major programme of deregulation on your doorstep, but the main reason behind the show’s sus- tained expansion is the close working relationship we have with our customers. It is the exhibitors’ products and services that draw so many buyers from every corner of the globe, and with an enlarged


show floor planned for 2004 we are confident of being able to stage an equally, if not more impressive showcase next year.” Underlining the continuing pro- gramme of deregulation in the United Kingdom, the number of ICE visitors based in the host nation rose by 24.1 per cent to 2,309.


After the UK, the most repre- sented nation at ICE 2003 was the Netherlands, with 371 attendees, followed by Germany with 366, Spain with 310, Austria with 292 and the USA with 252.


Also setting a new record, the number of territories represented by visitors to ICE rose to 98, six of which – Aruba, Dominican Repub- lic, Indonesia, Kyrgyzstan, Myanmar and Qatar – were repre- sented for the first time at ICE. International visitors accounted for 62 per cent of the total attendance, the majority of whom were from continental Europe where an annual increase of 46.6 per cent saw visitor numbers soar to 3,232. The number of North American visi- tors also increased substantially,


up by 27.2 per cent to 355. 13 overseas territories were


represented by more than 100 vis- itors and no fewer than 40 of the top 50 visitor territories either increased or maintained their rep- resentation at ICE 2003.


ICE2003Report


The London Show in detail Page 10


The Austrian casino industry is still trying to ascertain how much money a gang was able to cheat out of its casinos after allegedly manipulating results at roulette. Phil Martin reports on the latest on the attempted Austrian roulette robbery.


Austrians rocked by roulette scam


The picturesque setting of Casino Velden, in South Austria, where the daring roulette con took place


spinmen AUSTRIA


Casinos Austria’s surveil- lance specialists are scrutin- ising hour after hour of surveillance footage to iden- tify exactly how much money its Velden operation could have been conned out of,and indeed,if any more of its dozen domestic casinos could have been hit by an audacious roulette scam. Reports suggest that a gang of conmen,suspected of fixing roulette results


with a remote-controlled magnetic roulette ball,could have robbed at least 300,000 euros over several weeks of regular visits to just one casino in Velden, in south- ern Austria. Hermann Pamminger, head of corporate relations at Casinos Austria, revealed however, that so far there was no evidence to confirm that the gang had actually succeeded with their plot. “We know that casino guests might have influ- enced a roulette ball with a magnetic centre to land in a predetermined sector of the roulette cylinder by using a second device hidden in another guest’s clothing,”he said.“But contrary to numer- ous reports in the media, there is no evidence that


suggests that the men actu- ally managed to successfully manipulate the roulette ball to their financial advantage.” The fact that they even


managed to get the magnetic ball onto the table has left the operator shocked and police mystified. Not only will they be demanding an answer to the question of how the ball was switched, but also to how long it was there for and,of course,how much damage it caused. Whatever that damage, it could undoubtedly have been much worse. “The ball was discovered


by an attentive croupier who noticed it moving in a suspicious and unusual manner,”Pamminger added. “Upon closer inspection it became clear that the ball


had been tampered with, although it matched the roulette balls used by Casinos Austria exactly in both appearance and weight.”


Despite the similarities


between the ball,Casinos Austria is adamant that there is no suspicion of collusion with the gang from any of its staff.“We don’t believe that any casino employees were involved in getting this mag- netic ball onto the table,”said Leo Wallner,chief executive officer of Casinos Austria.” Indeed,safety issues are a


top priority at Casinos Austria,a company which has its own R&D department for products specially manu- factured for the casino indus- try.Pamminger stressed that the group placed great emphasis on every facet of security from guest and employee safety to gaming and building security. “Security standards form a bedrock component of the


casino services we offer,and prevention is one of our most important fundamental prin- ciples,”


Pamminger


explained. “Attempts to engage in fraud by manipu- lating casino equipment occur very infrequently.As a rule,we regularly conduct thorough and extensive checks of all of our security measures to eliminate, as much as humanly possible, any chance of cheating.” “Our employees are


trained to recognise and prevent any attempts at fraud such as this,”he added. “Movable inventory such as cards,dice and roulette balls are routinely locked away and checked to make sure that they are functioning properly.Since the incident at Casino Velden,we have taken additional steps to further tighten security measures throughout our 12 casinos.”


Despite the obvious annoyance of being involved


in this scam,Casinos Austria is taking a somewhat philo- sophical view.


“I’m pleased that we have


exposed this con and can now act against it,”Wallner added.“We’re obviously very concerned and suspect that the gang may have been in operation at other casinos in Austria, at Graz and Salzburg.”


Indeed police also believe


they may have struck in other Austrian casinos, moving on every three months to avoid arousing suspicion. But,with Austria sharing


borders with Germany, the Czech Republic, Slovakia, Hungary, Slovenia, Italy and Switzerland, there’s no cer- tainty that the crime would have been limited to just Austria.


EuropeanNews Staying ahead of the roulette robbers Page 3


bytheportdivided PORTUGAL


Political tension has been mounting in the Portuguese industry ever since the gov- ernment rewrote its gaming laws to allow for a casino in Lisbon.This situation is set to reach fever pitch propor- tions when the location of the venue is confirmed this month and the possibility of a casino in the capital becomes more of a reality. The proposal rests on the casino being housed either in the Parque Mayer theatre, in a move which will breath new life into the city’s his- torical, cultural and artistic zone, or alternatively in a venue in south east Lisbon in the EXPO 98 building. Whilst this licence would


bring great quality to the overall Portuguese offering, the fact that a new decree law had to be approved to allow it has meant the con- troversy surrounding its very existence has been volatile to say the least. Since the introduction of gaming in Portugal in 1927, the right to operate casinos has been granted to private companies through public tenders on the basis of con- cession contracts.


The main purpose of the gaming legislation was to stimulate the development of areas with potential for


tourism.These areas were specified as always having to be away from Portugal’s big cities,which explains the localisation of Casino Estoril, 30 km north of Lisbon,and Casino da Póvoa and Casino de Espinho, 25 km north and 17 km south of Porto,respectively. To prevent proliferation,


there was also a law dictat- ing that only one casino would be allowed to operate in a designated area surrounding each prede- fined casino location,which is usually 150 km.In the case of the huge Casino Estoril this was revised to 300 km, but the Lisbon licence has actually gone to the Estoril- Sol, as an extension of its existing Casino Estoril licence, just 30 km out of the city.Whilst the operator has done little wrong, the advantageous position it has found itself in, hasn’t been greatly received by rival operators,or for that matter, some local councillors.The regions of Porto,Matosi and the Vila de Gaia have all put forward requests to the gov- ernment for casinos in their localities,the latter wishing to extend the Espinho licence in its district. Manuel Violas,president of the Solverde Group, believes, meanwhile, that the licence was made solely with Estoril-Sol in mind.He


also believes that the Lisbon site will be the most suc- cessful casino in Portugal making Estoril-Sol more than 60m euros in its first year of operation going up to 150m a year within five year’s time.


Whilst the sensitivity of the situation meant that neither Estoril-Sol or the Por- tuguese Association of Casinos (APC) felt they could talk about the Lisbon casino until a decision had been taken on its location, Fernando Fernandes, a director at the Solverde Group, questioned how Lisbon would effect the equilibrium in Portugal. “It’s true that because of


the protections in place no one else could expect to be granted a new licence in that area,” he said.“But it is also true that a new casino in Lisbon will interfere with the stability of the sector by changing the status of com- petition between the two existing groups.” The Estoril Sol Group, with Casino Estoril, Casino da Póvoa and Casino da Figeira,has about 70 per cent of the market whilst Solverde with Casino de Espinho and the three casinos in the Algarve, has the vast majority of the rest. The only other group, Pestana,operates the Casino Funchal in Madeira.


Each of the concession


contracts of these casinos were reviewed in Decem- ber 2001 with all the con- tracts extended by 15 years, except for the Solverde casinos in the Algarve that were each given at least a further three years. Fernandes added:“Having


agreed on that negotiation, Solverde Group assumed that it had achieved a con- solidated situation in terms of the gaming business in Portugal.It would never had


COINSLOT INTERNA T IONAL Land-based Danes to net virtual chance


netgain DENMARK


It is looking more and more likely that the casino licence for Danish operators will soon be extended, paving the way for an expansion into online gaming.


Peter Sehestedt, from the Ministry of Taxation of


Denmark, outlined the pro- posed policy at the recent Law of Internet Gambling Confer- ence in Lausanne, Switzer- land. In the plan, Sehestedt will be recommending to the Danish Ministry of Finance that Danish casino operators should be allowed to offer reg- ulated online gaming, but only to Danish citizens.


Sehestedt is forthright in his view that a national approach to regulation is the only way that I-Gaming can proceed. “Global I-gaming threatens the sovereignty of each indi- vidual state,” he suggested, adding that Denmark would never be able to regulate how it wanted to if globalisation remained. “We should have


Portuguese equilibrium on a knife edge


With only seven casinos currently in operation, the Portuguese casino industry is, from the outside, a fairly tight-knit community. But as Phil Martin writes, the creation of a licence in the heart of Lisbon has split the sector right down the middle.


the ability to enforce our own regulation otherwise we could be forced into a state of anarchy. The internet could prove a catalyst for collision in differing legislation.”


He was keen to point out, however, that although the Danish approach was liberal there would still be several hurdles to overcome before


internet casinos become a reality in Denmark. His pro- posal encourages the regula- tion and taxation of legal gaming entities moving online, whilst blocking the online activities of those that offer unlicensed casinos, provide payment processing to unli- censed casinos or advertise illegal sites.


Danish operators could soon offer online gaming but only to Danish citizens


given its consent to those negotiations if it had realised that less than one year later a new licence for a casino in Lisbon would be granted to its main competitor.” The contract for Casino


Estoril would have expired by the end of 2005 and it would then have been opened up for the other groups to compete for the new concession in that zone. Fernandes believes that


granting the Lisbon licence to the leading group in the sector will ‘untwist the situ- ation in terms of what should be the result of a fair competition between the two operating groups on the continent.’ “Of course Solverde


The proposal of a Lisbon licence has caused huge debate between Portugal’s big two, Estoril-Sol and Solverde, as well as councillors all over the country


Group is complaining about this decision and since it is now irreversible,expects to obtain some compensa- tions from the government,” he added. With seven operating casinos and one more planned in both Troia for the Sonae Group and in Chaves for Solverde, the relatively small republic of Portugal is already well served by casino gaming.But with the best potentially yet to come, the concern for those ignored in Lisbon is clear.


With the Polish industry hovering tantalisingly close to new gaming regulations, Casino Review’s Phil Martin speculates as to how the casino sector will be affected by new forms of competition.


Poznan in the west,Lublin in the east and Gdansk in the north all have population levels capable of supporting several more casinos under the proposals. The draft,which is currently


awaiting the signature of Poland’s President Aleksander Kwasniewski, has already been passed by the Lower and Upper ‘Houses’and comes as the Ministry of Finance bids to turn around an ailing industry and boost government coffers through improved levels of taxation.


The amendment has been


directed to a committee created to speed read legisla- tion connected with the gov- ernment’s programme relating to enterprise,growth and jobs, enabling it to be processed quickly. At the moment, with the


Poland poised to light the touch paper


polishingwindow ofopportunity POLAND


The Polish Parliament is dancing with the detail of the drafted amendments to its gaming regulation.Poised to breathe new life into its casino business by scrapping the pop- ulation laws currently restrict- ing casino introduction and allowing foreign operators into the country,the amend- ments to its current stipula- tions are also set to bring with them a new wave of competi- tion for the country’s 40 odd casinos.


Whilst the green light for


international operators to enter the market will only be signalled as part of the package when Poland eventually joins the European Union,the popu- lation laws almost certainly look like being overhauled in the coming months. And the new bill, which could be finalised as early as July,is being developed to reju- venate every aspect of the gaming industry adding com- petition in the form of video lottery,telebingo and low-win- nings gaming machines to the overall catalogue of games. Whilst this means more opposition for the casino sector in terms of higher numbers of gaming machines, the proposed changes will also allow operators to open up in previously unpermitted areas.


The current law stipulates that an area must have a population of 250,000 before a casino oper- ation can be justified.That law is being poleaxed with the quarter of a million people ruling now being used as the dividing point between operat- ing one and two casinos.As such,casinos could potentially open anywhere in Poland where they aren’t already, meaning market forces could now dictate future openings. The new population laws will also allow further openings in already permitted areas. A spokesperson for the Gaming and Wagering depart- ment at the Ministry of Finance said:“Whilst the economic situ- ation in Poland is quite difficult now,and whilst it is not for this department to make market predictions, there will be lots of opportunity for casino oper- ators once the new draft is implemented.In Warsaw, for example,current laws restrict the market to only five casinos, but under the proposed draft this could increase to eight.” Given the density of its pop-


ulation,Warsaw will retain its position as Poland’s leading casino city,but with one casino being permitted per 250,000 inhabitants in any town or city, other regions could provide rich pickings for domestic and eventually foreign operators. After Warsaw, Lodz in central Poland,Krakow in the south, Wroclaw in the south west,


exception of numbers games and betting, the gambling market is in recession in Poland and poor company perform- ance translates into smaller tax revenue for the state. The previous Sejm tight-


ened regulations to restrict machines that pay out money to amusement arcades and casinos.But these regulations simply resulted in the expan- sion of underground gambling. In its bid to boost gaming


taxes, the amendment intro- duces some revolutionary changes throughout the entire gambling sector.Whilst the number of unlimited jackpot machines will remain at 30 and 70 for casinos and slot halls respectively,up to three low-payout machines,of up to 15 euros, will be allowed in restaurants, bars, service sta- tions and retail outlets. New population laws will


also lower the required inhab- itants for a slot hall down to 50,000 with guidelines per- mitting further slot halls per each further 100,000 of the population. However,the most impor- tant item in the government’s amendment for state revenues is seen to be the expansion of lotto-type games and money lotteries. Analysts predict between 35,000 and 67,000 lottery terminals all over Poland, depending on the project’s success. For Polish casino operators,


the drafting of the proposals has brought with it the spectre of competition on all fronts, shrouded by the hope of oppor- tunity.Perhaps the biggest chal- lenge will come from the added competition of foreign casino investors just visible on the Euro horizon.The suggestion of an open market,in line with European Regulations,will,like every business opportunity, provide challenge for some and opportunity for others.


COINSLOT INTERNA T IONAL


Barrière given chance to revamp Cannes


supernoga FRANCE


The Lucien Barrière Group is to help restore the tradition of three gaming licences in Cannes, the star of the French Riviera, after the much sought after licence was awarded to the group’s subsidiary Societe Fermiere du Casino Municipal de Cannes. Cannes Town Council has opted for a name already sun- drenched in the resort’s tradi- tion as the Barrière Group already operates one casino and two major hotels in the City of Festivals. Alongside Majestic Barrière and Hôtel Gray d'Albion, the group has maintained a top six placing for its Casino Barrière de Cannes Croisette in terms of revenue for the last two years. Traditionally, Cannes always had three casinos. That was, however, until 1996 when the Grand Casino Riviera affair led to the downfall of then mayor Michel Mouillot and the closure of the casino following corruption charges. Now, Barrière is to return to the site of that casino and reopen in the Noga Hilton in


doneanddusted UNITEDKINGDOM


The deal which has gripped the casino industry since its inception at the beginning of the year is now done with Vic- toria Holdings, the parent company of the TCS Group, confirming the completion of the move to bring John Huxley


under the same business umbrella.


The two great rival London–based companies have now formed what many observers believe is the most powerful non-slot domi- nated gaming supplier in the world.


Whilst being somewhat brief in detail, the message


from Victoria Holdings, TCS and Huxley was clear. The deal is done, it will bring positives for operators, but the industry is going to have to wait to find out how the two company’s myriad of product offerings will be blended together. The company said in it statement: “The completion of the acquisition of the John


The Noga Hilton on the distinguished Croisette Boulevard will once again house Cannes’ third licence


the heart of the La Croisette area. This third casino is set to open during 2003, subject to authorisation from the Min- istry of the Interior.


A spokesperson for the


Group said: “The concession of this new gaming establishment enhances the synergy and dynamics that already exist between the different Groupe Lucien Barrière establishments in Cannes. The establishment’s first challenge will be to attract a new gaming clientele by offer- ing them something different.” The newly established SCLC (Société Casinotière du Littoral Cannois, subsidiary of the SFCMC) will take up the chal- lenge, working with the 2,000


square meters of space occu- pied by the old casino which benefits from direct access from the busy Croisette Boulevard. There are also plans for a


restaurant to attract the interna- tional community of Cannes. The Groupe Lucien Barrière will organise a rich artistic pro- gramme of quality events throughout the year. Barrière added: “Through this new venture, the Groupe Lucien Barrière confirms its position as an economic, social and cultural partner in the Cannes community and rein- forces its expansion strategy, aiming to make the SFCMC resort establishments leaders on the Côte d’Azur.”


Operating issues in focus at ECS 2003


Casino executives from Europe and beyond are preparing to converge on the Hyatt Regency Hotel in Thessaloniki,Greece (8-9 May) for what organisers of the European Casino Summit 2003 are describing as ‘the most operator-focused forum to date’. Topping the agenda for most delegates will


be the chance to hear first-hand accounts of operating issues and practices in some of Europe’s casino hot spots, including Switzerland, Lithuania, Germany, Italy, Spain,


Austria,the United Kingdom and Greece. In addition to individual market issues, ECS 2003 will offer specialist sessions covering marketing strategies, regulatory updates, brand protection, layout and design, social responsibility developments,product testing, payment systems, slot games and strategies.


ECS2003Bookings Tel: +44 (0) 20 7713 0302 www.ATEOnline.co.uk/conferences


One of the primary concerns in the build up to the birth of Switzerland’s real casino indus- try in July 2002 was that the sector might become domi- nated by slot machine gaming and that as a result live gaming wouldn’t get the opportunity to flourish. One year on and that anxiety has been well and truly laid to rest with the tables accounting for nearly half of gaming related revenues in the fledgling indus- try so far.In fact in some casinos it is fresh orders for tables and not slots that the management are frantically filling out as table play rises to levels far above the estimations of much of the market.


Speaking at the European Casino Summit,held in Thessa- loniki, Timothy Cullimore, director general of the Crans Montana B licence casino in Switzerland, revealed how he wasn’t surprised by the initial success of live gaming. “For the period of the six months from the opening of the first ‘new’casino to the end of 2002, table games revenue accounted for a staggering 47 per cent of total win,”he said.


Swiss table success flies in the face of product ratios


Speaking at this year’s European Casino Summit, Timothy Cullimore put forward the case for emerging markets to learn from the experience of one young member of the European casino family - that of Switzerland. Phil Martin reports on how accessibility has been key to Switzerland’s traditional success.


tablingsuccess SWITZERLAND


“This could be down to the novelty of a new gaming oppor- tunity for the clients, but I believe we are seeing the bene- fits of laws which in no way inhibit players from reaching the tables.The reality is that table games have been more successful than some analysts had forecast.”


The casino in Luzern has


had particular success with its table games operations, but Cullimore highlighted that whether in A or B venues, the Swiss table games market was a ‘clientele waiting for its product.’


The Swiss are great travellers and he believes the domestic players proved their desire to play the tables long before the onset of real gaming in Switzer- land, visiting holiday destina- tions,offering gaming as part of the holiday experience,and also cross border casinos nearby to where they live. At the heart of the Swiss


industry is an excellent devo- tion to problem gambling, which Cullimore feels has been integral to the market’s devel- opment. “A comprehensive problem gambling policy has in fact been an aid for those of us implanted in relatively small communities, allying fears of a mass epidemic of pathological gamblers destroying the deli- cate social tissue,”he said. Once in place, the dedica- tion to socially responsible gaming has allowed the casinos, and perhaps most importantly,the tables to retain a fair degree of accessibility.


“There are no mandatory


charges for entering the casinos in Switzerland,”Cullimore con- tinued.“Table games and slots, along with bars and restaurants, can be located in the same room,giving easy accessibility to new and experienced table games players alike.The old fears that only slots would be profitable and that table games with their high employment charges would be a drain on resources has not been borne out.”


Indeed,Cullimore explained


that safeguards inserted into the gaming legislation, which limited the number of slots to a maximum of 25 machines for each gaming table, no longer seem to be required.“In my own casino,as in some others,I will shortly be adding tables without enlarging my slot park,”he declared.“I only hope that other countries can learn from this experience and not


COINSLOT INTERNA TIONAL TCS and John Huxley deal now complete


Huxley Group by Victoria Holdings Ltd. - the parent company of TCS Group - has taken place on Friday May 16 2003.Bringing together the two strongest names in global gaming – TCS and John Huxley – is exciting news, with positive benefits for gaming operators around the world. Watch this space for further


hamper growth by making unnecessary


developments, campaigns and product news.” As presented when the deal was first announced on the eve of the International Casino Exhibition in January, David Heap, CEO of John Huxley is now the executive vice president of Victoria Holdings. He joins Bertil Knutsson, chairman and


owner of Victoria Holdings on the overall advisory board, as well as John Huxley chairman Jeff Lindsay.


Heap said at the time: “By bringing these companies together we can be more focussed on providing more thorough solutions through better focussed research and development.”


equations


between the number of slots and tables. I firmly believe that fixing the quota of slots and tables actually stifles the product offering.” As the industry in Switzer- land begins to mature, Cul- limore believes it would be prudent for other gaming juris- dictions to share in the secrets of its successes, and indeed its difficulties. “As we see more and more


cross-border clients, and as more and more of our players travel on holiday and business to other European countries, a closer alignment between our various gaming cultures is becoming more and more vital,” he explained.“New or changing jurisdictions, such as Britain, can greatly benefit from our collective experiences.” And as a forum for such dis-


cussion,Cullimore labelled the European Casino Summit as being invaluable to the devel- opment of the European indus- try.“The importance of events such as these cannot be under- estimated,giving us the oppor- tunity to share our experiences, both good and bad,” he said, concluding that attendance at such events proved that opera- tors are now considering them- selves as part of the European gaming community, and not individual operators.


Casino Cruising: High rolling on the high seas on board the RSSC Voyager


British COINSLOT INTERNA TIONAL


If any hard evidence was needed of Casinos Austria’s continued expansion, it came in the form of its investment in a casino which considers itself the most successful in Greece and one of the busiest in Europe. Phil Martin reports from the sun-drenched city of Loutraki.


gambling bill by 2005/6


The introduction of the bill to liberalise the United Kingdom’s casino industry will be delayed by three to 12 months. Andy McCarron reports.


billacceptor UNITED KINGDOM


The Department of Culture, Media and Sport, the government office responsi- ble for British gaming, has conceded that gambling legislation has officially been delayed, at least to the start of the legislative procedure.


A mock up of the gaming action on the top deck of the Radisson Seven Seas Voyager. Casinos Austria’s describes its fourth operation on a Radisson cruise ship as its most beautiful maritime casino of all time which, after installing and operating 80 onboard casinos, is quite a claim. Find out why on page 8.


It was a declaration that disappointed nearly all the parties involved in the process, not least of all the government department itself which has widely been recognised as working vigorously to achieving new laws. The DCMS now esti- mates that the bill will become law in the 2004/5 parliamentary session, despite the hold-up to the initial part of the leg- islative process, which is largely due to an oversubscribed parliamentary timetable, which includes a vast alloca- tion of time to the Asylum Bill. An official statement from the DCMS said: “The draft Gambling Bill is to be scru- tinised by a joint committee of both Houses of Parliament. We welcome the rigorous examination of our proposals that this will involve, and look forward to making our contribution. We will publish draft propos- als as soon as possible this year. “The joint committee is scheduled to


Tim Cullimore: “New or changing jurisdictions, such as Britain, can greatly benefit from our collective experiences.”


report by the end of March 2004.We will therefore be in a good position to intro- duce the Bill to Parliament soon there- after, having given full consideration to the Committee’s recommendations.” While the department had been aiming to introduce the Gambling Bill in October/November, it thinks that a scrutinised bill could move more quickly through the legislative process when it is hopefully introduced in April 2004. British Casino Association direc- tor general David Beeton pointed out that any new act looks likely to come into force in 2006, six years after the review committee was originally formed. He added: “I’ve no doubt the DCMS is being sincere with its new timescale, but there is still no guaran- tees for the Bill. Election year is not the time when you would want to put through this kind of legislation. We need to keep our fingers crossed and emphasise the need for changes to be made to the law.”


Austrians buy into Loutraki licence


goldmineofgaming GREECE


Located on the east coast of the Gulf of Corinth, Loutraki was the first resort to be recorded in the annals of world history. Some 80km away from


Athens, the resort benefits from 4km of coastal beauty making the entire area seem like an endless beach. But whilst the beaches of this idyllic spa resort are popular, the epicentre is undoubtedly Club Hotel Casino Loutraki, which in 2002 welcomed over 816,000 guests. That works out to an average of 2,250 people a day, rising to an impressive 3,500 visitors at the weekend.


The casino opened in


1995, with the adjoining hotel following seven years later, and its popularity has been growing year on year, yielding gaming revenues of 165m euros,up 12 per cent from 2001. Such awe-inspiring busi- ness statistics have led to the prolonged pursuit of a share of the casino from some of the finest operators in Europe.Last year negotiations began between the casino’s owners and Casinos Austria Interna- tional regarding the acquisi- tion of a stake in the establishment.These negotia-


tions have now been finalised and the Austrian operator will secure a 25 per cent share in the holding company which in turn owns a 78 per cent stake in the Greek venue.The trans- action is valued at 100m euros, which Casinos Austria clearly believes is money well spent. Paul Herzfeld, CEO of Casinos Austria International, summed up the company’s delight.“This exciting acqui- sition of a significant stake in Club Hotel Casino Loutraki, the biggest casino in Greece and in Europe, represents a further milestone for CAI’s expansion strategy.” “The investment repre-


sents a real win-win opportu- nity for both parties,”head of corporate relations Hermann Pamminger, added. “Club Hotel Casino Loutraki will become part of Casino Austria Group’s extensive interna- tional network of casinos. In return, this will give CAI access to an exciting, new market as well as a take in the most successful and expan- sive casino project in Greece. Both parties are looking forward to an exciting joint future,with one of the first highlights being the Olympic games 2004 in Athens.” Shmuel Ephron,managing


director of the Loutraki casino group,emphasised the significance of the deal for


his company saying it would add value to both groups.“It will bring together business strategies and ideas as well as cross marketing possibili- ties and the chance to work on further projects in the future.” The recent success of rival


Hyatt, which already oper- ates in Thessaloniki,in wining the bid for a share in the Mont Parnes casino, on the out- skirts of Athens,will not have gone unnoticed. Ephron added:“As an oper-


ator, to be joining with Casinos Austria places us in a new light.We are now with one of the biggest casino groups in the world which we are sure will benefit both parties with further invest- ments and developments.” The casino, which accounts for 36 per cent of the total Greek market, recorded its record number of visits when 7,000 guests passed through its doors last New year’s eve. Put simply, the casino is huge with 70 gaming tables and 612 slots but,as director of casino oper- ations John James explained, the casino’s popularity is forcing it to expand even further.“We’re busy from 8am when we open to 5am when we close,” he said.“Loutraki only has a population of 12,000 so with visitor levels


The entrance to Club Hotel Casino Loutraki


of over 800,000 last year, it’s no surprise that 75 per cent of the players come from Athens,which will only be an hour away once the highway is finished.The expansion will see us add a new gaming floor the size of the main area which exists today.The sec- ondary gaming area currently located downstairs will become a restaurant and the present VIP areas will be relo- cated to allow for more ‘private’space.” James is also hoping that a


change in Greek laws will soon allow for an influx of new games.The proposal is that any casino game approved for play in Europe or Las Vegas will automatically


constitute approval in Greece. But,irrelevant of their intro-


duction, Loutraki remains an operator’s dream.The casino is clearly benefiting from excellent management and careful investment.The adjoin- ing hotel, designed to resem- ble a cruise ship, oozes opulence of the highest stan- dard whilst the resort itself, under the gaze of the Gerania mountain,is clearly a favoured destination with the Greeks and with Athenians in particu- lar.Throw this all together with the nation’s insatiable appetite for gambling and it’s easy to see why 100m euros could soon be considered a dip in the crystal clear waters of the Corinthian Gulf.


Excellent EELEX eelexreview page 23


www.coinslot.co.uk La Méd makeover


Le Palais double Nice’s numbers europeannews page 2


ICEing on the cake


The best of the products from ICE 2003 ice2003report page 10yxyx page xx


Mega-merger


What TCS/Huxley means for the operator suppliernews page 8


March 2003 • 005 www.coinslot.co.uk Taxing Estonia


Operators forced under in Baltic State europeannews page 2


Greece uncovered


Privatisation to boost Olympics europeannews page 3yxyx page xx


Reshuffling the pack Isaacs answer Aristocrat’s US call suppliernews page 8


April 2003 • 006 www.coinslot.co.uk Boom time for Belgium?


Cleansed Belgium set for slots drive europeannews page 2


Going for Gold


Strong showing for South Africa’s resorts worldnews page 16


Smart move


New payment methods on the cards for UK slots europeannews page 6


May 2003 • 007 www.coinslot.co.uk Walls fall down


Northern Cyprus borders on new era europeannews page 2


Taxing issues


Players’ tax strangling Romania europeannews page 2


Never mind the quantity ....?


Quality cry from Lithuania europeannews page 3


June 2003 • 008 www.coinslot.co.uk Bustling Breda


Crowds flock to Dutch casino europeannews page 2


Roulette threat


Germany ready to wheel it out europeannews page 2


July 2003 • 009 Lisbon lights


Estoril-Sol on its new licence europeannews page 3


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CAI’s head of corporate relations Hermann Pamminger with Loutraki Casino director John James, communication’s consultant Thalis Coutoupis and CAI CEO Paul Herzfeld


All roads lead to London ss the TV reality check? 3


Who did what at this year’s ICE show icereport page 18


March 2004 • 017 www.coinslot.co.uk


Les Princes’ crowning glory


Barriere has high hopes for princely return europeannews page 3


An English affair


MGM make mdest move on UK europeannews page 4


April 2004 • 018


Shuffling the pack


Shuffle Master state their intent for CARD suppliernews page 20


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Boule party


One game suits all for Morbihan europeannews page 2


The A team


Admiral’s A licence plan for Mendrisio europeannews page 2


May 2004 • 019


Customer first


Casino 2000 sets sights on second million europeannews page 4


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On the up


New look Figueira feels the force europeannews page 2


Mountain possibilities


Ribeauville prompts French law rethink europeannews page 3


June 2004 • 020


Played in Russia


Unicum sets its own slot for the East suppliernews page 26


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Turning the tables


Is Hilton shuffling its UK pack again? europeannews page 2


Olympic gains


Eight casinos planned for Baltic States europeannews page 3


July 2004 • 021


Russian rules


Taleon tackles poker decline head on europeannews page 13


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Random ruling


Madrid court rules in favour of stat-men europeannews page 2


Lottery roll-over


Why the Swiss are blocking Tactilo? europeannews page 3


Out of focus


Alarm bells ringing over Brit’s slot lot europeannews page 4


August 2004 • 022 www.coinslot .co.uk


Vegas on the Med High praise for Partouche Pasino europeannews page 2


Back on track


Sizinvest steers good ship Namur europeannews page 3


Top value for Vallée Casino de la Vallée hits record month europeannews page 4


September 2004 • 023 www.coinslot.co.uk COINSLOT INTERNA TIONAL


on came of home


cting more before.


casino and passed rt 2 in


se on the


as further stered in nts sister


show, ATEI, crossing over into the casino exhibition - resulting in a total ICE 2004 attendance of 17,775, over 18.7 per cent higher than the same measure taken in 2003.


Peter Rusbridge, chief executive of organisers ATE, said: “We’re delighted that the relocation to Earls Court 2 was so well received by visitors and exhibitors alike. All of the world’s major suppliers really got behind ICE 2004 and combined to put on an unrivalled showcase with a dazzling display of new products and services and unique hospitality packages.” A breakdown of the visitor database


reveals that not only did buyers turn up in great numbers, but their provenance was also remarkable with no fewer than 101 territories across five continents represented by show attendees. “It was very encouraging to see the fantastic turn-out with operators from such a diverse range of jurisdictions,” Rusbridge added, “particularly those from rapidly expanding markets such as central and eastern Europe. All of which points to a healthy future for ICE as Europe’s flagship casino and gaming show and arguably the world’s most influential event for buying and selling to a truly international audience.”


COINSLOT INTERNA TIONAL


Casinos Austria is being forced to pay damages to a problem gambler who lost his business and tried to commit suicide after a disastrous run on the tables. Phil Martin reports on the case and asks what precedent it sets for the rest of Europe.


Floodgates could open following Austrian Appeals Court ruling


problemarea AUSTRIA


In a case,which could bring the tobacco style litigation witnessed in the United States to the Euro- pean casino sector,an appeal by Casinos Austria concerning a cus- tomer and ‘neglected duties’has been overruled with the operator being ordered to pay a compul- sive gambler half a million euros. The verdict,which confirmed


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The Barrière brand in Switzerland: the newly formed partnership with Accor and Colony Capital sees it positioning itself for more Euro expansion


media speculation that we have found a partner is,at this stage,just that.”


In addition to its share- holding, Colony Capital the third partner of the new group and a casino operator in its own right in the United States, will, through its Euro- pean fund Colyzeo, invest 100m euros in the group. At the end of the operation,


the two major companies of Lucien Barrière,mainly held by the Barrière-Desseigne family and Accor Casinos, the Accor and Colony Capital subsidiary will form a new group known as Group Lucien Barrière. Colony Capital has already bought its strength into play in some recent requisitions by Accor Casinos.Its involvement will further strengthen the


new group’s financial struc- ture, giving it even more buying power and fortifying its position in Europe.


Société Fermière du Casino Municipal de Cannes, in which the Barrière group has a 65.2 per cent controlling interest and in which the Partouche group has a 15.54 per cent stake, has been excluded from the deal.


a lower court judgement two years ago,has set a worrying trend for casinos,with dozens of similar claims already being lodged. The operator was charged with not doing enough research into its client’s financial resources and failing to restrict the actions of a person who had ‘all the signs of a compulsive gambler’. The Austrian Appeals Court


ruled that it was guilty of ‘gross malfeasance and negligent behaviour’ and that problem gambler Christian Hainz should be reimbursed 499,729 euros after he lost what he claims amounted to 2.5m euros in a three-year gambling spree. Hainz’s lawyer, Gunter Huainigg,hailed the result a ‘great success’,not only for his client but for other problem gamblers. The 40-year-old married


father of two and then a director of a building supplies company in Klagenfurt, claims he visited two of Casinos Austria’s venues more than 100 times between 1997 and 2000. He said he gambled away his


company’s profits and then tried to commit suicide by poi- soning himself with carbon monoxide from his car exhaust, but was found before he died. He claimed that casino


staff had taken no action to limit his excesses until he was heavily in debt. Hainz said in court:“I was sometimes drunk, and only played with extremely high amounts. If there were restric- tions on the upper limits for a game I wanted to play,I would get round them by playing up to three tables at a time. I once threw away 750,000 schillings


Casino Velden, one of two venues where Christian Hainz claims to have lost 2.5m euros


on a single bet at black jack.” Casinos Austria was ordered


in February 2002 to pay back part of the money although set- tlement of that claim was delayed after it appealed against the ruling.The operator argued that its internal records proved that Hainz only lost 290,000 euros in Austrian casinos. It claimed that not only did


the player always bet within the legal limit for minimum and maximum wagers, but that he only drank alcohol in very mod- erate amounts and on some occa- sions drank nothing but water. It argued that the company


had followed all the regulations to ensure he and other players were protected saying that as used cash, credit cards and euro cheques was used to fund his play,and that he was never given credit,he was not displaying signs of over stretching his finances. But the Appeals Court upheld


Hainz’s claim that casinos had an obligation to check the finan- cial situations of regular players and to refuse them entry if there was any suspicion surrounding their solvency.


It took into consideration both Hainz’s claim, and that made by the operator,when cal- culating his compensation.The player had originally demanded compensation of 1.2m euros, half the sum that he claimed he lost on the casino’s tables and his lawyers are now considering


a further appeal to have the compensation increased. The rather grim outcome for the gaming industry could have far reaching implications. David Clifton, a specialist gaming lawyer at London firm Joelson Wilson & Co, said:“This case will certainly be regarded by some as opening the door to Amer- ican style-litigation between punters and the casinos at which they have lost money.Whether such a claim would stand any chance of success in the English Courts would depend on the individual circumstances of the case in question.” It presently remains the case under British law that gaming contracts are unenforceable. But Clifton believes this would not stop a losing punter from arguing with some force that a casino owed him a duty of care if it was aware that he was a problem gambler or was gaming whilst under the influence of drugs or alcohol. He added however:“I suspect that controls are in place in most,if not all,British casinos to guard against this.” Gamblers Anonymous was also keen to stress that legal action was not the answer and that court action should be regarded as the very last resort. Not that those words will soften the blow for Casinos Austria. Since its inception it has taken responsible gambling incredibly


seriously, setting up a depart- ment specialising in player pro- tection.Over 2.5m customs flow through its doors annually with somewhere in the region of 2,000 credit searches on guests each year and 800 player exclu- sions. It said in a statement the original verdict was ‘fundamen- tally negative in therapeutic terms,’as it could lead players to the presumption that they could ‘regain lost stakes.’ The operator’s lawyers were also still deciding whether to lodge a further appeal.


Didot-Bottin’s casino in Hautville is believed to be a target for Partouche


Grand opening marks new beginnings in Finland


The Grand Casino Helsinki held a spate of openings at the start of April marking the end of the era that was Casino Ray and heralding a rebirth for gaming in the Finnish capital. Full story on page 12


COINSLOT INTERNA TIONAL


Measured approach to slot liberalisation welcomed by Brits


Partouche strikes back with new bid


biddingwar FRANCE


Group Partouche, the French operator which was recently surpassed as the biggest revenue generator in the European market, is looking to regain pole position and is in talks to buy the establishments of Didot-Bottin. Reports out of France suggest that Isidore Partouche, founder of the family group, is about to sign a letter of intent to buy a non quoted group in a deal funded by investment group Cinven and Permira. Sources in the French media claim that both Partouche and Didot-Bottin have confirmed that they are in talks. Didot-Bottin operates four venues in France including the prestigious Casino Divonne, which was France’s third best performing casino in 2003 with gross gaming revenues of 66.585m euros. The group operated 595 slot machine in France, generated a total GGR of 107m euros and accounted for 4.2 per cent of the domestic market. It also operates one of the Swiss licences holding the licence for the Crans-Montana in the canton of Valais. Partouche was overtaken as the biggest operator in France if not Europe following the deal between Lucien Barrière and Accor. With combined revenues of 771m euros, the merger between Accor and Barrière would have provided the group with 30.3 per cent market share of the French sector by revenues in 2003.


A deal between Partouche and Didot-Bottin would give Partouche the edge with 31.4 per cent of the 2003 revenue share. Partouche has also hinted that it could launch a repurchase offer if Cinven and Permira decide to acquire a stake in the group. At the end of October 2003, Partouche’s net borrowing amounted to 345.1m euros, 97 per cent of its equity capital. At present, 29.4 per cent of Partouche’s capital is in the public domain, with the remaining 62.3 per cent controlled by the Partouche family’s holding company, Financierer Partouche.


Top names lined up for International Casino Operator Forum


readytoconfer EUROPE


Some of the most renowned names from the European casino circuit have been lined up to speak at the inaugural International Casino Operator Forum to be held at the Hotel Gran Melia Sitges in Barcelona, from May 13 to 14. The event, which is being organised by ATE Conferences, who co-ran last year’s hugely successful European Casino Summit in Thessaloniki, is looking to deliver a wealth of information to delegates from all over Europe. “We’ve tried to piece together a carefully prepared pro- gramme, drawing casino executives from the length of breadth of Europe from the British Isles, Portugal, France, through Switzerland, Sweden Greece and over to Russia and the Baltic States,” explained Karen Cooke. “We’ve worked extremely closely with several operators to ensure the speakers and the topics are tailored to what the operators need to know. It should prove a great opportunity for operators to learn about other jurisdictions, changes in regulations, new opportunities and how different casino groups operate.” Issues central to the industry’s future will be discussed including the new markets soon to open up with the expan- sion of the EU, threats from both the US, and online and reg- ulatory and deregulatory issues arising in European gaming. Proposed pan European legislation will be addressed and opportunities through marketing and use of personal data will also be key topics of the conference programme. The event is also aiming to be accessible to non-English speakers, as Cooke explained. “To ensure the event is truly a platform for the entire industry, the conference programme will be translated simultaneously into French, German, Italian and Spanish, which we’re hoping will open the conference up to a wider audience,” she said. A group of the attending operators are also arranging a trip to the Gran Casino de Barcelona.


Scheduled speakers include: Michael Boettcher – Storm


International CS BV, David Clifton – Joelson Wilson, Tim Cullimore – Casino Crans Montana, Yves Devin – Casino de Montreal, Steve Donoughue – Gambling Consultancy, Anders Galfvensjö – Casino Cosmopol AB, Ian Gosling – Hyatt Regency Casinos, Jon Harris – Xanadu Casino Group, Armin Karu – Olympic Casino Group, Pieter Remmers – Assissa Consultancy Europe (ACE), Paul Renney – Addleshaw Goddard, Tobin Prior – Kerzner International, Jan Rodrigo MBA – Amorim, Jonathan Strock – Accor Electronic.


Limiting numbers of slot machines, even in the largest casinos set to emerge from the deregulation of the British industry, won’t have proved everyone’s cup of tea, especially in the boardrooms of some US investors. But, as Phil Martin reports, the measured approach has been welcomed with greater vigour by those already in operation in the British Isles.


restrictivemeasures UNITED KINGDOM


With more restrictions on machine gaming,preventative measures on small casinos offering bingo and a firm defiance that wide-area-pro- gressives should not feature in the initial roll-out, there’s no doubting that the UK parliament Select Committee’s scrutiny of the draft Gambling Bill is looking for tighter control on the liberalisation of the British industry.


It has also tilted the odds against


US operators hoping to replicate the bulging slot floors of Las Vegas, with many Stateside groups feeling slightly deflated by the Select Com- mittee’s decision to introduce a ceiling on numbers of machines in even the biggest of casinos.The report also called for a better link between resort casinos and areas in need of regeneration and for large casinos to provide cultural ameni- ties,but it was, of course, the slot limitations which has caused most debate especially in the America. Analysts who had been predicting


unfathomable numbers of slot machines being introduced couldn’t mask their dejection over recommen- dations to cap the biggest casinos at between 1,000 to 1,250 slot machines and that they should be located in areas targeted for regeneration.With many US resort casinos having as many as 4,000 slots,Deutsche Bank analyst Marc Falcone thought many organisations looking to invest would find the committee’s findings disap- pointing and predicted that ‘size and site restrictions’might make ‘attractive return on capital investments in this market hard to come by.’ He even suggested that some US


operators might look at redirecting some of the project capital they had earmarked for the UK to more tra- ditional merger and acquisition opportunities with UK operators. It wasn’t all negativity though. MGM Mirage managing director for Europe Lloyd Nathan wel- comed the report’s call for moving things through quickly and also said it would be prema- ture to say whether slot limita- tions might affect the level of investment operators will make in Great Britain. “We note,too,the Committee’s comments on the objectives of inward investment and regenera-


tion,” he said.“All of our develop- ment activity to date has been with an eye towards maximising both of these important objectives. On the matter of limited slot


machines,he added:“It is prema- ture to offer comment at this stage in isolation of the unknowns that still exist. Clearly the recom- mended numbers may have an effect on the level of investment an operator might make and the resulting characteristics of any casino complex that might evolve. Certain limitations on the number of gaming positions have always been a part of the discussions and contemplated by most of the gaming companies that have made submissions.” The company’s Alan Feldman added that whilst a higher slots-to- table games ratio would have been welcomed, the liberalised British sector remained one of MGM Mirage’s ‘centrepieces of future growth’ adding that so did Asia,including Thai- land,Singapore and Macau.


But whilst foreign investors,


particularly those favouring the Las Vegas model,may have been disappointed,the feeling amongst existing British operators was that progress was being made especially with the committee’s measured approach. Bob Wiper, chief executive of


Stanley Leisure, said he fully sup- ported the proposal of a cap at a maximum of 1,000 machines even in the biggest locations,to avoid a machine dominated casino envi- ronment.“Whilst recognising that there is still ground to cover before the Gambling Bill is enacted,we welcome the Joint Committee’s recommendations,”he said. For Leisure Parcs,the company


wanting to regenerate Blackpool via resort casinos,it was a bitter sweet pill to swallow.Whilst buoyed by the fact that the committee called for a clear definition of what constitutes a resort casino,as well as a clearer link to regeneration,managing director Marc Etches expressed concern over


slot numbers.“The issue of machine numbers is critical,but I believe the government has got to think the issue of regeneration through very carefully.And that is exactly the chal- lenge that the scrutiny committee has set before them.” Concerns that the number of successful casino applications being made before Royal Assent of the bill could jeopardise the oppor- tunities for regenerative benefits in some areas, and calls for smaller casinos not to have an automatic right to offer bingo mean there are still several points of discussion. Not least with the citing of resort casinos, but the feeling from the home sector is that the select com- mittee has got much right both in its guarded approach and its aspira- tions on timing.


“The committee has moved the


process forward significantly and we agree with their conclusion that there are many reasons why the Bill should be introduced before the end of this Session of Parliament,” said British Casino Association chairman Penny Cobham,whilst John Greenway, the Tory MP chairing the commit- tee, denied that the restrictions could put off investors.“If some people who see this as a licence to print money are disappointed then so be it,”he said.“It shouldn’t put anyone off taking sensible,realistic investments.”


Gala COINSLOT INTERNA TIONAL


owners set sights on France


englishchannel FRANCE


Having invested in the British casino and bingo sectors through its acquisition of the Gala Group, British venture capitalists Permira and Cinven are teaming up again to pursue a stake in of one of the biggest operators in Europe, the French based Groupe Partouche. The talks, which value the company at up to 1bn euros, are believed to have been initiated following Partouche’s desire to buy five casinos from French leisure conglomerate Didot Bottin for around 200m euros. It would enable Partouche to regain pole position in the French casino market, which it lost earlier this year following the merger of the Luciene Bar- riere Desseigne family group with Accor Casinos. Partouche requires extra


financial muscle to fund the deal though, particularly in light of some heavy investment in its 40 something French casinos, as well as its seven casinos overseas. The French group said in a statement: “As part of its ongoing business growth and development strategy, Groupe Partouche has begun exclusive negotiations with Didot Bottin Group with a view to acquiring its five casinos,and with Permira and Cinven. Premira and Cinven would give Groupe Partouche the financial resources to pursue its busi- ness development strategy, whilst preserving the spirit and culture of its business based primarily on its management team which have been Groupe Partouche ’s key strength over the last 30 years.


“If they come to fruition, the negotiations with Permira and Cinven may lead to a change in control of the company’s capital and therefore to a public cash offer being made to the minority shareholders of Groupe Partouche.”


The inaugural International Casino Operators Conference brought a multitude of topics to forum causing lively debate amongst delegates. Phil Martin begins his reports with an update from Russia where, in the eyes of one man widely accredited with driving the market forward over the last 13 years, greater control must soon be levied as the golden boom has started to rust.


Russian licence hikes present passage to progress


Michael Boettcher of Storm International


russianrevolutions RUSSIA


Proposals to radically revamp Russian legislation governing the licensing, required assets and minimum size of gaming venues,are expected to halve the number of fully fledged casinos in the country and wipe out many of the smaller, street level operations. But the new legislation,


The Palm Beach casino in Cannes part of the Partouche portfolio


which is on the threshold of its third reading in Parlia- ment,is being welcomed by RARIB (The Russian Associa- tion for Gaming Business Development) as well as the larger,more established oper- ators who have become disil- lusioned with the ease of entry and operating stan- dards of some of the more unscrupulous slot operators. Speaking at the Interna- tional Casino Operators Conference, organised by ATE,Michael Boettcher,pres- ident and CEO of Storm International, said the new law would help ease the Russian sector into the next stage of its evolution. “The low price of licens- ing has led to a tremendous growth in the number of loca- tions,”he explained. “Since July 2002 the State


Sports Committee has awarded a total of 4,200


licenses nationwide. In Moscow the number of slot machines has doubled and 17 new casinos have opened in this time. Such rate of expansion is outrageous and we’re hoping it will change with the introduction of the new proposals.” Boettcher’s Storm Inter- national is widely respected for establishing a new gen- eration of gaming excite- ment, entertainment and service standards in Moscow. It operates four casinos at some of the most famed venues in Moscow such as the Shangri La and the Vinso Grand,and has 20 Super Slots locations,includ- ing Carnival and Udarnik, operating some 2,000 slots. But for Boettcher this is far removed from simply pro- tecting his own business. “We’re eagerly awaiting


the third reading of this law,” he added.“I have no problem with competition at all,I think it is good for all of us and makes every business better. But the problem now is that there are so many small casinos which just aren’t being run properly.” Although Storm and many of the bigger businesses take their stance on responsible gambling seriously,Boettcher points out that the flood of inexperienced operators has quickly developed into a social issue.There are even reports that locations are rumoured to have been set up in private apartments with just one or two machines, going completely against the current legislation.


An update on the intro- duction of the new legisla- tion is now expected in September of this year having been thrown off course at the end of 2003 due to the elections. If approved it will dramat-


ically transform the gaming landscape in Russia.


Boettcher sees it likely that the number of casino will be reduced from 376 to somewhere in the region of 200. Several casinos strug- gling to survive could also team up with four or five operations unifying their businesses to stay afloat. Some major operators


have already stated that on the new law’s introduction, they will sever their market exposure,with the general director of Jackpot Company, going on record as saying it will close all its regional slot halls and 60 of 140 halls in Moscow. The main complaint from


Boettcher is that at just 1,300 rubles ($45) the cost of a licence is incredibly cheap but he also described the low tax rates as ‘outrageous’ coming in at just 3,750 rubles ($125) per slot machine per month and 100,000 rubles ($3,400) per table per month. “Put simply,” he added,


“anyone can open a casino at any time. Russians are great people; they are the best people I have ever met,


Russians must register casinos in their


localities


localissue RUSSIA


The bright exterior of the Vinso Grande


but everyone wants to open a casino,so as soon as anyone starts making money in one industry they take that money and invest it in opening their own casino. As a result, business has grown rapidly and between 2002 and 2003 numbers of Moscow slots doubled to over 35,000.This year they will probably double again, with something in the region of 50 to 60,000 slot machines in operation.” He advised that the prob- lems with such uncontrolled expansion are numerous. “We have players coming to us saying that they have won money in other casinos but haven’t been paid which happens unfortunately on a regular basis,” Boettcher explained.


Some licensing require- ments are also being exploited as the battle for players intensifies. “Some venues have been


known to make their own interpretation of the rules for table games and depend- ing on market forces will


change the laws of their games to capture the market, usually by paying out more money.Some don’t research it properly and end up giving too much money away espe- cially in poker.” The major operators have


about 25 per cent of the market, but Boettcher high- lights that there are hundreds of small operators with just 10 slot machines on many street corner.“Some have no cash desk,”he revealed,“just someone walking round with rubbles and a rubber band and when you win you hope they pay out. It is awful but that’s what is happening and it has to change.” The new proposals will see the cost for federal licenses for opening slots halls reach 30m rubles ($1m) with regional licenses rising to 2m rubles ($67,000). Individual casino licenses will cost 10m rubles ($340,000). There will also be a crack-


down on owned assets with a slot hall working under a regional license needing 30m Continued on page 2


The Russian State Duma is amending the country’s gaming laws to force casino owners to register their busi- nesses with tax bodies and pay taxes in the area where their actual gaming venue is located and not where their headquarters are based. The decision was taken at a plenary meeting on May 27, where the Duma considered the second reading of amend- ments to the Tax Code con- cerning casinos and slot halls. The present legislation has


resulted in a situation where a gaming establishment may be in one part of the Russian Fed- eration, while the owner and the local benefits may be in another. Addressing the State Duma Igor Igoshin, deputy chair of the appropriate profile com- mittee, said that, in 2002, more than 290 organisations and individuals in the Moscow region paid taxes for their gaming businesses, however, only 51 per cent of them were registered in the region. Another example is with operators in Kaliningrad, on the south-east coast of the Baltic sea, where gaming tax has shot through the roof. Some venues have been registering their busi- nesses and paying taxes to the Ivanovo region instead of to Kaliningrad. Ivanovo has the lowest gaming tax rate in Russia and is located some 300 km to the north-east of Moscow. The authors of the draft law said that the measure would increase revenue from this regional tax for the constituent members of the Russian Federa- tion with gaming establishments.


COINSLOT INTERNA T IONAL


With precious little space left to expand, could it be the case that Monte Carlo operator SBM is examining the concept of developing a floating casino city in the Mediterranean Sea? Such a project would certainly be up the street of Vegas visionary Steve Wynn, whose business Wynn Resorts, SBM recently bought into. Phil Martin reports.


Floating casino city on the cards in Monte Carlo?


seabound MONACO


The Principality of Monaco, steeped in live gaming tradi- tion, could be flush with a futuristic makeover in the form of a floating casino to compliment the four venues in its famed Casino Square. The suggestion,made by


Share-Infos, a specialised German research company, has so far been neither con- firmed or denied by Société des Bains de Mer de Monaco (SBM), the group which holds the monopoly over all gambling rights in Monaco until 2027. The market analysts,whose


reports are used by 16 of the largest 20 banks in Germany, has published background research


assessing the


ongoing speculations sur- rounding SBM. It claims SBM is keen to


reposition Monte Carlo as a high-end destination for a younger clientele and, with little space in which to develop inland, an offshore, man-made island is the most likely way forward. Having entered into a


strategic alliance with Amer- ican billionaire and casino magnate Steve Wynn in June 2003, the research firm believes the operators are piecing together some spec- tacular plans to revitalise interest in the Monte Carlo market. “We believe Wynn and SBM will develop a strategy to make Monaco the centre of media attention by announc- ing (and subsequently build- ing) one of the most outstanding casino resort projects ever,”Swen Lorenz, head of Equity Research at Share-Infos, revealed in the report. Lorenz believes the brand name ‘Monte-Carlo Casino’ could then be exported into new markets, such as Paris and London, once gaming legislation in these areas permits. Wynn himself has gone on


The Golden Palace: already located and registered in Moscow


record saying he plans to introduce new and dynamic features enhancing Monaco’s standing as a major casino player.Currently,his company is busy constructing the world’s largest casino in terms


of cost in Las Vegas,at a price tag of US$ 2.5bn.Due to open in April next year, it will feature an artificial mountain, Niagara Falls and a real in- house Ferrari dealership.But after that, where’s next for Wynn? Monaco would cer- tainly lend itself as a strategic fit for a developer looking for new locations for mega- casinos outside the US. According to Share-Infos, SBM and Wynn could enter into an agreement for the con- struction of the floating city in the Bay of Monaco, to include a spectacular casino, as well as offices, high rise apartments and other leisure facilities.The 85-page report contains early architectural studies for such a project.The Principality,meanwhile, is even reported to have already completed a cost impact analysis and has recently signed a contract with France defining the sea borders between the two countries. Lorenz stated:“After the


expansion of the Port of Monaco (Port Hercule Project), the construction of an Ocean City would be the next logical development for the tiny Principality.” This view that Monte


Carlo’s land mass is now somewhat saturated is also held by the successor to the throne, Prince Albert,who has already confirmed that


Monte Carlo-on-sea, an artist’s impression of how Shares-Infos believe the project could unfold Adding further fuel to the


‘the only direction Monaco can grow is towards the sea.’ And of course there are


several ongoing projects around the world from which project developers could draw ideas. Engineers from Monaco


are said to have contacted the Emirate of Dubai, currently operating the world's largest land reclamation building projects,The Palm and The World. Prince Albert is reported to have inspected The Palm project in Dubai on April 4,2004.


fire, a French technology company is believed to have already approached Monaco with plans for a floating city with enough living space for 10,000 residents, whilst US blueprints to build a floating airport have allegedly been sent to Monaco’s government. Lorenz also points to


reports out of Vegas which paint a clear enough picture of how local media there per- ceive the SBM/Wynn relation- ship.An article in the Las Vegas Review Journal, dated August


31,2003,revealed:“Steve Wynn has just returned, not from a European vacation, but from an assignment in the inde- pendent principality of Monaco. His mission: to help get SBM, the company that owns the Monaco casino monopoly, back on track. Wynn said he was advising the company about re-energising the Monaco casino market.” Shares in the Monte Carlo


leisure group have certainly received increased atten- tion at the Paris Stock Exchange recently,with this normally illiquid small cap enjoying record trading volumes,suggesting that big news is imminent. The value of the group,


which is also one of the largest real estate owners in the Principality, has risen from 175 euros a share in Feb- ruary to 285 euros, although currently, the share price is 260 euros. The Grimaldi family owns 69.9 per cent of the shares, with an additional 5.41 per cent of shares held by the Johnson family,which owns the investment fund group Fidelity and part owns Wynn Resorts.But,according to the Share-Infos report, all minor- ity share holders in SBM could expect to receive a buyback offer in the medium term,fol- lowed by a split of SBM in two separate entities.


continued on page 2


Brussels licence finds its way to Austria


Brussels City Council has voted to award its keenly contested casino license to Casinos Austria International (CAI) who beat off competition from three other leading operators to secure its chance to develop one of Europe’s most eagerly awaited operations.


andthewinneris BELGIUM


Following the recommenda- tions of an expert tender eval- uation committee,and despite strong competition from French rivals Partouche and Accor as well as Eurocasino, a group including Holland Casino, over 90 per cent of Brussels council members voted in favour of awarding the city’s casino licence to Casinos Austria.


CAI will now become the


operator of the first casino to open in the EU capital since changes to the law introduced in 1999 lifted a ban on casinos in Belgium.A total of seven casinos have since been opened in the country’s Flan- ders and Wallonia regions. The licence for Brussels,


which claims to be the world’s second largest congress and exhibition centre,is viewed by many to be the most sought after European licence of recent times. Whilst Casinos Austria inter- national was reluctant to release the exact details of its Brussels blueprint, Paul Herzfeld, CEO of Casinos Austria International, did say: “We are honoured to have been selected to develop the Brus- sels casino.The new casino in Brussels is one of the most important casino licenses to be awarded in Europe,and we are extremely proud that it has gone to Casinos Austria Inter- national.The new casino and entertainment complex will be a valuable asset for the Brus- sels community and economy and will attract many new visi- tors to this exciting city.” Herzfeld attributed CAI’s success to the company’s


C O I N SL OT I N T E R N A T I O N A L


Category A proposals could cost UK casinos £20m a year


downside UNITED KINGDOM


By Alex Tanner


British casino operators stand to lose out on £10m-20m each a year if the government sticks to its guns over the proposals to limit category A machines to ‘regional’, resort style casinos. That was the stark message from John Hagan, partner at gaming law spe- cialists Harris Hagan, in his address to delegates attending this week’s IBC UK Conference, ‘Moving closer to reform - The Gambling Bill’.


“In the States, when you have a


properly developed destination casino, and it doesn’t have any restrictions on numbers, it’s looking to account for something like 70 per cent of revenue from slots,” Hagan said highlighting the importance of casino slots to an opera- tion. “I took some soundings from clients as to how much they expected these category A machines to be worth in the UK? And the estimates range from £50 to over £100 per machine per day. If, as a result of the government’s proposals, you have 500 less machines in your portfolio across the UK, you’re going to lose between £10m and £20m a year in revenue.”


extensive international experi- ence and expertise,strong rep- utation for integrity, multicultural business approach, and the know-how it has built up through its network of operations world- wide. He highlighted several casinos in the company’s port- folio which have been success- fully set up in a number of other capital cities around the world, including Berne, Canberra, Copenhagen, Johannesburg, Prague and Vienna. Work on the final site plan is


well underway and is due to be completed by the end of 2004 with local authority planning permission expected be granted by early 2005. Although the exact plans for


the eventual project remain under wraps, CAI did release time scales, floor sizes and numbers of games. A temporary venue will be


active by early 2005 with 30 gaming tables and 300 slot machines, and will be located in the city’s Salle de la Madeleine conference centre in the city centre while con- struction and renovation work is carried out at its permanent location.The permanent casino will be housed in the new Anspach Center. Covering a total area of around 11,000 square meters, this city centre complex will also house a con- ference and exhibition centre,


several restaurants,a hotel and a shopping mall.With a total estimated investment of around 30m euros, the new Brussels casino will occupy an area of 4,000 square meters and will offer a total of 50 gaming tables and 500 slot machines. The only other slither of


information that has been made public is that the Anspach Center will retain its Polak and Horta façades whilst the build- ings facing the Place de la Monnaie will be redesigned. Brussels city council selected Casino Austria based on a list of 13 criteria,of which the Austrians came out on top in 12 and was ranked third in the other.


If the decision is approved


by Brussels Capital Region authorities, Casino Austria stands to gain a 45 million euros,15-year contract. Regional authorities have


40 days to say whether they agree or disagree with the city council’s choice, although Belgian analysts say that this is only a formality. The Brussels municipal


authority will be paid annual fees amounting to 720,000 euros, whilst the Madeleine district will benefit from a tem- porary cash inflow of 160,000 euros annually, supplemented by local taxes and payments from operators.


Casinos Austria’s general director Dr Emil Mezgolits with general director Dr Leo Wallner and chairman Paul Herzfeld,


celebrating the Brussels licence award


Hagan said that these figures empha- sised the significance of the govern- ment’s Category A proposals and explored why this was such a shock to the industry.


He said: “The present gambling law


reform process was put in motion in 1999. Since the review body was con- stituted we’ve had five years of dis- cussions and at no point has anybody said that category A machines should not be in certain types of casinos. Yes, we’ve had debate about how many we should have, whether there should be a cap, but it’s never been said previ- ously by government that you would- n’t be able to have these machines in your casino.”


John Hagan: ‘extraordinary that this should be announced at such a late stage’


The roller coaster ride of anticipation and trepidation is continuing for the British casino sector and those looking to invest in it, with new reports suggesting the government will reject calls for an even playing field in terms of unlimited jackpots.


Category A veto leaves UK on a knife-edge


cliffedge UNITED KINGDOM


Existing operators in the United Kingdom are waiting with baited breath for the government’s response to the parliamentary Joint Scrutiny Committee’s latest recommendations for a more even spread of Category A (unlimited jackpot) machines. The early signs, though, point to the request being rejected by culture secretary Tessa Jowell.


Hagan believes these ratios will be in place for at least six years predicting that the government is not going to change them until they have two prevalence studies to see if the controls on machine gambling are working. “There is no difference from a regu- latory perspective between a small, large or resort casino. Why should one casino be able to have a product others can’t simply because it’s bigger? Although this is one way to limit slot numbers, there are other options and existing operators are entitled to feel aggrieved at the lack of consultation.”


 Despite the element of uncer- tainty surrounding the rebirth of the British casino industry, the 2005 International Casino Exhibition (ICE), which takes place from January 25 to 27 at London’s Earls Court 2, is being finely tuned by the show’s organisers, ATE, to accom- modate more exhibitors. Following a few minor floorplan alterations, including the relocation of some exhibitors and modifications to aisles and gangways, ATE is pre- dicting an even larger showcase than the 2004 edition which hosted a record-breaking 166 exhibiting companies from 31 nations.


UK Deregulation Proposals Alarm bells ringing page 4


The all-party committee had advised that the high-powered slots should be allowed into small and large casinos registered before


August 2003, going against government rec- ommendations that only the newly coined ‘leisure destination’ (resort style) casinos should be allowed Category A slots. The committee warned of the creation of a


cliff edge between existing and leisure destina- tion casinos. It also advised that new operators of small or large casinos should have their machine entitlement reviewed after three years of operation with a view to granting them cate- gory A machines if they had proved their stance on responsible gaming. The JSC has listened to all parties involved and opted to advise govern- ment that its machine stance is unfair but, if the


The Czech government looks set to bite back following a grenade attack outside one of Prague’s premier casinos. And the new laws could force several casinos either into new ownership or out of business altogether. Phil Martin reports.


Czech Republic looks to tighten legislative loopholes


czechpoint CZECH REPUBLIC


The Czech government is making legislative strides to iron out ownership indiscre- tions, increase supervision of casinos and tighten licensing rules throughout the country, following the assassination attempt on Israeli Assi Abutbul at the Royal Prague Casino- Hotel,which he is said to own. The Finance Ministry


revealed it would carry out stricter checks governing casino ownership after 18 people were among those injured in the attack which took place on one of the capital’s busiest streets, near Wenceslas Square, the site of the 1989 Velvet Revolution where the Communist regime was overturned. Under the current laws, confusion prevails as to who actually owns the casino. According to police and media, the Royal Prague Casino was opened by Abutbul’s father,Felix Abutbul, taking advantage of loopholes in Czech law which states that only Czech citizens can own real estate in the country.


Czech Finance Ministry spokesman Marek Zeman said, however, that the license to operate the casino was granted in 1998 to the Royal Praha company, established by Rastislav Prusak,one of two Czech citizens said to own the casino.According to the trade registry,Abutbul is only a co- owner of the restaurant which is part of the casino. The Finance Ministry wants to see new powers given to local authorities to utilise legal measures to clamp down on casinos, the companies oper- ating them and especially on Czech citizens serving as cover for foreign investors. The increased supervision


is expected to result in the closure of the casino, and sources in the Czech Republic said that there is an air of expectation that efforts would be made to see if legal means could be used to expel Assi Abutbul,who is not a Czech citizen,from the country.Some 150 casinos operate in the Czech Republic, run by 28 dif- ferent companies,11 of which are listed in Prague where 36 casinos are in operation. Police CCTV evidence


filmed two Thai citizens throwing a grenade towards the doorway of the casino owned by the Abutbul family on Sunday August 1. Police are convinced that Abutbul, was the intended target;with much drawn from the fact that it is only two years since Felix Abutbul was shot dead by an unknown attacker outside the casino. Most of those hurt were injured by shrapnel of flying glass whilst dining outside in the casino’s garden restaurant at midday. The grenade rolled under a white Jeep Cherokee with New Jersey licence plates before it exploded. Stanislav Gross,the soon to


be new Czech Prime Minis- ter, said the vehicle was the target of the attack.“It was a criminal act, more or less a settling of accounts,” he revealed,adding that whilst it would not be straight forward and would entail a compli- cated and lengthy legal pro- cedure,the aim was to close the casino-hotel.“With regard to closing the casino,we will have to continue to act by the law and this is a slow process,” he said.


Czech police think Abutbul


ordered casino staff not to talk but Gross said the lack of co-operation would not affect police work. The Finance Ministry is


believed to be wasting no time in drafting this amendment to the gaming laws and is hoping to move by late autumn to


make the granting of licences more complex and ownership more transparent. The reasons behind the


attack are unconfirmed, but with the Abutbul family reported to have extensive holdings in the central Israeli resort city of Netanya, includ- ing restaurants and gambling


Wenceslas Square in Prague, off which many of the capital’s casinos as well as much of the nightlife is located.


halls, sources in the Czech Republic claim the battle is not for control of gambling rights on their soil but in Israel where gambling is illegal.


culture department’s latest responses are to be taken as read, their request looks to have fallen on deaf ears.


Jowell has written to the JSC in acknowl- edgement of its examination of the proposed legislation, at the same time emphasising that protection of the vulnerable and children is now the key government priority. With the protection of minors the key ingre- dient, many current operators are dumb- founded as to why they are being disadvantaged. For after adhering to the 1968 Gaming Act and operating in one of the most restrictive gaming environments in the world, it


would seem government is now considering pushing many existing venues out for a new breed of operator. Gala Group, one of the leading UK opera- tors, has even voiced concern that 70 of the UK’s existing casinos would be forced to close down if the government isn’t persuaded to rethink its decision. Its protective stance is designed to push the Gambling Bill through to enactment with the minimum of Parliamentary resistance but the ramifications of a Category A veto for all but leisure destination casinos would be a crushing blow to much of the UK casino establishment.


Standardised gaming laws could soon reign in Spain EUROPEANNEWS2


Napoleons sounds Sheffield warning to US investors


owlsthat UNITED KINGDOM


British operator A&S Leisure Group is standing defiant in the face of US investment in its home city of Sheffield, South Yorkshire, with work set to start on the Owlerton Experience, an £8m, home- grown ‘racino-style’ gambling and entertainment development.


The plans will combine the largest and most luxurious cabaret, banqueting and conference suite ever seen in the northern city with the existing Napoleons Casino Owlerton and the Owlerton Stadium greyhound track. The state-of-the-art, 500- seater Napoleons Banqueting Suite will provide a 365-day-a-year venue for entertainment and business functions. Dave Allen, chairman of A&S Leisure Group, was keen to highlight that the venue will have a far larger capacity than any similar function rooms included in the various ‘gambling resort’ schemes presently being proposed by American or South African operators looking to exploit the South Yorkshire market. “We’re better placed than anyone to expand gaming and entertainment in the South Yorkshire area,” Allen proclaimed. “Sheffield people want quality venues, quality service and a bit of style and panache and nobody does it better than us. A number of American casino operators have expressed an interest in developing sites in Sheffield but they can’t progress unless government gives the green light to deregulation. Once planning permission is granted, A&S Leisure Group will be free to build its cabaret/banqueting suite as it doesn’t rely on a change in legislation.” A&S hopes to open the venue in 2006.


Getting ready for the new wave across the States INTERVIEW25


Will the UK slot comfortably into a new gambling landscape? MARKETREPORT32


Since being granted the licence to be the country’s sole gaming operator in 1968, Casinos Austria has shaken up its domestic gaming sector, reversing attitudes and bringing it to the masses as a popular leisure pursuit. But still, as Hugh Sorrill writes, challenges to its monopolistic mantle have sporadically surfaced, as is the case now.


Austrians dismiss hotel challenge to sole operator status


sellingthesole AUSTRIA


Casinos Austria is facing a bid by two prominent hoteliers to unseat it from its effective monopoly of gaming service provision in Austria. Wilfried Holleis, who oper- ates a hotel in Zell am See, in central Austria, and Matthias Krenn, who runs one in Bad Kleinkirchheim, amidst the Carinthian Nockberge moun- tains of southern Austria, have both lodged casino licence appli- cations with finance minister Karl-Heinz Grasser.There is no doubt that the applications will be rejected:by statute there are only 12 casino licences available and, of course, Casinos Austria has the licences to run them all. But once the rejection has


been received, the pair will apply to the Austrian Constitu- tional Court arguing that the law on gaming restricts their rights to be free to do business, something that is guaranteed in the constitution. Paul Herzfeld,CEO of Casinos


Austria, said it was unlikely that the challenge would succeed:“It’s a very clear part of Austrian law that sits very comfortably with regulations in other parts of the EU – similar systems operate in Sweden and Holland for example. The monopoly belongs to the state and it is the state that has decided to license just one opera- tor to keep tight control and to encourage responsible gaming.” He continued:“It’s a very suc- cessful model and we have no indication that anyone in gov- ernment wants to change this practical solution.It is just spec- ulation by these individuals.” The current gaming legisla-


tion,which was framed in the 1960s, was keen to prevent problem gambling becoming an issue,so it was decided at the time that it would be much easier for one operator to


control who came into casinos and who didn’t. In order to succeed in their


quest, Holleis and Krenn must persuade the court to force par- liament to change the law.Their lawyer,Norbert Gugerbauer, the one-time general secretary of the FPÖ (Freedom Party of Austria), believes there are two options: either to raise the number of licences or to allow other opera- tors to take over licences as and when they come up for renewal. Austrian licences last for 15 years from the date of the opening of each individual venue. Holleis and Krenn have been


trying to get into casino opera- tion for some 11 years.They believe the country would benefit from another three or four casinos, two of them located in their hotels.They are using research which indicates that kind of tourist casinos attract are generally wealthy and often prolong the season. The report by tourism consult- ant Roland Haslauer suggests that tourism in the regions could grow by as much as ten per cent each year through gaming. Attempts have been made by


others to set up ski resort casinos in Lech,in the Arlberg region,and Ischgl,a border village located in the Paznaun Valley, both in western Austria. Casinos Austria has also come


in for criticism for taking a casino away from Badgastein, one of the country’s most famous spa towns, and relocating it and its licence to Leobendorf in Lower Austria.A slot hall, with Video Lottery Terminals, is being installed as a replacement to the full casino licence but locals believe it will attract the wrong kind of visitor. Holleis and Krenn could well


have difficulty demonstrating that there is sufficient demand for more casinos given Casinos Austria’s recent half-year results. They show that in


Austria gross gaming revenue has decreased by 4.8 per cent over the same period last year with the 12 home casinos turning over 105m euros. The most successful Austrian


venue was naturally in Vienna, which took 26.3m,a reduction of 3.3 per cent, with Innsbruck taking 12.9m, up 5.1 per cent. Kleinwalsertal Casinos was worst hit with its GGR going down by almost 30 per cent to 1.3m. Across the country, the number of visitors remained stable at approximately 1.2m. Slot machines accounted for 71m of the drop,68 per cent of the total,and tables 34m euros. Acting general director of Casinos Austria,Emil Mezgolits, put the lacklustre results down


to poor economic conditions. He said:“Casinos,just like every- one else,have felt the fact that the economy is no longer forging ahead. In such times there is less uptake of the serv- ices offered by casinos.” It is not only difficulties in


Austria that have caused prob- lems.Slackness in the German economy was blamed specifi- cally for the poor results at Kleinwalsertal where 95 per cent of visitors come from across the border.


The domestic gloom is light-


ened by excellent results from Casino Austria’s other holdings abroad.Revenues increased by 12.4 per cent to 1.27bn euros and,encouragingly,the number of visitors increased by 15.1


Casinos Austria is watching a new player making moves on its domestic tables


per cent to 8.4m. Dietmar Hoscher, who is also the spokesman on tourism for the Austrian Social Democratic Party in the national parliament, said: “What the current half-year results are telling us is that the Austrian market is largely saturated.” He dismissed the latest move


by Holleis and Krenn.He said it was not so much an issue for the entire casino industry,rather one that has been ‘brought about by individual interests.’


Monopoly bored or state of control? CASINOCOMMENT30


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The official publication of EELEX


Casino Austria’s Hermann Pamminger on growing gaming in Europe


INTERVIEW20 by the European Court and political manoeuvrings at


erman government to decide to impose VAT on casinos. orrill, opposition from the states has put back the plan to d scupper it altogether.


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Could a little bit of Las Vegas be set for Hungary’s north west?


hungaryformore HUNGARY


The Hungarian government is considering revamping its gaming laws to allow an invest- ment group to build a Las Vegas style operation in Bezenye, a region in the north west of the country,known as 'The Golden Triangle' due to its proximity to the big cities of Vienna, Budapest and Bratislava.


The investment group,which


has remained unidentified but is reported to be a US group,has seemingly convinced the Min- istry of Finance of the commer- cial benefits of the venture and the ministry is now believed to be urging Parliament to change its laws on gambling so that the country's largest casino complex can be built. It certainly has the support of the local mayor Mátyás Schma-


account of things like internet gaming anyway,but this should be a long process.States do not want to introduce new gaming legislation every two to three months.” Given all this, the states


would also clearly lose out on a great deal of money:the adjust- ment downwards on local taxes in order for casinos to pay a national levy, of which states will see only a fraction, will have a direct influence on funding for social and sporting activities, which these rev- enues have traditionally been used for.


This legislative and political minefield has come about as the result of a ruling by the European Court of Justice that privately owned arcades should have equal treatment in the taxation of the GGR from their slot machines: they have to pay VAT on that figure, until now, casinos do not.The bill, however,demands that casinos pay VAT on the whole of their GGR,tables included, as well


as on entrance fees and bar and food receipts.The fairness of the whole approach taken by the government escapes Hein. “For some reason arcade


operators have a strong influ- ence on the Federal govern- ment and they believe that we are monopolies keeping them out of other business opportu- nities,”he said.“But there is a fundamental difference:we offer gambling opportunities and under the law they have to be very well regulated.” He continued:“There are


other, better proposals that would satisfy the ECJ ruling, for example bringing arcades under the state taxation system,with the monies then transferred by the state to Federal Treasury.” The Federal government


would clearly be unhappy to lose altogether the 270m euros contribution to its finances that arcades cur- rently make through VAT,but that is little compared to what states would lose if the bill as


it stands goes through. To complicate matters even


further,the ECJ ruling is retro- spective, meaning that either the arcades get a substantial reimbursement or that casinos would have to find even more than the additional 150m euros VAT imposition is expected to mean.However, according to legal advice given to DeSIA, backdating a tax in these cir- cumstances would be uncon- stitutional.


Whilst the united hope from the industry is that these pro- posals do not mature into full blown legislation, these are undoubtedly worrying days for the German sector.The combination of a tightening economy,a decline in casino spend and state treasuries have already milked the cash cow to the point where drastic meas- ures regarding live tables have had to be introduced. The added threat of VAT would surely be seen by many as a tightening noose around that cash cow’s neck.


Can the cafe culture open a slot for Portugal’s Figueira Casino?


EUROPEANNEWS2


Confusion on German VAT


intheair GERMANY


Despite the desire of chancellor Gerhard Schröder to dissolve Parliament in July to make way for a


How playing the Euro recruitment card has given UK operators a winning hand


INTERVIEW28


general election in September, it seems that the proposal to impose value added tax (VAT) on casinos is still being pushed for. “The Federal government is sticking to its guns in this matter,” said Matthias Hein, spokesman of the German casino operators’ association DeSIA. “But the finance ministries of individual states are still opposed to plan.” However, there are reports that most of the states have come up with a joint proposal for a gaming tax of 20 per cent of the drop on arcade


It’s a Russian revolution but ‘slot’ as we know it. Moscow hosts its new showcase


EXHIBITIONREPORT30


machines. This measure could replace the VAT currently paid by arcade operators and go some way to meeting the requirement laid on the German government by the European Court of Justice to give them equal tax treatment, though it is likely to meet with some resistance. “The problem is that the government desper- ately needs to increase its tax revenues and it is talking about raising VAT from 16 to 20 per cent,” said Hein. “With early elections becoming likely, the political situation is so confused now that no-one


really knows what is happening. And this means we have no idea either about the time frame for the introduction of this tax nor if it will come at all.” He added: “We have arranged a meeting with technical advisors to the Ministry of Economics and Labour in Berlin to find a common line on specs restricting bets and winnings for gaming machines in arcades. This might in fact solve the ECJ ruling as at the time of the ruling the ECJ could not see any difference between arcade and casino games, but we are not hopeful about the outcome.”


Hungarians sound out potential for Euro Vegas


A new wave of casino development could be on the cards in Hungary with an unnamed operator close to convincing the government of the financial benefits of introducing large, Las Vegas style casinos. Phil Martin sounds out the potential.


tovich who coined the term Euro Vegas to describe the project “With the integration of Hungary to the European Union, the border towns have decreased in importance and now everyone is looking for solutions to their financial problems.” He also predicted:“The con-


struction of the casino will begin in the summer of 2006 and they plan to have at least a hotel and a casino functioning in a year's time.The project will generate massive interest from European tourists,because we are 80km from Vienna,40 from Bratislava and 160 from Budapest,and all of them are capitals with impor- tant airports.” Austrian investor, Lukale


Investment and Development, has already presented plans to build an adventure town in Bezenye, which will include a 60,000-sqm shopping centre, four-star hotel and adventure park and spa, bringing the total investment to 400m euros. Whilst current laws prevent


such large casino complexes being developed in Hungary,the government sees gaming as the perfect partner for the planned development with sources revealing that it plans to add a second definition of casino to the existing category in order to open the door to such projects. All existing casinos in Hungary would be grouped into the second definition of casinos, whilst the new super casinos would be squeezed into their own legislative pigeon hole. Nemeth Timea of the Ministry


of Finance press office con- firmed the move.“The amend- ment to the gambling act is underway.In particular,it divides the casinos into two categories and sets out a new tax regula- tion in this context.”


Timea added that the new


category of casino would allow for other types of gambling, whilst existing casinos would retain the status quo in terms of product offering.The current tax levels of 30 per cent tax will be retained for the initial 5bn in earnings (20m euros).This will then drop to 25 per cent up to 10bn,and to 10 per cent of any profit above this. Despite the proposed tax


allowances, the state would immediately receive 500m Hun- garian Forints if the Bezenye casino complex was built, this being the price of the conces- sion to build and operate a first category casino in Gy_r-Moson- Sopron County.The Ministry of Finance has also already sug- gested that the length of any such concession contract should be 20 years although Timea did warn that nothing was set in stone.“The amendment to the


gambling act is yet to be adopted by the Parliament with the final vote expected at the end of this month,” she revealed, before hinting that any reports that the US group had won the right to develop the project weren't quite accurate.“The concession tenders for the casino are open,” she advised. “Therefore, it is accessible for any operator who meets the conditions described in the call for tender.The compli- ances between the authorities and the investor of the Bezenye- region project are under way. But we can only reveal more after the closing of the compliances.” So how viable a tourist


magnet would a Las Vegas style casino in the spa town of Bezenye prove? Hungary has a populace of some 10m people and tourism is growing with 36.6m foreigners visiting the country in 2004 and the pro- posal for Bezenye would make


use of the fact that after Iceland, Hungary has the world's largest reserve of surface thermal water. There is also space in which


to grow the casino industry despite added competition from an escalating slot sector, which last year fluctuated around the 20,000 mark, in terms of number of slot halls in operation across the country. Total attendance for the six


casino venues was 365,847, showing a healthy increase of 9.6 per cent on 2003s figures, whilst drop in 2004 came in at 54.7bn Hungarian Forints, more than 19 per cent of the total in 2003. Given these figures, there's


every chance that more of the market could be exploited.The Hungarian Government seems keen to raise the bar in terms of casino development and tourism. So it would seem does at least one casino operator.


The Slot Academy on raising revenues by going back to basics


INTERVIEW24


A High Court ruling in Asia could have a profound effect on gambling in European casinos with a judge finding that gaming laws in the country where a bet is placed count for nothing if gambling is frowned upon in the player’s country of origin.


London’s Ritz casino where a judge in Kuala Lumpur has ruled that gambling is a sin and debts should ot be enforceable


As one gambling debt goes unpaid, just who is it that needs ‘protection from foreign vice’?


COMMENT26


ICE changes hands but its expo ambitions remain as aggressive as ever


EXHIBITIONNEWS28


Moscow moves to cripple industry


numbercruncher RUSSIA


London casino loses in chase for Malaysian credit loss


losschasing UNITED KINGDOM


The Ritz, one of London’s swankiest casinos, is strug- gling to recover a debt of almost £1m from a Malaysian politician following a High Court ruling that people must be ‘protected from being enticed to gamble on credit.’ The court in Kuala Lumpur


heard how Osu Sukam, a former chief minister of the timber-rich Sabah state, clocked up the debt when the Ritz agreed to him gambling on credit.


The casino obtained a judg- ment from a British court to recover the debt and applied to a Malaysian High Court to enforce the British court order on Osu, but Malaysia’s High Court judge Ian Chin in his judgment said the British court order could not be enforced in Malaysia,claiming:“Malaysians must be protected from being enticed to gamble on credit.” Chin said:“The only way to


discourage this entrapment is to prevent such foreign judg- ment founded on gambling on credit from being registered and from being enforceable in Malaysia.”


He added that the dismissal of the bid to register the British High Court’s judgement was based on the premise that gam- bling was against Malaysia’s public policy, which he said


was a belief in God and good social behaviour embedded in the Rukunegara.“It [gambling] is against the Rukun Negara,” the judge added.“Anything that seeks to go against the Rukun Negara must surely be regarded as against public policy.” Osu,who resides in Sabah


state, is a divisional leader in Prime Minister


Abdullah


Ahmad Badawi’s ruling United Malays National Organisation. Chin added that the British


court order,if enforced,would allow ‘a foreign country to exercise extraterritorial juris- diction.’ As for the argument that


gambling debt incurred in Malaysia would suffer the same fate in another country if he did not allow the registration of the foreign judgement,Chin said:“My short answer would be that the world would be so much better for it and makes for a better public policy.The world would be a much nicer place if no country would allow the recovery of a judge- ment for a gambling debt which was the result, invari- ably, of the debtor being enticed to gamble on credit and beyond his means,”he said. “What is offensive and


totally unfair is for the casino to allow someone to gamble on credit in order to make him lose not only his pants,but the livelihood of his wife and chil-


dren as in this case,” Chin added.“In fact I would suggest a law should be enacted to allow a gambler to sue a casino for having enticed him to gamble beyond his means.” Chin also had some harsh


words for Osu, saying the former chief minister,who is a Muslim,did not deserve to be awarded costs for the hearing as he had engaged in an activ- ity his religion frowned upon. The former state chief min- ister is reported to have resigned as party division chief.He is also believed to have owed an undisclosed amount to Crown Casino in Melbourne, Australia. The matter is now believed to have been resolved in the Sabah High Court although it was not clear if Osu had paid the debt in full.


The Ritz is now considering whether to file an appeal against the Kota Kinabalu High Court’s judgement. The firms’ counsel Colin Lau said his clients had one month to file a notice of appeal against the judgement in the Kota Kinabalu High Court. Although it is unlikely that London casinos will refuse bets from any player whose religious beliefs call into ques- tion the very essence of gam- bling, few will be looking forward to the precedent that this court case could set and the prospect of ‘losing players’


believing the authorities in their home countries will back them up against payment of losses.


The case is the second high


publicity court case in recent times for the Ritz following a British court’s verdict that a gang of roulette sector tar- geters did not cheat the casino out of £1.3m despite using mobile phone technology to record the decaying orbit of the ball in December 2004.


Reaction and comment COMMENT26


The Moscow City Duma has passed the first reading of a new law prohibiting casinos and amusement arcades from being set up closer than 500 meters to residential houses, hospitals and schools, as well a blanket ban on placing gaming machines outdoors. Whilst the upper end of the industry has called for measures to be introduced it will be shocked by the severe nature of this latest proposal, which is already expected to cause a surge of lawsuits against the city authorities from gambling businesses. If approved, the new law would pay no respect to grandfather rights and would force some 60 per cent of gaming machines in Moscow to be relocated.


Moscow hosts 56 casinos, over 2,000 arcades and more than 60,000 game machines. The turnover of the city gam- bling machines market exceeds $1bn per year. Stanislav Bartnikas, mar- keting director of the Ritzio Entertainment Group which operates the Vulkan chain, said that the 500-meter zone was an ill-considered idea, as the density of housing development is very high in


some districts. He added that the bill failed to explain how existing casinos and arcades would be removed from these areas and warned that, as only Federal authori- ties had the right to close business down on such a scale, the local authorities could be in breach of busi- ness laws and could face a barrage of lawsuits from existing venues. Director general of Jackpot German Goglichidze, meanwhile, stressed that any law intro- duced had to be enforceable. He called for this proposal to be reviewed and questioned the validity of building ill- considered barriers and said he hoped it would be reviewed.


The draft was passed in the second reading, while its amending will be continued in autumn. The initial version of the document was to impose even more severe restrictions on the industry. It planned to slash the number of casinos in the city down to 30 and the number of arcades down to four in every Moscow district. This measure was opposed by the Moscow Prosecutor’s Office.


Bill that could crush Moscow gaming EUROPEANNEWS16


How the international casino sector is raising the security bar MARKETREPORT24


What’s in store on the G2E floor? A product preview of the Las Vegas expo G2EPREVIEW46


Casino Review The official publication of EELEX


EXHIBITIONNEWS40 Fresh controversy over UK government’s dealings with US operators


strikingadeal UNITED KINGDOM


British prime minister Tony Blair and his culture secre- tary Tessa Jowell are facing a fresh row over their leg- islation to introduce a new generation of casinos to Britain, amid opposition claims that they misled MPs over rules against money-laundering. The conservative party has demanded that all letters and correspondence between government offi- cials and the American casino industry should be


made public. The call follows documents released under the Freedom of Information Act which show that government officials lobbied to lift controversial money laundering proposals which would have bene- fited American casinos wishing to set up in the UK. The shadow secretary of state for culture, media and sport, Theresa May said: “The secretary of state and the prime minister told the Commons that it was a matter for the Treasury to decide on money laundering rules. Yet it is now clear that not only were DCMS officials in discus- sions with American casino operators, they were actively


The legislation behind Russia’s casino industry is in a state of upheaval having come in for massive criticism from both federal agents and Moscow city authorities. Now, two internal republics have said enough is enough and have banned gambling all together, whilst one proposal for Moscow is to push gaming 100km outside the outer ring road. Phil Martin reports.


Two Russian republics ban casinos as crisis deepens


crisispoint RUSSIA


The biggest casino market in Europe is at a crisis point.The explosion of small relatively unregulated slot halls has led to criticism of the Russian industry as a whole,necessitating a demand for tighter regulation and in two regions leading to a blanket ban of any type of gambling. The first vice premier of the pro-


Moscow Chechen government, Ramzan Kadyrov,led the most extreme stance, banning all gambling busi- nesses in the republic at the start of August,on the premise that gambling goes against the laws of Islam and pro- duces a negative impact on the youth. Chechen casino and slot owners


were given just seven days to dis- mantle the facilities.“I am giving these quasi-businessmen one week. If they cannot cope,I will personally come and destroy their slot machines,”Kadyrov said. Reports state that Chechnya has around 1,000 gambling halls. Less than a week later and the neighbouring Russian internal republic of Ingushetia followed suit with the republic’s president Murat Zyazikov saying he was banning gambling after receiving a complaint from religious authori-


ties and public organisations. “Gambling has a negative impact on the society’s spiritual and moral state and misleads the youth,” Zyazikov said. “Gambling is not typical for the Ingush mentality,we have other values.Our people know how to work and enjoy working.” The president added that North Caucasian regions had witnessed too many gambling arcades opening recently and that should this trend continue,there would be more gam- bling establishments in the North Caucasus than in Las Vegas. The solution for the rest of Russia should not be so severe but the RF State Duma and the Moscow City Duma have drafted two bills placing acute constraints on the gambling industry.The biggest political storm has been caused by a joint proposal from Aleksandr Lebedev and Andrei Samoshin, both members of the United Russia faction in the State Duma.They believe that gaming establishments should be com- pletely removed from city limits in Russia.The stakes are clearly high as the politicians try and find a balance between the mammoth profits of casino and gaming arcade owners, the financial and mental health of Russian citizens, and billions of rubles in gambling tax.


Moscow mayor Luzhkov


marked the start of an anti-gam- bling campaign by saying recently:“What is going on in the city is utter depravity,perversion and moral corruption.” The number of slot machines has


reached 63,000,while the number of casinos in Moscow has grown to 56. Whilst highly unlikely to follow


the Chechen and Ingushetian lead, officials in Moscow are very serious about cutting the number of gam- bling outlets. The city’s town hall has proposed


reducing the number of gaming arcades from 15 to four per city dis- trict,limiting the number of casinos to 30 and reinstating the power it needs to regulate the sector. Members of the United Russia faction in the State Duma,however, went further, suggesting that licens- ing costs be multiplied and gaming establishments removed at least 1km outside population centres. The crackdown looks imminent. Aleksandr Lebedev, a State Duma deputy and sponsor of the draft law on pari-mutuel and gaming establish- ments,had strong words for reporters recently.“I was driving along Leninsky Prospekt and I counted 38 gaming sign- boards which terribly vulgarise the city,”he said.“But more importantly,it is


lobbying the Treasury on their behalf. The impression given by Tessa Jowell was clearly misleading. It is now essential that her department make public all the corre- spondence relating both with the American casinos and with the Treasury. This legislation was incredibly contro- versial, and was pushed through before the General Election despite fierce opposition. Yet it now seems that the relationship between DCMS officials and the Ameri- can casinos was far closer than the government admits. “Given that the Association of Chief Police Officers was just one of the groups warning against the


dangers of lifting these restrictions, why were DCMS officials so heavily in favour of it? Having talks with casino operators is one thing, but lobbying on their behalf is something completely different. We urgently require reassurances that the Treasury will not jeopar- dise the war against organised crime by relaxing money laundering rules.”


A spokesman for the DCMS said the department had never denied talks with “a wide range of stake- holders” including casino operators. “What we have denied is special favours or deals,” he added.


roughly one per cent of the able- bodied urban population. It added, though,that more than 10 per cent of all slot machines were unregistered and therefore untaxed, and the number of machines at the lower end of the market that had been tampered with was impossible to estimate. Whilst the upper segments of


Russia’s gambling industry are also desperate for things to change ,the proposals brought to the table so far have caused nothing short of an uproar.


Samoil Binder,deputy executive


a huge shadow business with an annual turnover of between $2bn and $5bn. What is even worse is that this money is being made out of people from low- income groups who hope to get rich by gambling.This is an absolute dis- grace the like of which does not exist anywhere else in the world, where people have to go out of town to play, not spread the plague around.” He highlighted the example of Bel-


gorod whose authorities banned the gambling business,moving it beyond the city limits.He also stands impervi- ous at the prospect of a legal backlash from owners forced to shut their oper- ations down.“So what if they have licenses?”he said to the media.“This is what ruling authority is for in the first place — to uphold a righteous cause.”


Russian casinos and slot halls, such as this one in Nizhny, are about to face tough new laws but exactly what they will be and indeed who will be taking charge of enforcing them remains to be seen


According to Lebedev support


for his draft law is growing and has received backing from both the Kremlin and the State Duma lead- ership.Copies of the draft law are currently sitting with Federation components. According to the Russian Associa-


tion for the Development of the Gaming Industry (ADGI), Russia’s gaming business paid $1bn into Russia’s federal treasury in 2004,and employed some 550,000 people,


director of the ADGI, slammed Lebedev’s bill as ‘populist’and ‘eco- nomically unfeasible’ . He said that the Bill proposed pushing the gaming business at least 100km beyond the Outer Ring Road. Stanislav Bartnikas, marketing


director at the Ritzio Entertainment Group,added that driving the indus- try out of town would drive it under- ground where unscrupulous gangs would take it over.He said the pro- posals had not even received expert appraisal, violated Article 55 of the RF Constitution on the right of free enterprise and were at best restric- tive. He said that by pushing the business ‘into the shadows,’ those who have been operating illegally would continue to operate illegally.


The official publication of EELEX


Saarland close to French connection EUROPEANNEWS4


A look into Global Gaming Expo’s window to the future G2EREPORT20


Progressive Gaming brings EndX into the fold SUPPLIERNEWS44


France warned over proposals to block foreign deals


nationaldefence FRANCE


The French government risks having its knuckles rapped after issuing a ‘hands off’ warning on several of its key industries including, most notably, its casino sector. Industry minister François Loos has


produced a draft list of 10 strategic sectors that he wants to keep under French ownership, ranging from casinos to companies producing vaccines, computer security and defence. In response the European Commission has launched its strongest warning yet against the Franco-plans plans to protect ‘strategic’


industries from foreign take-overs. Neelie Kroes, European competition commissioner, said protectionism was not the right response to the challenge of economic reform, claiming it could ‘cut Europe off’ from the global marketplace it needed to support for economic growth. “Tempting though it often proves to politicians, I do not agree it would be better to shelter European industries from international or even internal European pressure,” Kroes said. She warned that she had seen protectionist ‘signals’ from France and that such measures risked leading Europe into ‘a 1930s-style downward spiral of tit-for-tat protectionism.’


A resilient crackdown is being planned on Northern Cyprus’ buoyant casino industry amid claims that a lack of regulation could be allowing money launderers to infiltrate the industry. Among the tough proposals is something of an olive branch to operators, but is it enough to ensure survival? Phil Martin reports.


Northern Cyprus set for unprecedented crackdown


hangtough NORTHERN CYPRUS


Gambling venues in Northern Cyprus are bracing themselves for tough new gaming laws which will force casinos to declare their incomes for tax purposes, allow inspectors to be permanently present on site and,most alarmingly,force cus- tomers to take out a 320-euro membership before being allowed to gamble. Casinos have been an inte-


gral part of north Cyprus’ tourism sector since the opening of the first casino in 1976 and have since flourished with some 24 operations gracing coastal locations. But there life is set to become arduous under the stringent new restrictions. The unprecedented move has been called by Turkish Cypriot Dr Vedat Yorucu, chief advisor to the Economy Min- istry,who wants to bring an end to the state’s image as a gam- bling haven.Yorucu made the announcement after handing a draft proposal to 24 casino owners in the north. Offering something of an olive branch to operators though,there is also a proposal which would allow citizens of the north to use the


casinos,something which has so far been prohibited. The decision to crackdown


on the rampant growth of the casino sector follows a fact- finding visit to the north by three UK officials in February which looked at ways to admin- ister some control over the north’s widespread gambling enthusiasm.


Their damming conclu-


sions were presented to the north’s authorities in the guise of a report which is alleged to have warned that casinos could be harvesting illegal money laundering by organ- ised criminals. The British diplomatic corp also pre- sented proposals for technical assistance and offered several methods of tightening regula- tions on casinos to vastly reduce opportunities for money laundering.


The diplomatic sources


went as far to say that money laundering in the north,in par- ticular from funds derived from heroin sales in the UK,were causing considerable worry for the British government. A 13-man task force,includ-


ing officials from the state planning organisation, the development bank and a number of lawyers,has been


set up by the north’s Eco- nomic Ministry. Yorucu said the proposals


were an attempt by a reformist ‘government’ to bring the gaming industry into line. “There have been repeated announcements that laws to regulate and control the indus- try would be put in place.But they were always shelved,”he said.“But now economy minis- ter Dervish Deniz has said he wants to see the economy inte- grated with the EU.” Yorucu said that the current administration had decided to face up to the fact that casinos in the north operated almost completely without regulation. “For all we know,money is being laundered in these casinos,”he added.“We are not accusing anyone of anything, but we would like to see casinos come under the same kind of regulations seen in France and the UK.” He added that officials had been sent to a number of coun- tries abroad to look at possible suitable models for the north and that EU economic regula- tions had also provided guid- ance for the committee putting together the draft law. The proposals still have along way to go before they are


passed as law and casino owners are scrutinising the bill prior to meetings planned between themselves, the gov- ernment and several non gov- ernmental organisations.If they can agree,the draft will be sent to the ‘attorney general’ for approval, after which it will be put to the ‘council of ministers’ and ‘parliament’for approval. Whilst the main aim is to


The Colony Club in Kyrenia, Northern Cyprus, one of 24 casinos facing tough new proposals


enhance the north’s image, Yorucu admits that some moti- vation to implement new gam- bling laws could be to raise money through taxation of the industry. He also believes that by cleansing the north’s eco-


Kroes slammed the French proposals as


‘ironic’, highlighting an article in the Economist magazine that revealed France was responsible for the largest value of take-over deals in Europe so far this year. “It is not through protectionism, but through competition that firms innovate, strive to get the best from their people, make the most effective use of their resources, push up quality and push down prices,” the Dutch commissioner said.


Whilst the EU treaty allows member states to defend national industries which are involved in ‘public security’ or defending public health, the Commission fears Paris may intend to broaden


that scope to include industries like casino gaming.


France’s 188 casinos saw Gross Gaming Revenue (GGR) rise to 2.613bn euros for the 2003-2004 season, up 2.6 per cent on the year previous, but with consolidation continuing there were less names once more in the country’s top ten performing casinos. Loos insists his list will comply with


European law, but French nationalism in the economic field has been growing. Dominique de Villepin, French prime minister, said earlier this year that he was prepared to defend Danone, the food and drinks company, from a rumoured take-sover bid by PepsiCo of the US.


nomic practices more foreign investment could be attracted to the area.


Whether casino owners will


back the draft remains unan- swered but it seems highly likely that if the prosals become law they will eat into the profits of casino compa- nies as they will prevent cus- tomers simply walking in from the streets to gamble.Ambient gambling will be all but eradi- cated with anyone wishing to gamble having to purchase a yearly membership costing 320 euros. Proposals for daily member- ship of 30 euros onopposed to the US$2 now charged could also convince people the casino is not for them.It is also doubtful that casino owners would be happy entertaining two government inspectors every hour of everyday and, indeed, whether allowing northern citizens to gamble could go anyway to counter- balancing the new laws.


The official publication of EELEX


HIT-ting the top as Perla


doubles up EUROPEANNEWS14


Taxing times in Russia as industry looks for clues to


future EUROPEANNEWS20


St Petersburg shocked by crushing legislation


locationlocation RUSSIA


Around a third of St Petersburg’s gaming halls have been forced to shut after crushing new legislation was introduced by a government keen to clamp down on operations in the most popular locations. The new initiative by the St Petersburg


government dictates that gaming sites of all descriptions should be located no closer than 50 meters from subway stations and 10 meters from other public transport stops. Having approved this new amendment to the gaming laws, the changes were introduced with immediate effect with the authorities launching a series of inspections in the city where they forced various gaming sites to shut down. One observer said: “The largest federal operators are among the most severely damaged companies. Jackpot and Vulcan (Ritzio) had to close a number of slot halls, about 30 per cent of what they had there before, due to the new local initiative. Another operator Yakor is now operating 10 slot sites out of 43 they had before that. All these sites were located in the most popular places, subway stations where people’s traffic is very heavy.”


With 23 fully fledged casinos and many more slot halls, operators such as Vulcan, Jackpot and Profit had established a healthy business in St Petersburg, a city which had some 24,352 gaming machines at the start of 2005. The outlying Leningrad region also boasts a further 5,169.


The move is the second crushing blow to come out of the local government. Table tax increased by more than 100 per cent in the last year from 50,000 to 120,000 roubles per table. And with taxation laws being changed from local to Federal, any change in the rates in Moscow where average spend per head is much higher could hit St Petersburg venues particularly hard.


Let’s party: Unicum celebrates 15 years with


further growth SUPPLIERNEWS30


In light of HIT’s undoubted success in the Slovenian town of Nova Gorica, there would be far worse courses for Harrah’s to plot when determining its long awaited entry point into European gaming. But with a change in Slovenian laws currently blocking the bid, Phil Martin found out at what stage the talks were at.


HIT hopes to be the sole Slovenian partner of Harrah´s for a mega-casino entertainment centre near its Perla venue in Nova Gorica


Harrah’s Entertainment for the mega-enter- tainment centre project.In light of the suc- cessful talks,we expect that the business agreement to be concluded in November.” HIT has already done more than simply


put Nova Gorica on the gaming map.Lying in western Slovenia,close to the Italian border,Nova Gorica,as the name would suggest,is a relatively new town,built after the Second World War.After opening its first gaming venue,Casino Park,in the town some 20 years ago,HIT,having changed its name from DO HGP Gorica,returned to Nova Gorica in 1993 to open Casino Perla. These two casinos currently lead the way in Slovenia although the Perla dwarfs the GGR contribution of the Park by some 40 per cent.A major project has just got under- way to double the number of hotel rooms at Casino Perla,which could also see HIT up its slot total to nearly 1,500. Harrah’s,meanwhile,has been examin-


HIT and Harrah’s bid for Slovenian super site


italianjob SLOVENIA


Slovenian operator HIT has confirmed that it is in talks with US operator Harrah’s Entertainment to evaluate the potential of setting up a joint venture company to develop a groundbreaking project near the town of Nova Gorica. The two are hoping gaming laws in the


country will be rewritten to allow them to develop blueprints for a completely new casino venture nearby to the region which, due to its proximity to Italy,is blessed with an influx of Italian gamblers. Boris Tomazic,managing director of


HIT’s Casino Perla,which is already a huge success in Nova Gorica,confirmed:“We are currently in talks with Harrah’s Entertain- ment about developing a resort casino close to Nova Gorica,which would be American in both style and size.This would require changes to our gaming law includ- ing a change of the ownership restrictions as currently foreign companies can’t own more than 20 per cent of preferred shares. The government would also have to lower gaming tax which currently sees slots taxed at 38 per cent and tables at 23 per cent and it would have to issue new licences.” Tomizac was unable to divulge any more and pointed instead to a group statement. All it could reveal was:“On Wednesday,5 October 2005,representatives of Harrah’s


Entertainment visited Nova Gorica.During the talks with the HIT management board the key elements of the business agree- ment between the two companies were defined.These elements will serve as the basis to settle relations with the govern- ment,which are the precondition for the realisation of the project.It was agreed that HIT would be the sole Slovenian partner of


ing several ways into European gaming since the collapse of its hopes to develop a network of UK super casinos in conjunc- tion with British operator Gala.The British government’s u-turn on its free market approach has seen the world’s biggest casino operator make some daring moves throughout Europe.One of its more auda- cious strikes of late has seen it challenge the state monopoly in Holland with a super sized proposal for the city of Maas- trich in the far south of the Netherlands. Harrah’s is still eager to inject 600m euros in creating this Caesar’s style casino in Holland,which would also include a theatre,a music venue,a nightclub,exhibi- tion halls,a gym,shopping malls and two hotels.But it is clearly keeping its options open by eyeing up other European locali- ties which it feels has the potential for US style resorts.Nova Gorica clearly fits the bill.But once again,Harrah’s fate is in gov- ernmental hands.


But this time the state could well be


open for business.HIT’s founder was,after all,the Republic of Slovenia,and its owners are therefore the state,several government funds and the local community.At the very least,the Slovenian government will be all ears with this latest proposal.


Dark clouds over Moscow’s strip of casinos on the famous Novy Arbat


The official publication of EELEX


Reform ushers in Ukrainian opportunity EUROPEANNEWS2


Conti Group to prosper in light of St Petersburg laws EUROPEANNEWS3


Russians stress need to get laws spot on


Crisis talks have been held in Russia as the industry tries to advise politicians on legislation crucial to both the industry’s future and government coffers. The injustice of imposing nationwide, flat rate taxation and the need to really crack down on illegal slots dominated the talks. Anna Ben Saud and Andrew Gellatly report.


stresspoint RUSSIA


Representatives of the Russian gaming busi- ness from Moscow and the regions met with Muscovite officials on 22 November to discuss the proposed federal licensing and taxation legislation currently on offer.The underlying message from the sector to the Duma was blatant in its simplicity: Regulate more effi- ciently and please do it soon. The emergency roundtable was convened to discuss an urgent appeal by gaming firms to the State Duma,Russia’s lower house of parlia- ment,concerning the new licensing draft law that passed its first reading on 10 November. November 23 saw the Duma pass a Bill


whereby slot halls and casinos should be located at least 100 meters from schools.It also ruled that no gaming machines should be installed in homes, apartments, f lats, state offices,hospitals,stores or supermarkets. Analysts believe that the city will lose at least a third of its nearly 70,000 legally regis- tered gaming machines.The move is the first of many expected law changes which will force the redistribution of the gambling business in Moscow.Once underway it is expected that only the large players will survive. Sources say that the next target for the city’s deputies is the bill on casino advertising. In addition, the deputies are likely to advocate the concentration of gaming facilities in one area,creating what some are calling a Las Vegas area within the city. While the alternative draft submitted by deputy Lebedev to move all gaming enter- prises at least 1 km from any population centre was, as anticipated, rejected at that stage, the industry’s appeal calls on deputies to speed up the process of adopting a clear-cut decision on licensing laws and their nationwide imple- mentation.


Since the draft law was first written in June the industry has been left in the dark concern- ing many of the critical changes set to take place,though a recent decision to grant licens- ing powers to the federal tax authority has helped clarify the situation a little. “The current quagmire is growing more and


more profitable for those who operate in the business illegally,”lamented Aleksandr Borisov


April deadline for existing UK licences Jowell went on to


knowlimit UNITED KINGDOM


Casino operators wishing to seal licences under the exist- ing regulations will need cer- tificates of consent before next May after culture secre- tary Tessa Jowell revealed that she intends to guillotine the number of casino licences granted before the new gambling legislation comes into force.


Jowell told the British Casino Association’s AGM that April 2006 is the prospec- tive cut off date for applica- tions for casino operating licences under the 1968


Gaming Act. She said: “I am announcing that, subject to consultation, no further appli- cations for certificates of consent for new casino licences should be allowed after April 2006. We have made it clear throughout this process that we want to avoid proliferation in the number of smaller casinos.”


The announcement will answer some concerns that a plethora of ‘old style’ casinos will slip through the net before the Casino Advisory Panel decides where the new eight small casinos, eight large casinos and one regional casino should be allowed.


announce plans to further strengthen the board of the new gambling regulator the Gambling Commission with at least one more member with expertise in social responsibility.


She said: “The Gambling Commission has assumed new responsibilities, not least the question of social respon- sibility. I have discussed with Peter Dean, its chairman, how to further strengthen its Board and are looking to expand their already considerable skills with at least one more new member with expertise in social responsibility.”


Online poker stimulates casino appeal INTERVIEW32


of the Russian Association for Gaming Industry Development (RARIB) and director general of the Moscow International Business Associa- tion (MIBA).The prospect of a protracted struggle, during which the absence of clear legislation threatens to further hurt the indus- try both financially and in terms of public image, is growing increasingly frustrating to the major businesses affected by the pending changes.And,as RARIB chairman Valery Ivanov noted while opening the roundtable,“there are still more questions than answers.” On 17 November the cabinet decided to


transfer the authority to licence gaming busi- nesses to the federal tax service,but the deci- sion will only come into effect after the government resolves other issues relating to federal gaming regulation.It is a move that has been welcomed by many in the industry.Speak- ing at the roundtable Michael Boettcher CEO of Storm International said:“The tax service is a responsible body, though it is not clear whether they have experience in issuing licences or what criteria they will use.” In the meantime the huge gap between the number of licensed businesses, slot arcades and individual slot machines and the number of those actually operating in Russia remains a central concern for the industry.In Moscow, for instance, only 64,000 of the 96,000 slot machines currently operating are in the hands of valid license holders. The vexed issue of taxation was also central to the discussions. Following the recent tax increases in Moscow,where in October the City Duma effectively doubled the tax rates for all gambling establishments and slots from January 2006,the associations argued over the feasibility of a flat rate tax across the country.A number of participants representing major gaming firms at the roundtable said that impos- ing a flat tax countrywide without reference to local income and expenditure would be unfair.“Bigger taxes mean only one thing: bigger bribery. History has proven time and again that the less a government changes its tax policy, the better.”said Vladimir Kashin,an economist and deputy director of the State Research Institute of Taxation Reform of the Russian Ministry of Finance.Kashin went on to compare the situation to the prohibition era in Continued on page 2 >


The official publication of EELEX


A sneaky glimpse of Brussels from Casinos Austria


International EUROPEANNEWS2


Fall out continues for Tranchant Group in


Amnéville EUROPEANNEWS4


IPO rumour for Russian based Ritzio


Entertainment BUSINESSNEWS46


Lack of Christmas cheer as slots dent Austrian employment


jobclub AUSTRIA


Christmas lights at Klessheim Palace in Salzburg, in western Austria. Any Christmas cheer at Austria’s 12 casinos has been served up with a fair helping of serious negotiation as the operator is looking to cut 130 jobs in a bout of redundancies and restructuring to be brought in on January 1, 2006. Full story on page 12


Having bubbled away for some years under the surface of international development, US giant Harrah’s has named its third foray into foreign soils in just under a month. Phil Martin explains how the latest master plan is to reign in Spain.


Spanish all set for Caesar’s invasion


spanishinquisition SPAIN


US gaming colossus Harrah’s Entertainment is partnering with a Spanish developer to develop a Las Vegas-style casino- hotel,integrated within an enor- mous theme park, in the tax friendly climes of Castile-La Mancha, located at the very centre of the Iberian Peninsula. The Las Vegas-based operator is teaming up with El Reino de Don Quijote de La Mancha,SA to help develop a Caesar’s themed complex featuring an 850-room luxury hotel, a 50,000 square foot Vegas-style casino, a 3,000- seat Colosseum theatre, golf courses, swimming pools and a shopping mall. The complex will be built on a


29-acre site near Ciudad Real, a city of some 65,000 people,190km south of the capital, said Aurelio Alvarez,chairman of El Reino,at a Madrid news conference. Harrah’s, operators of the


Caesars Palace gambling empire,will own 60 per cent of the $1.4bn project,El Reino 40 per cent with construction set to begin in late 2006 with a goal of completion in 2008. Subject to all appropriate gov-


ernmental approvals, Caesars will be Spain’s first large-scale casino resort, complementing the other attractions of El Reino de Don Quijote, which will include hotels,golf courses,spas and entertainment, retail and residential development. Having already sized up oppor-


tunities in Great Britain and The Netherlands, and having announced its intentions to team up with Slovenian operator Hit, Gary Loveman, chairman, chief executive officer and president of Harrah’s Entertainment, was clearly delighted to finally move a European project from the drawing board into the group’s ‘to do’list.“We look forward to joining forces with El Reino to develop a resort of distinction that will further increase the drawing power of this magnificent region,” he enthused.“Over the years,Euro- peans have travelled thousands of miles to immerse themselves in the unique Caesars entertainment experience. It’s therefore a thrill and a privilege for us now to be able to bring Caesars to them. There are millions of people in this region of Spain with an inter- est in gambling and we are confi- dent people will get in the car,on the train and on the plane to come and see us,”he added.“We expect the Caesars Palace idea will be very successful in Spain.” Alvarez added the Spanish


complex will be built in a semi- arid area in the Castile-La Mancha region called El Reino de Don Quijote after the main character in Miguel de Cervantes’ famous 17th-century novel.


The gaming soils of El Reino, located near Ciudad Real, the capital of Ciudad Real province in the Castile-La Mancha region of Spain, have certainly been enriched by the local authorities. In 2002, Castilla La Mancha reduced its tax rate to 10 per cent.


It previously had a tax rate of 4,020.77 euros per machine as well as a supplementary tax rate as high as 30 per cent. The Caesars resort in Spain is anticipated to include many of the signature elements that have made Caesars Palace in Las Vegas a leading worldwide name in premium gaming.As well as the new added features,the prelimi- nary project scope includes a conference centre, a 30,000 square-foot spa, and multiple restaurants, lounges and bars. In addition,a lakeside Forum Shops retail centre will be developed adjacent to the Caesars casino resort.


It will be built in a rapidly


growing area, with numerous excellent transportation links including a stop on the high-speed AVE rail line between Madrid (50 minutes away) and Seville (1 hour and 45 minutes away).The area, which includes Madrid and Toledo,has more than 9m adults. Additionally, the Caesars casino resort is expected to draw visitors from across Europe. The local government has


signed off on an exclusivity deal that will keep Harrah’s the only gambling operation in the region for 10 years. The deal is the third interna- tional move since Harrah’s acquired Caesar Entertainment in June, an acquisition that swelled its assets and positioned the company to set its sights on international markets.The end of November also saw Harrah’s publicly comment for the first


time on the signing of a memo- randum of understanding with the Hit Group,Slovenia’s largest casino operators, to pursue development of a luxury casino resort in Nova Gorica, Slovenia, just across the border from Italy, that will also offer spa, enter- tainment and retail amenities. The joint venture project will cost in the region of US$ 700m and is scheduled for com- pletion in 2009,but unlike the Spanish project is dependent on government loosening its gaming legislation. Currently, foreigners in Sloven- ian gaming can hold no more than Continued on page 2 >


Caesars: set for Spain but not for Slovenia


September 2006 • 047


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The official publication of EELEX


Cash is king – or is it? EZ Pay drives the revolution INTERVIEW22


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Holland Casino prepares for online trial


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The Turkish capital of Istanbul is believed to be home to some 90 odd illegal casinos


tant casinos in Northern Cyprus, confirmed that atten- dance at the casino had fallen by almost 40 per cent in the last eight months due to the opening of illegal casinos in Istanbul.Atici said that he had spoken to former customers who had revealed where the venues were and what games, stakes and prizes were on offer. Leyla Kirca,manager of the casino at the Merit Hotel in Northern Cyprus, is one of those who has spoken out.She


confirmed that many illegal gambling houses have been opened and that there are at least 90 operating from private villas in Istanbul which are ‘always packed with people.’ She explained that the most popular casinos were operat- ing from private villas in Etiler, Levent and Acarkent and that in the unregulated environment players first pay with their own money and then, when they have spent up,they chase their losses with immediately avail- able loans with high interest rates.According to Kirca, the authorities are doing little to make life difficult for these criminal enterprises. She said that the illegal venues, such as the Dalmaz Centre in Etiler,are all ‘out in the open’ and that anyone can find out where these villas are. The news has made front


page headlines in Turkey’s national media but police remain convinced that they are unable to take any action against the private villas being used.A senior police officer was quoted as saying:“We cannot raid these at night as they are classed as residential properties,so we can’t catch them red-handed. On the odd occasion when we do, the punishment is not too severe,so they go and open new ones.”He said the actual number of people who carry out this


criminal activity in Istanbul did not exceed 10 to 15 but believed that there were members of the Mafia amongst them. “They usually open and run these gam- bling houses using other people’s names,”he explained. “Our fight against them contin- ues incessantly.We arrest the people running these establish- ments and we confiscate their roulette machines, but they avoid imprisonment by paying a small fine and then go and open a new place.” The officer confirmed that


gambling was taking place in the Sofra Kultur Club, attached to the Taç Spor Club Complexes of Kadikoy. “We raided this venue in January 2004 for the first time; confiscated the machines and arrested the offenders.They paid a fine,went out and began running the same place again. Can you believe that we raided the same place 22 times.What else can we do?” With Northern


Cyprus


looking at new gaming laws to better control its own industry with fresh taxation, limitations on what hotels may operate and fees to enter,all set to raise the bar on ticket to operate,the island’s operators will be hoping the Turkish authorities, take a much tougher stance on those operating outside the letter of the law in what is sup- posed to be a closed market.


It’s not happening quite how they first envisaged a few years ago, but the world’s resort casino specialists are finally making their play on the British market. Phil Martin reports on how the last month has seen Genting and Harrah’s lock horns as they jostle for supremacy.


Trading places: Geoff Hall explains his switch from player to designer


INTERVIEW26


London Club’s Fifty property in Mayfair, one of the venues to be snapped up by Harrah’s.


It’s 15 up as EELEX gets ready for new look expo


EXHIBITION32


Moscow halls fall from 2,770 to 540


closingtime RUSSIA


Brits losing grip on domestic market


foreignlegion UNITED KINGDOM


With the loosening of its legis- lation, it was only a matter of time before the cash-rich casino companies of the world posi- tioned themselves to profit from the new golden age in British casino gambling. Dra- matic moves in recent weeks have seen the world’s largest gaming company, Las Vegas supremo Harrah’s Entertain- ment, and Malaysian resort spe- cialist Genting International show their hands.


Genting had been strongly tipped to pounce on what it hoped would be the merged entity of Stanley casinos and London Clubs International, having become the majority shareholder in both opera- tors with 20 per cent in Stanley and 29.9 per cent in LCI.The Malaysian operator was swept to one side though by a £279m bid for LCI buy Harrah’s.Genting took just over a week to steady itself before making its own bid of £670m for Stanley. Stanley’s


non-executive


chairman Lord Leonard Stein- berg said a deal was struck on September 11.“Agreement has been reached on the terms of a recommended cash offer of 860 pence per share for the entire issued and to be issued ordi- nary share capital of Stanley.We believe that it represents fair value and provides appropriate certainty for our shareholders.” Genting’s experience is very


much in resort style casinos, which fuels belief that it is trying to position itself for the


greatest British prize of all - the country’s first super casino licence. It owns the Genting Highlands resort, situated about 58 kilometres from Kuala Lumpur, and it has gaming interests in Malaysia and abroad.In London,Genting also owns Maxims Casino Club, a high-end gambling venue in Kensington,which it bought from Gala Group. Stanley, the largest casino


operator in Britain with 45 casinos, has said that its “strat- egy is to focus on expanding its UK casino business by taking full advantage of the new dereg- ulation environment”. The chances of fulfilling those ambi- tions would be heightened by becoming part of a bigger,more powerful group with greater financial muscle. Its monetary strength will


be dwarfed though by that of Harrah’s who said it will acquire all of the outstanding ordinary shares of LCI for £1.25 per share.It said London Clubs pro- vided an ideal stepping stone for expansion in Britain and a base for Europe. Gary Loveman, chairman,


chief executive officer and president of Harrah’s, con- firmed why the US giant was making its UK move.“London Clubs has a strong collection of properties that are well posi- tioned in the United Kingdom’s evolving regulatory frame- work,”he said.“Under Harrah’s ownership,these international properties will even be stronger in the future.” The hidden potential is


clearly the underlying feature of LCI’s estate.The group cur-


rently operates six casinos in the United Kingdom and has an additional five under develop- ment in Manchester, Leeds, Blackpool, Nottingham and Glasgow. London Clubs also operates two casinos in Egypt, one in South Africa and has a consulting relationship with a casino in Lebanon. Loveman added that LCI’s


management had experience which would only fuel Harrah’s international development. “The multi-national operational experience of LCI’s manage- ment strengthens Harrah’s existing team,allowing for con- tinued international expan- sion,” he explained. “We’re excited by its current develop- ment projects and believe that Harrah’s Entertainment’s skills and access to capital will assist London Clubs International in its planned expansion.” Michael Beckett, non-execu-


tive chairman of London Clubs International, added:“Harrah’s has the resources and expertise to fully leverage the develop- ment opportunities that London Clubs International has in its new licences and to max- imise growth for the company.” Of course, this isn’t Harrah’s


first foray into Europe.Having investigated several potential routes,that virginal move came in November when it agreed a $700m joint venture to build a casino on Slovenia’s border with Italy.The same month it also agreed another joint venture to build a $670m casino in Spain,modelled on Caesars Palace in Las Vegas. Whilst both Harrah’s and Genting would have preferred


to enter the market with a clutch of resort casino licences to go after, their involvement will undoubtedly strengthen their case for the one licence up for grabs.With limited space in which to expand domesti- cally,the UK’s solitary licence has grown in importance for the world’s five biggest gaming groups – Genting,MGM Mirage, Kerzner,Harrah’s and Starwood – all who operate in fairly mature markets where there is little option for expansion.They know all too well that British casinos can expect an impres- sive increase in membership and demand, once they are allowed to advertise from next year.The abolition of the 24 hour rule last year has already help drive attendance and GGR.


Russian legislators returned from their summer vacations this month to find Moscow still basking in the neon lights of its numerous casinos and slots halls. Having already forced many closures, the State Duma is ready to pull the plug on much of Russia’s remaining gambling operators as early as next year. According to Moscow Deputy Mayor, Iosif Ordzhonikidze, by the beginning of 2007 the city will only have 540 gambling venues instead of the current 855. “In January 2006, there were 2,770 slot halls in Moscow but by August that number had been reduced by 69 per cent. As for the remaining casinos, 315 will be closed at the end of the year,” he said. The Duma, or the country’s lower house of parliament, is scheduled to vote this autumn on the second of the three readings of a controversial bill on gambling. The bill is Russia’s first attempt to impose strict, federal regulations on its


booming gaming industry, estimated to be worth


between $6 and $7bn. It is highly probable that it will be approved with operators and manufacturers saying that should be sooner rather than later.


“The bill has good chances of passing this year,” said Anastasia Kozhemyakina, a spokeswoman for Unicum, Russia’s largest producer of gaming equipment. Storm International’s Michael Boettcher agreed saying: “I imagine


something will be done by the end of the year - Putin may step in. I’m tired of the situation, and I’m tired of people asking me what I think about the situation. The industry is slowly heading in the right direction, but on the whole the industry sees the new laws as a negative whereas we see them as a positive.” Chris Van Riet, of


Moscow firm Cube Private Equity, added: “The legislation will result in a more heavily regulated, taxed and organised gaming sector. All of which is good for the industry as a whole. As for financing, the uncertainty around the legislation makes the sector off limits from a capital markets perspective.”


The official publication of EELEX


Residents knock knocking on Knokke’s door


EUROPEANNEWS2


The future make-up of the Russian business has taken an unforeseen twist with president Vladimir Putin playing a new hand looking to close down all casinos outside of four main gaming areas and several regional ‘gaming zones.’ Phil Martin analyses the reaction to Putin’s casino colonies, which analysts believe would see only ten per cent of the sector survive.


Putin’s zonal play slammed as ‘irresponsible’


reservationsindeed RUSSIA


Russian president Vladimir Putin has shocked his $5.5bn domestic casino sector by delivering a draft law that would restrict the future gaming industry to four federal gaming reservations, two in central Russia, one in Siberia and one in the Russian Far East, alongside several local casino colonies. Only the president, the leader of United Russia Boris Gryzlov and members of the presidential administration know the exact contents of the draft law although it aims to reform the casino sector in two phases. The first measure would last until July 2007 and would enforce an outright ban on establish- ments with less than 50 slot machines.Then,by January 1 2009, all gaming establish- ments, including bookmak- ing, electronic casinos and internet gambling, should have either moved to one of


the four federal gaming zones or to a gaming zone set up by local authorities. This is where the main ambi- guity lies as nothing is known yet about the number of local zones or the conditions for opening them.Reports have suggested Ramenskoe,Kalin- ingrad,Khabarovsk, Ivanovo and Moscow, the Nagatin- skaya Plain specifically,will all be considered but nothing is certain. The existing industry is


reeling.Amid the suggestions of a quota system and a whole host of restrictions on loca- tions, which have already closed down hundreds of slot halls,no one expected such draconian state regulation to be put forward. Michael Boettcher,presi- dent of the Storm Interna- tional Group of casinos, slammed the proposal as ‘irresponsible.’


“This is a bad idea, not thought through and will not work,”he warned.“It will only encourage foreigners to come


here with their billions and take all the profits out of Russia as opposed to allowing Russian companies to rein- vest into Russia, something they had been doing more and more.Implementing this idea gives foreign giants unlimited possibilities to enter the market and export all the profits from the country.” Boettcher also envisages


the proposal opening the door for unscrupulous oper- ators to open in the shadows. “What will certainly happen is that casinos will go under- ground all over Russia as has happened in any country that restricts gambling rather than controlling it,”he said. “Surely it is better to control and legislate the gaming industry, not drive it under- ground.Having four zones in Russia,the largest country in the world with its 11 time zones is nothing less than irresponsible.” Following the news, Storm said it had been forced to call off plans for an initial public


offering.“I had to say stop, because now we’ll have South Africans,Australians and Amer- icans buying into mega com- plexes inside these zones,” Continued on page 2 >


Monopolies under attack as online goes on offensive


EUROPEANNEWS3


EELEX hopes hard sell hits hard times off Russian radar


EELEX2006REPORT40


UK looks at online opportunity as US closes door


onedoorcloses UNITED KINGDOM


British politicians want to turn the UK into a “world leader” in internet gambling with legislation being pieced together to lift the current ban on online gaming businesses from next year in the hope of attracting offshore companies to Britain. The UK’s Department for Culture, Media and Sport (DCMS) has lobbied the Treasury on behalf of online gaming companies to introduce a favourable tax regime for some time. A governmental briefing note stated: “It is government- wide policy, and that includes HMT (Her Majesty’s Treasury), that Britain should become a world leader in the field of online gambling, in order to provide our citizens with the opportunity to gamble in a safe, well-regulated environment.” The industry has said that anything above a two per cent tax on gross profits would be untenable. The move is in complete contrast to the situation in the United States, where online gambling has been outlawed. US President George Bush signed the ban on internet gambling on Friday October 13, a date which has spelt the end for some in the sector. The ban has made it illegal for banks and credit card companies to process payments to online gaming companies. About 170 websites have declared their intention to stop accepting US players, the vast majority since Congress passed the act, according to gaming website Casino City, which expects 10 to 15 per cent of the world’s 2,700 or so gaming websites to eventually block US customers. Sector leader PartyGaming is holding its cards close to its chest, but spokesman John Shepherd said the ban could push parts of the internet gambling sector underground. “The protection afforded to millions of Americans by responsible companies is just about to be stripped away,” he said.


Some land based casinos decided to walk away immediately, London’s Ritz Club being one. Others such as Lassesters are prepared to see what happens following the US ban. Having halted services to the US, it revealed that the Unlawful Internet Gambling Enforcement Act would eliminate about half of the world’s estimated $13.34bn online gaming industry. The US market accounts for about 70 per cent of Lasseters’ revenue.


The official publication of EELEX


How the French keep their game in check


EUROPEANNEWS2


John Galajsza: By Royale Appointment


INTERVIEW18


Technology takes center stage at Vegas


G2EREPORT20


Moscow frozen by deputy Mayor’s cold words


The war of words over the future of Moscow’s casino sector dropped a few degrees following a chilling warning delivered by Moscow’s deputy mayor Iosif Ordzhonikidze. He forewarned that the gaming hotbed would not play host to any casinos in the future and that unspoilt forest areas would be the chosen locations. Phil Martin reports.


coldwar RUSSIA


With almost 70 per cent of Moscow’s casinos and slot halls closed in recent months,there is no doubting that the restructure of the city’s casino offering will take on a whole new dimension when new legislation is finally pieced together.But the message from Moscow deputy mayor Iosif Ordzhonikidze at a press confer- ence in early November delivered the blood chilling warning to existing and future operators that Moscow had no intention of being reborn as the Las Vegas of Russia. Ordzhonikidze said he was


‘strongly opposed’to plans aiding the development for a gambling zone in or near the city.He added that the proposed gambling zone must be located ’in the middle of a barren field’ and that he would oppose one in the town of Ramen- skoye,a region of Moscow which has been named as a potential site for a project devised by South African operator Sun Interna- tional and Moscow conglomer- ate Belaya Dacha. “Moscow will not lay claim to hosting a zone of gambling outlets and will never accept such an offer,” the deputy said. “We are against the idea of a gam- bling zone close to Moscow’s perimeter beltway, we are against our roads, our people, and our infrastructures being


involved in servicing such a zone.We shall object to the cre- ation of such a zone in the town of Ramenskoye,too,as well as in any other district centre close to Moscow,”Ordzhonikidze added. The grim news followed on


from the deputy’s confirmation that over 2,000 from a total 2,720 gambling houses have now been closed.Ordzhonikidze countered that the industry’s claims that tax revenues would suffer as a result had not been proven.Indeed,tax revenues for the Moscow budget from gambling dropped by just three per cent following the clo- sures, suggesting that the player base was shifting its habits from the more ambient side of metro gambling to the destination style of the remaining larger venues. Independent research high- lighted that one slot machine makes an average profit of US$ 10,000 per month,whilst gam- bling business tax returns have struck a 7bn ruble mark, roughly US$ 260m. The State Duma, the lower house of the Russian parliament, gave unanimous approval to the bill that would effectively ban gambling in Russia,except in four designated zones,from 2009. The bill, submitted by Presi- dent Putin last month, got through its first reading by a vote of 440-0,with one abstention. The legislation, however, is expected to undergo drastic


changes before it passes a second reading,probably later this year. “There is no doubt the bill


will change beyond recogni- tion,” Yevgeny


Kovtun, a


spokesman for the Gaming Busi- ness Association,said. The current version of the bill does not distinguish how many of the zones would be established inside residential areas. In fact, all that is known at this stage is that five-year licenses would be granted for operation inside the zones. Duma speaker Boris Gryzlov


said:“The approach will change fundamentally. Plans are to assign no more than four restricted territories where gam- bling would be allowed.” Gryzlov said that two areas


would be assigned in European Russia,one in Siberia and one in the Far East.These areas are supposed to be uninhabited,he declared.“At present, territories free from resi- dents are offered,”he said. Vladimir Zhirinovsky of the


Liberal Democratic Party added:“These will be new areas in the flatlands,in the woods.” He declared also that ‘Virgin forests’should be the only con- siderations here. The owners must be Russian legal entities that have not been created by the Russian govern- ment or local authorities. Of the two types of area men-


tioned, it has emerged that the first could be in residential areas. These can be established on ter- ritory allocated for urban and rural development.The federal government will issue permits to gambling establishments in these areas in co-ordination with local authorities.Permits will be issued for five years and will allow each organiser to set up one gambling facility per permit. The second type comprises


gambling zones established on parcels of land belonging to


federal or municipal authorities not allocated for urban or rural development.These parcels will be leased to the owners of gam- bling businesses by the Russian government. Putin’s draft document also outlines some requirements for owners of gambling establish- ments, including the fact that owners must be Russian legal entities that have not been created by the Russian govern- ment or local authorities, and whose net assets are not less than US$ 22.4m. All gambling businesses that do not meet the requirements proposed in the draft will be shut down after July 1, 2007. Those places that meet the requirements will be allowed to operate without special permits until January 1, 2009,when the new law comes into effect. Already,some cities or regions


have pushed to be considered to be one of the areas – and the


tourism and tax revenue it could bring.They include Kaliningrad, the enclave between Poland and Lithuania, and Kalmikia, a Bud- dhist region on the northeast coast of the Caspian Sea governed by President Kirsan Ilyumzhinov, who has already built a Chess City that recently played host to the world championship. A small city on Moscow’s southeastern outskirts, Ramen- skoye, has also been cited as a potential location, which is where South African casino company Sun International has announced plans to build a large gambling and entertainment centre.Clearly, a final decision would depend on the legislation now being drafted. Putin’s pro- posal appears to have popular support with the public. In a recent poll of Russians by the independent polling agency VTsIOM,65 per cent of respon- dents favoured restricting all gambling to special zones,while


Christmas trees and flashing lights adorn a casino on the Novy Arbat but will there be anything to cheer in Moscow come the New Year


only 18 per cent were opposed. In a supposed olive branch to


existing casinos, the law would not take effect immediately but be phased in by 2009 – time enough for owners to recoup their investments and close or relocate to the new zones. Unless lawmakers sidestep


Putin’s wishes, an eventuality which has yet to occur,the new law would do more to alter the Moscow landscape than any since the fall of the Soviet rule. Many think that the new laws will see the $5bn-a-year gambling industry shrink by as much as 70 per cent, others think the tear it down approach could destroy the industry altogether as it calls it for a completely different player to come to the floor.


The official publication of EELEX


Campione doors finally set to open


EUROPEANNEWS2


Has Russia zoned out with its big freeze?


EUROPEANNEWS12 Cosmopol sets stage for Nordic Light poker


thesnowmustgoon SWEDEN


Cosmopol in Sundsvall, Europe’s northernmost casino, is preparing to open its doors for the Nordic Light Poker Tournament. The tournament will be presented in classic Scandinavian winter fashion, outside the casino, as well as in the poker room. During five days, several tournaments and cash games will be arranged. The tournament opens on January 31 with the main event starting on February 3.


The guests will be part of an overall experience from


arrival to departure. “We want to create a whole new experience for our guests, not only at the poker tables but in every aspect of their stay in Sundsvall. Hospitality and service will be our mission. A hostess will take care of the poker players and make sure they are attended to at all times,” said Peter Dennbrink, marketing manager of the Casino in Sundsvall. “Exclusive winter themes will surround the tournament for the entire weekend. The Nordic Light poker tournament will be an event to look forward to and will leave a lasting impression for those who will participate.”


Moscow and St Petersburg left off Duma wish list


With Moscow and St. Petersburg spectacularly left off the State Duma’s Christmas list, many operators are now looking abroad rather than relocate to the remote four zones of the Baltic exclave of Kaliningrad, the Primorsky region on the Pacific coast, the Siberian region of Altai and the southern Krasnodar-Rostov area. Andrew Gellatly reports.


taleoftwocities RUSSIA


A draconian law that will bring about the closure of most of Russia’s casinos and slot halls now only needs the formality of a signature by President Vladimir Putin to become a reality. The legislation, already


waved through by Russia’s lower house of parliament in the build up to Christmas,looks set to exile Russia’s casinos into four remote and unpopu- lated zones,with some leading operators now looking to leave the country and relocate to the Baltic States or Ukraine rather than move to the special areas which they believe to be totally unworkable. Four days before Christmas, the State Duma decisively approved the Kremlin-backed legislation first introduced by Putin in October,which would set up the four special regions by July 1,2009.


And when operators


unfolded their maps the news was worse than they feared. The zones, which are among the most inaccessible places in Russia, are to be located in the Altai region in Siberia,the rainy


Pacific coast region of Pri- morsky, the Kaliningrad area along the Baltic coast and an area in Russia’s south between Rostov and Krasnodar.Of the four, only Primorsky in the Pacific region between the Sea of Japan and China has any- thing like an established gam- bling industry. Kaliningrad is located on the Baltic Sea, cut off from Russia proper by Lithuania and Belarus and believes itself to be essentially non-Russian. One insider at a Moscow-based operator said:“I didn’t even bother to look at the map in detail, if you can’t drive there from Moscow it isn’t worth thinking about.” The location of the gam-


bling zones was certainly the most controversial part of the bill.Many questions about the selection process were left unanswered,not least the fact that all of the regions selected by the Duma’s Economic Policy,Entrepreneurship and Tourism Committee are uncritical supporters of Putin’s government. Duma Deputy Alexander Lebedev,of Putin’s United Russia party, said in an interview that the gambling zones “were chosen behind closed doors,which is


not great. But it’s better than the alternative.”


Some of the best-known and


most respected operators in Russia’s principal cities are now resigned to seeing the lights go out in June 2009,but before that they anticipate further radical changes in the industry.“We’ve got two and a half years,which is a lifetime in Russia,”says Michael Boettcher, CEO of Storm International. Boettcher, the operator of the Superslots chain of slot halls,and casinos including the New York and Shangri La,has already ruled out locating to one of the zones.“The four zones are absolutely unwork- able unless you want to take a donkey for the last 300kms, the government is crazy to believe anyone will build there,”he says.Instead,he says, Storm is already sizing up opportunities abroad that have presented themselves. Yevgeny Kovtun, vice presi- dent of the Association of Gam- bling Businesses, said the repressive measures essentially amounted to a ban.“Before, a person would pop into a casino or slot-machine hall between the metro and his house,”he explained.“Now, the gaming companies will have to entice him to the Pacific coast.” In the meantime,new rules


go into effect on January 1, 2007,setting up minimum age limits for casino-goers, a minimum floorplan of 800 square meters for casinos and 100 square meters for slot halls.More significantly, only Russian entities backed with assets worth no less than 600m roubles (US$23m) may now


operate in Russia – a require- ment that is already driving frenzied consolidation among the smaller operators. The operators of the


Fortuna chain of slot halls have reportedly sent letters to oper- ators of small gambling halls, offering to buy their busi- nesses to bring them under the asset umbrella of a single organisation – the halls will then be leased back to the operators.Many operators that have not already been driven out of business by the Moscow city ordinance forbidding their location within 150 metres of a metro station,will simply dis- appear,and their business will flow to the surviving opera- tors who are set for 30 bumper months of trading. According to Iosif


Ordzhonikidze, the deputy Mayor of Moscow,in 2006 1,954 gambling outlets,70.5 per cent of the city’s total,closed,but tax revenues to the city still rose. “At present, 787 gambling outlets are operating in the capital, 241 of them should cease their activities by the end of the year,” he said, but Ordzhonikidze also acknowl- edged that tax receipts from gambling businesses increased to 4.5bn roubles in the period from January-September. Blame for the legislative ambush that the Russian gam- bling industry now finds itself in is divided. Some observers argue that the industry spec- tacularly failed to present a united lobbying front to gov- ernment;others argue that the government itself should have


conducted a feasibility study. “It is the fault of the govern- ment for not consulting,” argued Boettcher. “There should have been a law in the first place to allow the industry to grow as Atlantic City did.” There remains a scant hope


for existing businesses that changes that could flow from the 2007 Duma elections and the 2008 presidential election which will bring with it the replacement of President Putin,but in the meantime the number of casinos in Moscow and St Petersburg will shrink further as the minimum asset rules bite, with only one gam- bling venue certain to remain open beyond 2009 – the Moscow Stock Exchange is specifically exempted from Russia’s 2006 Gambling Law.


London rings in the new season


ICEPRODUCTS40


The official publication of EELEX


Poker: skill or luck? Court’s Gut reaction EUROPEANNEWS8


Etches sketches:


crunch time for regional bids INTERVIEW33


Class of 89: Olympic’s revenue


races ahead BUSINESSNEWS86


French fight the right to strike


The doors remained shut at seven French casinos on what is for many the most profitable night of the year. As dismay turned to anger, it now seems that many of those who chose to strike will now lose their jobs. Phil Martin asks were they right to take to the picket line on New Year’s Eve.


strikenight FRANCE


What should have been a dream night of fireworks and festive celebrations fizzled out into a New Year night- mare for many French casinos as workers took to the picket lines to complain over a host of introductions that they feel are making their jobs less secure. Their fears centred around the usual problems of wage increases but had been heightened by a host of new laws introduced in 2006 which the unions claim could lead to the onset of electronic casinos and the loss of 3,500 jobs. Two years ago, a similar


strike also called by the trade unions was averted at the 11th hour. This time round, seven casinos were unable to open on December 31, tra- ditionally the most profitable night in the casino calendar. Others were forced to shut as the night wore on and many more bore witness to striking croupiers carrying placards and handing out leaflets at their entrance, hardly conducive to the cele- bratory mood. Around 30 venues were believed to have been affected in some way, the most high profile of which was the Partouche Group’s Pasino in Aix-en- Provence, the third top earning casino in the country in 2005, which was unable to even open its doors due to staff shortages. Partouche was also unable to open its venues in Beaulieu and Berck-sur-Mer, whilst Lucien Barrière did not have suffi- cient staff levels to host its planned party night in Trou- ville. Others that failed to


open were the Tahoe Group owned casino in Cap d’Agde and two independently owned ventures in Evian and Aix-les-Bains. Picket lines greeted casino guests in several venues including Partouche’s estab- lishments in Cannes, Nice and Royat, Barrière’s venues in Enghein, Nice and Cannes and Moliflor Loisirs’ casino in Uriage.


Whilst later on in the


evening, Berck, Beaulieu and Evian were forced to close with some casinos missing qualified employees such as inspectors. As in 2004, four unions in


the French sector, the FO, the CFDT, the CGT and the CFE- CGC unions, employing 17,000 workers, called for the strike after their demands for a five per cent wage increase was met with a response from the operators of just two per cent. “In French casinos there is a majority of minimum wage earners working in the smoke and noise at nights, on public holidays and at week- ends. However, the casinos have never earned so much money,” the unions argued. They also fear that the new


laws threaten the very exis- tence of table games in France’s 193 casinos. David Rousset, the secre-


tary general of the Force Ouvrière, said: “The exis- tence of table games will depend on the number of slot machines operated in the casino, hence the thresh- olds (laid down in the draft order) are far below the actual reality. Also, giving electronic roulette the status of a traditional game can only have a negative impact on employment. We are more


Half of German casinos ‘threatened’


heavyburdens GERMANY


determined than in 2004, as the context has changed.” The unions are also con-


cerned that surviving employees will be asked to perform several jobs for the same pay with the fear being that one position could com- prise slot-machine techni- cian, barman, cashier etc. Operators were hit much


harder by the strike than they had anticipated. Indeed, prior to New Year, the Partouche Group had envisaged that only one of its 50 odd opera- tions, namely


“I am not sure that going


on strike on December 31 is a clever choice for a croupier, continued on p4>


Fireworks in more celebratory times at Partouche’s casino in Royat, central France


As many as half of Germany’s casinos are under the threat of closure, a leading member of the German industry has said. Michael Seegert, manager of the casinos in Bad Dürkheim and Bad Neuenahr and spokesman for the German operators’ association DeSIA, said that one in two of the 49 casinos currently operating in the country could close their doors, saying the smaller operations were in particular ‘danger.’ German casinos are facing increased competition not only from illegal online gaming but also from street operations, which are increasingly offering casino- style games, from sports betting and from interactive TV games, which have a strong random element. Although the total gambling market in Germany rose by 40 per cent to 12.2bn euros in the period between 2003 and 2005, the casinos’ share has remained unchanged at about 950m euros with visitors becoming ever harder to attract. At best in 2006, revenues will have stagnated, according to Seegert. Another factor, he added, is the heavy tax burden on casinos, which range anywhere from about 60 per cent of GGR to in excess of 90 per cent with the average at 80 per cent. The situa- tion is made even more uncertain by the still unresolved issue of where the money to pay the newly imposed VAT on gaming will come from.


The official publication of EELEX


Manc Swagger: How Manchester finshed first in the regional race


EUROPEANNEWS4


Aristocratic Focus:


Aristocrat to maximise Euro opportunities


INTERVIEW20


The prospects of the UK’s rainy city housing the Sun City of Manchester Casino is now very much on the cards. Having already been awarded a provisional contract in 2004, Kerzner International, founded by South African tycoon Sol Kerzner, is believed to be the early favourite to become the chosen operator for Manchester’s super casino. But as Phil Martin reports, it won’t be a one horse race.


Sol leads race to shine as Manc superstar


shineon UNITEDKINGDOM


The super casino set for east Manchester will attract some of the biggest names in gaming once the tender to operate is launched.


Having already


impressed local councillors to the extent that they gave him ‘preferred operator status’, Sol Kerzner’s Kerzner International is an early favourite, but with the 2005 Gambling Act dictating that the winning council has to hold a new competitive auction to determine which companies will develop and operate the casino, nothing is certain. And as Manchester knows better than most, the favourites are often pipped at the post. UK bookmaker Paddy Power


put Kerzner, the founder of Sun City in South Africa, in the driving seat and 2/1 favourite, followed by giants of the Las Vegas strip Hilton, Harrah’s and MGM at 4/1, 5/1 and 5/1, respectively. Kerzner, along with Ask and


Artisan, two small local devel- opment companies, was given ‘preferred operator status’ to create a £260m casino and leisure complex at Sportscity in the east of the city. Tom Russell, the chief execu-


Aix-en-


Provence, would be affected. Patrick Partouche predicted that around 50 out of 6,000 members of staff would actu- ally strike. Whilst there are no official figures, guesstimates put the striking total at much higher than this. The group had three casinos closed with the losses at Aix-en-Provence in particular, believed to be significant, much to Par- touche’s annoyance.


tive of New East Manchester, said: "Kerzner's bid had a quality design which jumped out at us.” Kerzner said in a statement, it


was ‘proud’ to have played a role in helping Manchester win the super casino, adding: "Our bid, with its key elements of stunning design, joined-up regeneration and maximum economic bene- fits, clearly made a compelling case. The consortium notes that due process in this project involves a competitive tender to comply fully with the Gambling Act and keenly awaits more details on the process which will


lead to the regional casino being developed in Manchester." MPs are set to interrogate


Kerzner as the media turns its attention now to Labour's links with the controversial gaming guru, who was accused of offering bribes to secure casino licences in South Africa several years ago, claims he has always denied. Tory Committee member


Nigel Evans said: "It is impor- tant that we look at all aspects of the issuing of the supercasino licence - not least because this government might want to launch another competition in the future. I think it's important that we pull in all the key players including Mr Kerzner." Liberal Democrat culture spokesman Don Foster added: "He has got a track record which would cause some people to have concerns and that's the job of the Select Committee." Some senior casino execu-


tives have said, though, that they were unlikely to bid against Kerzner. "Manchester had a com- plete tie-up with Kerzner. I just don't see the point of bidding against them again," the head of one leading US casino group was quoted as saying. But many others, however, look set to bid with several having to switch their focus from Blackpool to Manchester. Andrew Tottenham, managing director of European Develop- ment for US giant Harrah’s, said: “We look forward to learning the details of the public tender- ing process necessary to objec- tively select the casino operator to ensure the local community of Manchester will realise the maximum benefit of this planned development. We feel strongly that Harrah’s Enter- tainment offers the most com- plete package for the UK as we


have a proven, worldwide track record of responsibly operat- ing, successful casino inte- grated resort complexes.” Ladbrokes, Britain’s biggest bookmaker, had itself hoped to become involved in bidding to operate the casino planned for Blackpool. But Alan Ross, man- aging director of its European retail and casinos arm, said it had not given up hope of being involved. "We will consider our position regarding a potential bid to operate a regional casino in Manchester,” he said. “We are already actively assessing opportunities in the locations recommended for small and large casinos and together with our partners, including Hilton, expect to bid to operate for a number of these new licences." Michael Riddy, finance direc- tor at Stanley which was bought by resort casino specialist Genting last year, said: “A super- casino is great news for Man- chester as it will act as a catalyst for widespread regeneration in the area. I think a standalone UK casino operator might strug- gle to compete against bidders from say, the US, but our posi- tion now as part of a multi- national group is a very strong one. Genting recently won a US$ 5.8bn casino project in Sin- gapore so the merger with our- selves is a good combination.” It has also emerged that the Casino Advisory Panel, which selected Manchester, will not be disbanded because minis- ters fear there could be a suc- cessful legal challenge from one of the losing bidders. Certainly Blackpool is refus- ing to accept defeat in its failed bid to land the country’s first super-sized casino and is receiv- ing support from within the House of Commons. Sixty-six MPs have signed a Commons


Early Day Motion tabled by the Fylde coast's four representa- tives in the Houses of Parlia- ment. The support includes three MPs from Manchester who believe that the seaside resort is in greater need to the regeneration boost than their own city. Over 6,000 have put their name to local paper The Gazette's crusade which calls on Tessa Jowell to reconsider Blackpool being overlooked. Steve Weaver, chief executive


of Blackpool Council, said the town had "no other realistic alternatives" for regeneration. "We are surprised and hugely disappointed by the panel's rec- ommendation but we are not giving up,” he said. “The decision that the panel is proposing is an enormous missed opportunity for Blackpool to become a world-class resort destination. A regional casino would be a cata- lyst for substantial change in Blackpool. Of all the other loca-


tions on the regional casino shortlist, Blackpool has no other realistic alternatives for regener- ation," he said. “The future of the town now looks far more uncer- tain, with no easy answers." Roy Fisher, the leader of Black- pool Council, added: "We are one of the most deprived communi- ties in the north west. I believe the regeneration that would have been brought about would have raised us out of that deprivation. We believe Blackpool's case was very, very strong; for us it was the cake, for Manchester it was the icing on the cake."


The disappointment was


also felt in London. Green- wich's Chamber of Commerce leader Steve Nelson said he was ‘absolutely flabbergasted and very disappointed.’ "I’m disappointed for the thousands of people who won't get the jobs that the casino would have brought. I'm disap- pointed that the hotels that were


Manchester, seen here celebrating the 2002


Commonwealth Games, is the unexpected winner of the UK’s super casino race. The groundbreaking venue is almost certain to be located in Sport City, which hosted the games.


going to be built, aren't going to be built,” he said. “I'm disap- pointed for all those tourists who won't be able to stay in Greenwich. I really do think that as much as Greenwich needed the casino, the casino needed Greenwich to be a real success." Whilst the losers in the race


ref lect on their disappoint- ment, the operator focus will now shine on Manchester. Whether it is the Sun City of Manchester, remains to be seen. Harrah’s will claim a Caesar’s Palace would not look out of place at Sport City but there will be many, many plans put forward in the fight to operate the UK’s new age casino.


London’s Burning: Latest products to melt the ICE


ICE2007REPORT21


The official publication of EELEX


Mod cons: Duisburg opens as Germany’s most modern


EUROPEANNEWS8


Dutch monopoly secure for the moment


oneforall THE NETHERLANDS


The Dutch Council of State has rung the final bell on any hopes of the breaking the casino gambling monopoly operated by Holland Casino. The decision came on 14


March as the Council refused a request by the Dutch company CFR working in partnership with French operator Tran- chant, for an operating licence in the Netherlands, in the town of Bergen op Zoom in south west of the country. The Council’s decision is


controversial, not least because in its own judgement, it could infringe EU law - not only competition law but also the hotly contested issue of whether gambling, like other services, may be offered by any competent operator from within the EU. At present, the European authorities feel that gambling is an issue that should remain within the com- petence of each member state but that public protection is the only legal justification for continued state monopolies. This is the line that the Council of State took: “The Netherlands has deliberately opted for a single licence holder in its desire to protect the consumer, combat ille- gality and criminality, and reduce gambling,” said Sabine Heijstek, spokes- woman for the council. The decision overturns the ruling of a lower court in December 2005, which said that the state had failed to prove the need for a monopoly and that it was therefore illegal. It is not only CFR and Tran- chant that will be reading the small print of the judgement: the American operator Harrah’s, which has several ambitions for operations on this side of the Atlantic, hopes to open a casino in Maas- tricht. The decision repre- sents a significant obstacle. The Council of State’s judgement cannot be chal- lenged in the Netherlands: any further moves will have to be made through the European Court of Justice.


No more Swiss casinos for at least three years


hardcheese SWITZERLAND


Switzerland’s casino laws will not be reviewed until 2010 at the earliest, the Federal Council has at long last announced after receiving a much-delayed report from the Federal Casino Commission (FCC). The news, which has disap- pointed many existing and potential operators, came on 9 March, fully six months after the original review date of September 2006. The Federal Council believes that the impact of the legislation, which became law in 2000 and saw the first casinos open in 2002, cannot yet be prop- erly measured. From an origi- nal 21 casinos, 19 have made it through with varying degrees of success.


In making this announce- ment, the Council accepted in its entirety the report by the FCC, which concluded that the market in Switzerland was all but saturated. The Commission is as yet to formulate any perti-


nent recommendations in the matter of new licences or in the modification of existing ones be that reclassification or extension. The FCC seems to have based its decision not to decide on being unable to determine what impact the new legislation has had on problem gambling and what, if any, damaging consequences there may have been on society. That said, the Commission


believes that in large part, the aims of the legislation that were intended have been met, particularly in matters of player protection and crime preven- tion, specifically money laun- dering. The expectations in terms of tax and other rev- enues for the public good have been exceeded. There are certain areas that the Council would like exam- ined further and to that end it has asked the Federal Depart- ment of Justice and Police to examine, among other things, whether the ban on online gaming should be lifted and how that market could be reg-


ulated. It is also to take another look at the tax regime for casinos in order to maximise revenues for the state - which many believe is an invitation to suggest higher rates. In the


50 sent: Super tax for super casino


EUROPEANNEWS10


The Swiss authorities have decided not to decide on the future of its casino legislation despite pressure from many to tweak its already well-regarded provisions so that all parts of the country can benefit. Hugh Sorrill reports


Dutch courage: Holland Casino prepares for online launch


INTERVIEW28


meantime, however, the exist- ing tax relief programme will be extended for another year. The Department will also look at whether it would be worth bringing the terms of A and B licences closer together. The Federal Council has


now charged the FCC with preparing another set of rec- ommendations by the end of 2009.


The news has not gone


down well in Zürich, which conspicuously missed out on a licence for a casino within the city limits in the first round. The local authorities and entre- preneurs had felt confident that they would have a share in the bounty following a revision of the law and at least two proj- ects had reached advanced stages in anticipation. Local operator Swiss Casinos said: “In view of the proven demand for an attrac- tive gambling casino in the Canton of Zurich, the opportu- nity to satisfy the need for a Zurich casino and to bring about considerable increased income from spending at the gambling casino has thus been wasted. With the negative pre- liminary decision of the Federal Council, the Canton of Zurich continues to be refused the opportunity of obtaining its own casino. Already in the year 2000 the most densely popu- lated Swiss canton was missed when licences were granted. Commercial and economic studies show that a casino in the Canton of Zurich could count on a high visitor poten- tial and annual increased profits in two figure millions would go to the AHV through the gambling casino taxes. The decision of the Federal Council


is even more regrettable for not allowing any new licences for another three years.” The Group said it would now


concentrate on the further devel- opment of its successful casino holdings in Bern, Pfäffikon, St. Gallen and Schaffhausen and is checking out expansion possi- bilities at home and abroad. Brigit Wehrli, director of city


development, said: “The deci- sion by the Federal Council is incomprehensible. The largest city in Switzerland should have a casino especially when there is such an interesting project on the table as that in the Old Stock Exchange. It is extremely important to have a casino operation, which would help to bring to life this venue. I do not believe that other casinos would be damaged by strong competition from one in Zürich. A casino in Zürich would attract new visitors. We are not giving up hope.” Fernando Mutti, who is the


project leader for Casino Zürich, is also trying to stay positive. “The Federal Council has not said no. The doors are still open and Casino Zürich still wants to walk through them in three years’ time.” The company has a little time in hand, if it can persuade the shareholders to continue to back the project in the mean time: it signed a 20-year lease for its location in the Old Stock Exchange in 2006. The moratorium is also


affecting the rival plan for the Sihlporte City Casino Zürich. According to press spokesman Peter Frei, the space in the old Co-Op City building cannot remain empty for three years and it was likely the project would now be dropped.


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The official publication of EELEX


Are you being served? All the latest from server- based gaming


PRODUCTFEATURE30


f casinos for cal age


The themes • Man before the discovery of writing • Pharaonic Egypt (Pictured) • The Middle East • The Greek World • Rome • West from 750 to 1,000 • The Mediterranean Middle East until 800


• The Western Middle Ages • The 15th Century in the • Eastern Mediterranean • The Pre Colombian Civilisations • The Renaissance • Birth of the modern States • The Century of enlightenment up to the capture of the Bastille


• The 19th Century & beginning of 20th • The Contemporary World • The Future


musical activities through concerts, operas, recording studios. The thematic con- cepts of the museums will be mythology and religions, civi- lizations, music art, craft and planetarium.


The most


emblematic buildings of world history will be repre- sented to scale and the most significant people in life size.” The various themes will be put out to tender with each potential operator applying for several themes in order of their preference. The whole site will be connected by a tram system. The whole project represents a total of


2,000 hectares with a theme park called Spy Land and a centre piece called the Agora tower acting as a huge sun dial on the central clock. Aragon, remotely located


midway between Madrid and Barcelona has a population of 1.2m inhabitants, spread over 47,000 km2. The region already has three casinos. Zaragoza, its capital, is the sixth largest city in Spain. Project backers point to numerous air routes, a large rail network and a real road transport hub as strategic links to the Atlantic and Mediter- ranean parts of Europe and as


key to attracting the 25m visi- tors expected each year. It remains to be seen whether uptake from casino owners will match the project’s ambition although a dozen operators are believed to have already lodged inter- est in the project, which would see them take on a 10- year licence with tax at 10 per cent. It also remains to be seen whether the educational appeal of such a project will appeal to enough families and gamblers to match its organ- iser’s predictions of bringing in almost double the footfall of Euro Disney in Paris.


Kiev considers closing door Uncertainty masks Ukraine New Year


EUROPEANNEWS8


Global Gaming Expose All the new games from G2e


G2eREPORT18


ICE’d Up New products to look out for at ICE


ICEPREVIEW54 Hungary to license giant new Budapest casino


pleasureisland HUNGARY


An island in the middle of the Danube in Budapest is to be home to Hungary’s newest and biggest casino, the Ministry of Finance has announced. The Ministry, with the agreement of the city council,


has released a concession tender for a 20-year casino licence on Hajógyári Island that will operate at least 100


gaming tables and at least 1,000 slot machines. The licence will cost the operator a minimum of 600m forints per year (about 2.2m euros).


This will be the first Category 1 casino to be given the go-ahead in Hungary. There are currently only five casinos in the country, all Category 2 together running 100 tables and just 170 slot machines in total, bringing in a combined annual turnover of about 9.5bn forints (37.5m euros).


The new casino will be the heart of other developments on the island, including hotels, entertainment and sports facilities that are expected to cost about 1bn euros. The partly wooded area is the home of a former shipyard and is also known as Old Buda island.


The exact details of the final concession will be determined by the city of Budapest: it will also receive a portion of the tax revenues generated by the casino.


French smoking ban to threaten casinos in decline


With over half of France’s 197 casinos in decline, the Casino de France association is concerned that the smoking ban set to be introduced in 2008 will wipe out those with the worst takings. Phil Martin reports.


ity of venues with Gross Gaming Revenues actually sliding at half of the 197 French casinos. Around 100 establishments experi- enced a decline in their finances and only 30, ten of which have been newly built, experienced a slight increase in activity.


nosmokewithfire FRANCE


The stagnation or survival of the French casino sector in 2007 will divide market analysts out there into three categories: pessimists, opti-


mists or realists. Revenues generated


reached new heights of 2.8bn euros, although with ten new casinos out there to add to the earnings, the increase masked something of a downturn at the major-


The optimists out there will highlight that the sector as a whole increased to 2.8bn euros equating to a 2.8 per cent increase, despite a diffi- cult year of trading which saw the introduction of iden- tification to enter any part of the casino and not just the table gaming rooms as in pre- vious years. These laws were balanced out with the ability to mix table games with their slot counterparts and also the removal of stamp duty, which in turn allowed casinos to abolish entry fees to the table gaming rooms. A spokesperson for the association Casinos De France said: “In this context, after a long period of con- stant decline, the recovery of GGR for table games is good news, but with this relatively small increase of 0.7 per cent - the GGR going from 171m euros last year to 183m this year - there is cause for cau- tious optimism. Of course, this progression is attributed to the removal of entrance fees and to the variety of games introduced as a result.” The approval of one such


game, Texas Hold ‘Em Poker, although not being the most profitable way to fill casino square footage, has allowed for the intro- duction of poker tourna- ments which is fuelling


attendance in casinos. “We can suppose that, at the end of this financial year, we’ll be able to get a complete feedback from poker being introduced in French casinos, assuming that all those interested in this game will have set up poker tables by October 2008,” the spokesperson added. Pessimists will focus on the plateauing of an indus- try which only a few years ago was producing double digit growth. Of the casinos around Lake Geneva, Divonne,


Annemasse,


Annecy and Evian, all made less money than last year with only the casino of Saint-Julien increasing its financial standing. Partouche recorded a


decline in slot revenues of 3.5 per cent despite operating


more machines than last year. Further problems will be encountered next year with the introduction of a smoking ban which will hit France as hard as it as hit anywhere. The Minister for Health, Roselyne Bach- elot, recently ruled that as from January 1, 2008, French casinos will be no smoking spaces. Casino directors at Saint-


Julien estimate that 60 per cent of their player base are smokers. If that is sympto- matic of the sector as a whole then the first few months of 2008 will take some coming to terms with. Certainly, Casinos de


France is extremely con- cerned about the forecasts for the next year’s gaming activity. The Union predicts that the smoking ban will


lead to a further decline of about 10 to 15 per cent in attendance, which will make life even tougher for the smallest or most indebted casinos. The spokesperson said: “Yet, casinos must invest to adjust their offers to their clients’ expectations with new games and new slot machines and face growing competition from other French casino operators such as illegal gambling websites.” According to Casinos de


France, table-games are already struggling to be profitable due to over taxa- tion. “The casino business really hopes that the tax system will be revised in order to promote the devel- opment of this job-creating activity,” it argued.


The official publication of EELEX


Aragon on Eight ops sign up with Gran Scala


EUROPEANNEWS2


Irish Ayes New laws touted for April


EUROPEANNEWS12


Raising the game


Ron Goudsmit talks up the ECA


INTERVIEW44 EUROPEANNEWS2


Gambling zone proposed in Southern Russia


A New Year, a new Prime Minister and a new gambling zone identified, has made for an interesting start to 2008 in Russia. Whilst Azov- City remains just a proposal, pinpointing the exact location of workable gambling zones is proving a difficult exercise with interest in them scarce. Phil Martin and Andrew Gellatly report on how there is still hope of a zone much closer to Moscow.


hintofchange RUSSIA


With the Russian casino sector clinging on to the hope that the presidential elections in March will blow a wind of change across Putin’s four gambling zone proposal, new Prime Minister Viktor Zubkov has closed in on where he thinks the Rostov/Krasnodar gambling zone should be. Zubkov has lent his own seal of approval that Azov- City should be set up in the Scherbinovsky district of Krasnodar area and the Azov district of Rostov region. Whilst there was always going to be a gambling zone in the Rostov/Krasnodar area, Zubkov’s proposal for Azov-City pushes the zone closer to Sochi, which is due to host the 2014 Winter Olympics. It would extend to 20,022 million sq meters, covering a portion of the Krasnodar area and the Rostov region in southern Russia. Under the current rules, as of July 1, 2009 casino operations will only be legal in the four zones proposed under Putin; namely the Kaliningrad region, the Altai Republic, the Primorie area and to the ter- ritory on the border of the Rostov region and the Krasnodar area. The suggestion of a less


remote zone has prompted hope within the industry that the new president might take a slightly different stance in order to make the zones more workable business models. The Russian Presidential election of 2008, scheduled to be held on March 2, is tipped to be a race between Dmitry Medvedev, a Kremlin- backed candidate supported by Putin, the candidates of the Communists and right- wing opposition, and nomi- nees from the liberal opposition. Ironically, with the market


distant, meaning the zone could not benefit from the new airports or road infra- structure that will be built with Olympic funding. There are still more ques-


The Superslots brand: Revenues are up 30 per cent following the closure of many street slot halls but the hope is still for a gambling zone closer to Moscow


cleansed of small, street level operations business has been brisk for Russia’s remaining casino operators in what is proving something of an Indian summer for them. With time running out for legal gambling in Russia’s cities, larger and more estab- lished operators have seen their revenues boosted as players migrate from estab- lishments forced to close or consolidate by the minimum capitalisation requirements of the new federal Law, which became effective last year. Storm International, the successful Moscow-based operator, has seen its turnover rise by 40 per cent in the past 12 months and its Superslots revenues expand by 30 per cent.


But with just 18 months to


go before the Russian gaming landscape is redrawn accord- ing to President Putin’s dra- conian 2006 federal law,


would-be investors are putting their next decisions on hold faced with this fresh and growing political uncer- tainty in the four new casino zones that are planned to host the industry’s next stage. So far, information has been scarce on investors willing to set up operation in the four originally proposed zones with even Zubkov’s Azov City attracting little immediate attention. It is becoming clear that,


operators will not have any- thing like the time they need to build facilities and be ready for 2009, and nor will the infrastructure be in place to support the new casinos. Alexander Tkachyov, the


Governor of the Krasnodar region, has talked of a gov- ernment plan to allot 18bn rubles before 2012, but he also indicated that might have to be underwritten by gambling tax revenues. A better bet might be the city of Sochi, further south in the Rostov region. “I would consider building a hotel casino in Sochi in order to have a presence in Russia in case the government


changes their mind in future,” Michael Boettcher, CEO of Storm International, said. But while Sochi is heading


for its own mini investment boom thanks to the 2014 Winter Olympics, so far gam- bling has not been included and the border of the new Azov City casino zone is


tions arising with regards to the remaining three gaming zones. No decrees have yet been signed on Kaliningrad, Altay and Primorie regions and rumours of opposition from local groups are growing. “Both Altai and Kaliningrad have both declined to host casino zones,” said Boettcher. “Prime Minister Zubkhov’s state- ment included the names of the other three zones but it is clear that two of those may not go ahead. That means they will need to establish two further zones and one of those may , in the end, be closer to Moscow.” Cracks are beginning to appear in the rhetoric sur- rounding the new zones. While local politicians talk up the investment potential of the nascent gambling zones,


opponents of


expanded gambling see prob- lems. “The problem is in the


status of the land plots - they are agricultural lands. And the terms of taking the lands out of this category have not been defined so far,” said an official in Kaliningrad region. Even with growing expec- tations that the casino zone scheme may yet be redrawn to suit economic realities, existing operators are facing up to the reality that business will not be the same next year. Boettcher added; “The


reality is that this was an ill- conceived idea, with no thought given to the ramifi- cations of over half a million lost jobs and all that implies. Illegal casinos will sprout up the day after casinos are closed and millions in tax revenues will be lost. Storm is already pursuing other opportunities around the world but it is sad that a busi- ness that took me 16 years to establish in Russia will now end and sadder still that most of our over 5,000 employees will lose their careers and their formerly promising futures, in what was a US$7bn a year industry and climbing.”


EUROPEANNEWS10 ICE expands global reach


ICEdup UNITED KINGDOM


London’s International Casino Exhibition (ICE) has continued its record of sustained growth for the eighth consecutive year as organisers Clarion Gaming revealed the final attendance at the 2008 show reached an all-time high of 12,972. The figure, comprising 10,111 unique ICE-dedicated visitors and a further 2,861 in the co-located remote gaming show ICEi, represents an annual growth of 7.9 per cent. Cross-over figures also reveal a further 6,960


buyers from the co-located ATEI (soft gaming expo) visited ICE 2008, boosting the gross atten- dance to 19,932. One of the most remarkable statistics from the show was the geographical spread: no fewer than 115 national territories were represented by visi- tors, five more than the previous year, with five juris- dictions - the Marshall Islands, Nicaragua, Rwanda, Tuvalu and US Minor Outlying Islands - all repre- sented for the very first time. By including ATEI cross-overs, visitors on the show floor combined to represent a global audience of some 127 territories. International and UK-based visitor levels both


EXHIBITIONREVIEW22


grew, with the non-UK contingent up 1.5 per cent to 7,337 and domestic visitor numbers rising 18.2 per cent to 5,526. Growth was recorded across several geographi-


cal regions, most notably the Far East/South East Asia whose visitor numbers increased by 18.8 per cent year-on-year from 231 to 284. Middle Eastern and North African representation grew by 11.2 per cent to 198, with continental Europe and the CIS up 2.4 per cent to 5,663 and Southern & Central Africa up 1.5 per cent to 134. Attendance levels rose across more than 58 countries with 29 new national records set. Karen Cooke, Clarion Gaming’s head of exhi- bitions, said: “ICE and ICEi continue to demon- strate their huge appeal to operators from every jurisdiction in the world, whether land-, cruise- or


A leaked letter has all but ended the speculation surrounding the UK’s super casino. In the face of the government’s continual refusal to make an official comment, Phil Martin reports on the reaction from opposition ministers and the international casino industry.


Leaked letter sparks fury over super-sized fiasco


notsosuper UNITED KINGDOM


British Prime Minister Gordon Brown has been accused of turning the gov- ernment’s gambling policy into a ‘dog’s breakfast’ fol- lowing confirmation that ministers will finally scrap plans for the UK’s super- casino.


The axe fell on the Las


Vegas casino sized proposal within days of Brown becom- ing PM last summer and was seen as a symbolic shun to what had gone before under outgoing Prime Minister Tony Blair. However, no offi- cial comment has been given with government seemingly hiding behind reviews to find alternative ways to offer regeneration to Manchester. Recent reports in the media have declared that letters sent out to Holyrood and the Welsh Assembly indi- cated that the biggest of the casinos created under the 2005 Gambling Act would never be built. The govern- ment will, though, give the formal go-ahead to the 16 small and large licenses after parliament returns from half- term recess. The letter sparked mass criticism from


opposition parties, despite their involvement in the derailing of the super pro- posal, as well as from inter- national operators. Speaking to the Financial


Times, Don Foster, Liberal Democrat culture spokesman, said: “It’s a com- plete mess. They’ve dillied, they’ve dallied, they’ve created all sorts of problems for all sorts of people. And they’ve ended up with a dog’s breakfast. Gordon Brown was a senior and key figure in a government that originally proposed there should be an unfettered number of super-casinos, before proceeding to go down to [a maximum of] eight and then one. Where was Gordon Brown when all these debates were taking place?” Foster added:


“They


repeatedly ignored those of us who expressed concern on this issue, led councils on a merry dance and have now performed a complete U- turn. We’re surely entitled to know why Gordon Brown failed to mention any con- cerns about the impact these casinos could have when he was voting in favour of them last year. “Both opposition


parties had concerns about the super-casino, but were happy to see the eight small and large casinos go ahead. Why did it take such a delay and a further review for the government to concede we were right?” The Tories also slammed the apparent lack of cohe- sion. “The government’s flip- f lops on this have left Manchester’s regeneration plans in tatters and the gam- bling industry in turmoil,” Jeremy Hunt, shadow culture secretary, said. “Is the govern- ment for casinos or against them? No one is left any the wiser by this news.”


Having spent millions of


dollars and man hours plot- ting entry points and poten- tial projects, Las Vegas Sands, which is spending billions of dollars to develop a similar sort of property in Singa- pore, pulled no punches in its assessment of the UK. “We spent a lot of time with the folks there (in Britain), trying to figure out how to do a larger style of gaming,”


said William


Weidner, COO of Las Vegas Sands, at the Reuters Travel and Leisure Summit in Los Angeles. “That didn’t work. Mr Brown pretty well shut


that down. The home team won. The operators there in the UK worked the system very well, so they ended up with what they wanted, what I would consider to be sub- optimal, lousy little casinos that kept them in the game and kept us out,”


said


Weidner. Weidner doesn’t believe the 12 small and large licenses Continued on page 2 >


British Prime Minister Gordon Brown


remotely-based. Much of the credit for the attractive powers of the show must go to the exhibitors who year-on-year continue to surpass themselves in the depth and breadth of their innovative displays.” She added: “We will continue to work in close partnership with all of our stakeholders, exhibitors and visitors alike, to ensure that 2009 is better still and we look forward in particular to the input into the show’s future development by the European Casino Association.” Next year’s ICE/ICEi takes place at the Earls Court Exhibition Centre, London, UK on 27-29 January 2009.


ICE2008Report Page 20


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ICE ICE Baby. All the latest products from the London show


Sweet Sixteen: UK to proceed with some new style licences


EUROPEANNEWS6


The Eye of the Storm: Russian operator to open in Costa Rica


EUROPEANNEWS12


Lincence to Thrill: But Dusk Till Dawn won't ever have slots


INTERVIEW22


Thai’s strengthen Far Eastern promise


Asia is fast becoming the boom region in casino gaming. Following the much publicised GGR of Macau and the closely fought tender processes of Singapore, many more regions are looking to get involved. Phil Martin reports on how Thailand and Taiwan are the latest.


asianstronghold THAILAND


The declaration this month from incoming Thai prime minister Samak Sundaravej that the country is to legalise gambling and develop five casinos should leave no doubt that the Far East is cementing itself as the world’s biggest developing casino sector. Sundaravej who is currently making provisions for five casinos aimed at both domes- tic and foreign tourists in the country’s holiday regions of Phuket, Pattaya, Khon Kaen, Hat Yai and Chiang Mai, is facing up to the stark reality that it is more prudent to control and tax any gambling spend, rather than to let it slip into another country.


Although casinos are illegal


in Thailand, this has not pre- vented Thais from swarming to neighbouring Cambodia and Myanmar where casinos have boomed along the border with Thailand. Sundaravej, who took office last month, mentioned in his weekly radio broadcast that he supported the concept of legalised gambling as in Macau and Malaysia, which both host thriving casino industries. “In the beginning, we should start with tourist areas like Pattaya, Phuket, Khon Kaen, Chiang Mai and Hat Yai,” he told reporters in the capital Bangkok. We have to seriously study the idea of how to open legal casinos. This way, the illegal dens and private casinos will close down. If people want to gamble they can come here, so the police won’t have to crack down on illegal ones. I think it’s time we made their existence official.”


Casino introduction has political support. “I personally


agree with the idea since our neighboring countries also have casinos,” Justice Minister Sompong Amornwiwat said. “But in Thailand, we are still attached to traditional values that it is inappropriate since we are a Buddhist society.” But only a third of the Thai


public support the new prime minister’s plans to introduce casinos to the Buddhist kingdom, in a recent survey. Just over 56 per cent of people polled by Bangkok’s Assump- tion University said they did not want to see casinos on Thai soil. Samak and other propo- nents suggest high entrance fees and other measures would ensure that Thais who cannot afford to gamble would be kept out. Over in nearby Taiwan casinos had been all but blown out of the water last Decem- ber when the national legisla- ture rejected a bill to introduce the gaming venues but the topic gained new momentum last month when Taiwan’s two major presidential candidates both said they would support passage of a gaming bill. Jonathan Galaviz, a partner


in Las Vegas-based Globalysis, said: “If Taiwan does legalise casino gaming, it should only be done in the context of large- scale multibillion-dollar inte- grated resort developments where casino gaming is just one component of a larger enter- tainment offering. Taiwan, like many other countries in Asia, sees tourism visitation enhancement as an important component of its future eco- nomic growth profile.” Amazing Holdings is hoping


to develop a 600-room hotel with a 130,000-square-foot casino on Taiwan’s island of Penghu. COO Carl Burger said of Taiwan’s chances: “Macau is


x


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EUROPEANNEWS8


Multi-National Ritzio right on track


INTERVIEW22


WheelerDealer Euro Dealer Championship takes place in Venice FEATUREPAGE24


Four political Bills aiming to rein Ukraine back in


With four bills to restrict the growth of gambling being submitted to the Ukrainian government so far this year, change is on the horizon with everything from a ban on new openings, restricting gambling to remote zones and closing the door on the industry altogether, being brought to the political table. Phil Martin reports.


footingthebill UKRAINE


With political concern that gambling is spiralling out of control, Ukrainian MPs from four different parties have pre- sented four far reaching bills to parliament, all of which would spell a period of heavy crack- down on the sector. There is little doubt it is time


maxed out and Singapore has already decided their two licenses. The big boys are looking at Japan and Korea. Taiwan is sort of an undiscov- ered option.”


Macau has led the way as the main driving force behind Asia’s move to introducing gaming floors. Currently there are 28 venues outpacing even the revenues of the Las Vegas Strip.


Macau’s gaming


revenue for 2008 is expected to see a double-digit increase reaching the 100bn patacas (over US$10bn). Last year gross gaming


revenue increased by 46.6 per cent to 83bn patacas (US$10.4bn). The former Por- tuguese colony, the only place in China where gam- bling is allowed, has attracted more than $20bn of invest- ment in the past few years as Las Vegas operators have entered the market. But it isn’t alone. Thailand’s


southern neighbour Malaysia also hosts major casinos and Singapore is building two casino resorts, one to open next year and the other by 2010. The Philippines is tipped for heavy growth, Taiwan is close to legalising casinos, and even the Japanese are looking to introduce legislation paving the way for casino introduc- tion. Casinos are thriving in


lesser known countries such as Burma and Nepal with a total of 12 countries in Asia already having legalised casino style gambling. With the opening of three casinos last year, South Korea now has total of 17 casinos, one of the largest number of casinos in Asia. The country plans to expand its gaming industry by competing with Macau. “If 11 foreigners visit a casino, they will spend the equivalent of one exported


car,” said one South Korean newspaper in its editorial. A report by financial con- sultants PricewaterhouseC- oopers predicts that gambling revenue in the Asia-Pacific region would grow to US$30.3bn (19.9bn euros) in 2011 from US$14.6bn in 2006, making it the world’s second largest casino market after the United States. “The regulated gaming


industry will grow by 14 per cent a year from 2005-2010 -


Eastern promise: Excited customers flood into the Venetian Macau on opening night. More and more Far Eastern governments want a slice of their gambling pie


the fastest pace in the world,” predicted the analyst, whilst according to an Asian Devel- opment Bank study, the rise of middle-class Asians from poverty to aff luence will create millions of consumers with cash to spend on enter- tainment by 2020.


to regulate. The Department of the Interior has brought to light 800 violations of unlicensed and untaxed machines so far this year. And according to a Kyiv Institute of Sociology poll last Autumn, 85 per cent of Ukrainians want stricter regula- tions governing the country’s gambling venues.


But the legal industry is arguing that the proposals go too far in reining it back. Two of the Bills are based on the Russian concept of zoning, forcing casinos and slot halls into remote urban areas. Another calls for minimum size limitations to be called into play, both in terms of floor space and machine numbers. This bill also suggests that there should be a freeze on the casino business opening any new ventures throughout Ukraine for five years with a similar ban imposed on new slot halls for three years. The remaining bill is the most


draconian, calling for a com- plete ban on gaming activity in the capital of Kiev, although its discriminatory elements in highlighting just one city, are likely to prove too much of a hurdle for its approval. One of the zonal bills pro- posed on February 20 offers specific proposals for the first time, designating six months for cities to create the zones and for casinos to be closed down everywhere else within a year. It places the responsibility


of relocating on the gaming operators, while at the same


time requiring that outlets have at least 10 slot machines. The bill outlaws single slot opera- tions and also mini slot halls in underpasses, transportation stations, marketplaces and edu- cational institutions. Ukraine operators have


already threatened to quit the industry if the concept of zoning is introduced. One Kiev operator said: “I’ll quit this business, as will many of my colleagues as it just won’t bring enough profit any more. To implement such ideas costs crazy money. Where will it come from?” However, politicians argue that legal gaming operators would benefit from such a measure because the industry and its competition would be regulated in these zones and the licensing process will be simplified. Oksana Bilozir, an Our Ukraine-People’s Self Defense parliamentary faction MP who pieced together the draft bill described it as a ‘step forward for legal gaming opera- tors that have invested into developing their business.’ The Ukraine Parliamentary Committee of Regulatory Pol- itics has been charged with assessing the measures and examining further evidence, with the intention of writing a single draft law on gambling over the next four months. However, with seven drafts prepared last year, and the par- liament having passing nothing, some operators are sceptical/hopeful that the bills will see the light of day. Iryna Smirnova, head of


the law department at Alliance Games and Enter- tainment, one of the biggest legal Ukrainian gaming oper- ators, said she doubted the bills would find much support with the lawmakers. She said Ukraine was cur-


rently one of the markets that exiled Russian operators were expanding in.


About half of the $100m annual legal gaming business in the Kiev region is Ukrainian- owned whilst the remaining foreign owned half is over- whelmingly Russian. The Ukraine market cur-


rently provides business for 1,800 legal gaming companies, according to the Ukrainian Asso- ciation of Gaming Industry Rep- resentatives (UAGIR), although the legal entities only represent about 30 to 40 per cent of the total market. The rest are illegal, which is why the government is reviewing regulation. With slot machine average


daily profit placed at US$200 to $500, the industry brought $50m in revenues to the Kyiv budget in 2006, but this could be much more if illegal opera- tions were dragged into the legitimate world. Smirnova warned that instead of improving the situa- tion, establishing the zones would cause even more gaming operators underground. Con- stantine Vaschenko, the deputy head of the State Committee on Entrepreneurship,


agreed:


“Such zoning would not affect the illegal sector at all because those who break the law now will, equally, not be constrained in the future,” he said. UAGIR representatives said,


however, that they were not against relocating gambling beyond Kiev’s city limits, but claim it would be almost impos- sible because of the large invest- ment that would be required for new infrastructure and a lack of space to build. Opera- tors would need three to five years to relocate, not the year suggested in the legislation, according to Serhiy Tretiakov, chairman of the UAGIR. Tretiakov questioned both


what would motivate city based players to choose legal parlours that they would have to travel to over illegal ones on their doorstep and also where the government would find land


amendments in 2006 increased the reach of the licensing process they also created a disparity in licensing types and worsened the prob- lems of double licensing by both federal and local govern- ments. Currently, in the Ukraine a Federal gaming license costs 150,000 euros while a regional license costs only 250 to 600 Ukraine Hryvna (35 to 80 euros). “With a dearth of prevalence


near cities for those zones. And with one eye on EU


membership, the government has opted to begin a wider review of its options with a high-level hearing that covered money laundering, player pro- tection and the licensing of online gambling across many international jurisdictions. Natalia Karolevskaya, the head of the Parliamentary Com- mittee of Regulatory Politics, revealed that as recently as 2006 more than 40 per cent of the Ukraine’s 200,000 slot machines were completely unli- censed and unregistered by the state committee on entrepre- neurship, and the size of the grey slot market is still largely unknown. She described


A leading light in Kiev casinos: these are however uncertain times for Ukraine operations


Ukraine as being ‘flooded with semi-legal businesses with low quality of service’ saying slots were ‘everywhere, in stores and shops and cafes’ with access to them by children unlimited. But there is a degree of


comfort for big operators in the words of Karolevskaya, who is recommending that the new law should be drafted with ‘larger, well funded business entities in mind.’ Andrew Gellatly of Gam-


blingCompliance.com, who attended a hearing on the pro- posals, highlighted one of the main problems saying: “While


research available, the only indi- cation of the actual size of the Ukraine industry is the number of licenses issued and the number of machine patents reg- istered. More than 6,000 opera- tors have regional licenses but just 164 federal licenses have been issued, and a completely unlicensed sector, where busi- nesses operate under the radar of regional administrators, also proliferates,” he added.


On the plus side though, with EU membership high on the list of national priorities, the Ukraine government says it will examine not just the reg- ulatory example of its neigh- bour Russia but also of EU jurisdictions that have recently amended their own licensing and regulatory regimes. The Committee’s working


group hopes to have a new draft law prepared by Septem- ber of this year.


Media Frenzy The truth behind the Gran Scala news reports


EUROPEANNEWS2


Poker Face How Steve Lipscomb


helped deal the poker boom


INTERVIEW24


Open All Hours Busy Belgrade becoming a 24 hour operation


FEATUREPAGE28


Time called on Macau development boom


Having bolted from the stable marked new developments back in 2004, Macau’s growth is now being reined back by a series of government proposals which, as Phil Martin reports, have been welcomed by most involved in the boom time.


growingpains CHINA


In a move which shocked and later buoyed those in the existing market, Macau’s gov- ernment is introducing a series of new initiatives to better control the future development of the Chinese gambling destination. Edmund Ho, chief execu-


tive of the Chinese Special Administrative Region, said his government will freeze the number of licences and sub-concessions at six ‘for the foreseeable future’ and reject any land allocations for new gaming develop- ments as well as restricting expansion at existing casinos. Although there will be no more land allocations for new casino development, the government will ‘con- tinue to work with those who have begun construc- tion or negotiations.’ Any increases in the number of gaming tables and slot machines at existing casinos will be ‘tightly restrict- ed’ pending government review of casino industry policy, whilst junket commis- sions, deemed by many to be so high that they could blow the house down, are to be ‘reg- ulated in accordance with law.’ Although the meat still has to be added to the legisla- tive bones, a government licensing requirement for ‘all high-ranking casino execu-


The shock news was wel- comed by politicians, opera- tors and analysts alike. Au Kam-san, a pro-democracy legislator, said: “This move reflects the Macau govern- ment’s concerns, and proba- bly also Beijing’s, about the side-effects of the gambling boom. The gaming industry’s explosive growth has already exceeded the capacity of Macau’s limited resources.” Stanley Ho, Macau gaming


magnate and director of leading operator Sociedade de Jogos de Macau, said: “I think this is excellent news for Macau in general. I am fully in favour of such an action and I think not only that, we must all agree that in Macau now we have far too many casinos. There is no point opening up more casinos. It is high time to take care of the gaming sector’s problems. It is no good to have all six operators always fighting together using cut throat measures of getting customers into their casino, this is not correct because there is enough room for all six of us. There is no need for this monkey business,” he added, no doubt referring to the rising costs of junket operations.


Since ending Ho’s 40 year monopoly in 2002, Macau’s 11 casinos have become 29 including two described as the world’s biggest in the Venetian and Sands Macau. In the first quarter of this year gaming revenues increased more than 60 per cent year on year to $3.72bn, more than the Las Vegas Strip and Atlantic City combined. The government is


believed to have become concerned about ‘revenue sharing’ or ‘franchise’ agree- ments, under which outside parties ‘piggy-backed’ exist- ing licences belonging to companies already in the market. Ho’s Sociedade de Jogos de Macau had spear- headed such arrangements, which saw them operating casinos for partners who held most of the project’s investment risk. The government had


awarded three original con- cession holders; Sociedade de Jogos de Macau (SJM), Galaxy Casino and Wynn Resorts, followed by three sub-concession holders in Las Vegas Sands, Melco and MGM Grand Paradise. In January 2007, Sir Richard Branson said his Virgin Group wanted to build a


$3bn Macau gaming resort in co-junction with an exist- ing operator. But there were


also


worries that the growth was stretching Macau too far. When the Venetian Macao, opened in August, its 15,000 employees accounted for five per cent of Macau’s workforce. Perhaps the pres- idential comments of Las Vegas Sands’ William Weidner, that the Venetian was ‘the casino that ate Macau’ struck a cord. Whatever the reasons for


the move, analysts see the freeze as being highly posi- tive as it will stop unneeded competition and will drive profitability per table up. Indeed, share prices of both US and Hong Kong-listed companies with casino assets in Macau surged fol- lowing the news. As well as eroding uncer-


tainty over increased levels of competition from fresh concessions, the proposals could ease the labour squeeze and the pressure on transportation infrastruc- ture and even protect those resort


business models


which are looking to deviate from gambling centric income.


Plans falter for Russian gambling zones


A new report shows that little or no progress has been made in establishing the four areas where gambling may legally take place in Russia from July 2009, either in terms of viable business plans or even infrastructure. Hugh Sorrill reports.


fallingshort RUSSIA


When the remaining casinos and slot halls in Russia close in one year’s time, there will be no proper provision for legal gaming at all in the country. That is the view of some of


tives’ has also been touted, as well as a prohibition on any gaming company involve- ment in other sectors, espe- cially public services such as transport. In delivering the news Edmond Ho said: “We have to ensure our continued eco- nomic growth - but also resolve the new problems that have arisen as a result.” Precisely what prompted


the move is not known, although there have been plenty of potential annoy- ances for the SAR Govern- ment in recent times


Lucky lotus: Stanley Ho’s Grand Waldo could benefit like all existing casinos in Macau from proposals to prevent new projects


including the piggy backing of concessions, a possible credit bubble, rising devel- opment costs, pressures on infrastructure and local labour constraints and the recent problems generated by surging costs with high roller junkets, which account for 70 per cent of Macau’s gaming revenues but are eating into profit margins.


Russia’s leading industry figures as well as analysts. Scep- ticism about the law pushing gambling into four outlying regions has been rife since its publication. Now a new report by the leading manufacturer and supplier Unicum Gaming shows that progress in all four zones has stalled with prom- ised funding of $4bn (€2.56bn) from Federal government to improve the infrastructure so far failing to materialise. Local authorities and investors are expected to find a further $26bn (€16.75bn) to complete the projects.


“In spite of the fact that all casinos must be relocated in one year, not one of the four zones is constructed, not to mention the lack of any infra- structure,” said the report. The four zones are Azov City in the Rostov region in south- ern Russia, Yantarny Bereg in the Russian Baltic enclave of Kaliningrad, Sibirskaya Moneta in the Altai region border Kaza- khstan and Primorye on Russky Island near Vladivostok. On the face of it, Azov City


might benefit from the Winter Olympics due to take place in the Black Sea city of Sochi in 2014 but there are at least 500km between the two and a range of mountains. It is almost 100km away from its nearest large town, Rostov on Don. “At the moment there is nothing but an empty field and a coastline,” said the Unicum Gaming report. “No investor has begun construction of any- thing. According to the CEO of the Investment Development Agency, Igor Burakov, its param- eters, investors and developers have not been identified yet.” Proposals for Yantarny Bereg (Amber Shore) in Kaliningrad have been put forward by IdeAttack American corpora- tion, which calls for $20bn (€12.89bn) of investment. Regional government repre- sentatives say that interest has been shown by Russian com- panies as well as by firms from the US, South Africa and Europe. Applications will not be accepted until a project is confirmed however. Competi- tion is the principal issue for Yantarny Bereg, with strong and developing casino provi- sion in Poland, Lithuania and Belarus.


The Sibirskaya Moneta -


Siberian Coin - project in Altai has seen draft architectural plans for what might be built. Despite protestations by local


authorities that the world’s largest gaming companies were “elbowing one another” in order to be able to invest in the region, none has yet admit- ted to it.


“By 2009 a new federal


highway of 100km would have to be constructed to take gam- blers from Biisk airport to the new gaming zone. For the time being there are no power lines or gas lines or utilities,” the report said. Analysts believe of all the


zones, Altai has the least chance of success given its location away from almost every poten- tial market on virgin territory a sparsely populated area. Primorye is generally con-


sidered to have the best chance given its proximity to China, from where there are already a lot of visitors, and the fact that the APEC meeting will take place in Vladivostok in 2012, which will help to improve the infrastructure. Local represen- tatives believe there is poten- tial market of 30m Chinese who spend $21bn (€13.53bn) going abroad every year, with other important possibilities coming from Japan and South Korea. However, a Storm Interna- tional spokesman said: “The Primorsky region will not be that popular with Chinese gam- blers since the Chinese govern- ment is taking steps to prevent money leakage from the


Russky Island off Vladivistok where the Primorye gaming zone is scheduled to be located


country. It is too expensive to fly to Altai and Kaliningrad is on the border with countries where the gaming business is


already actively developing.” The Unicum Gaming report


concludes: “For the time being, Russian casino operators are


not hurrying to move and foreign investors are tending to wait and see what happens rather than participate.”


Licence to Dream: Licence awarded for Hungarian super casino EUROPEANNEWS8


Vegas recovery in two years


creditdue THE WORLD


BY PHIL MARTIN


Nevada and Atlantic City will have to ride the storm of the credit crunch, rising fuel prices and the tough economy for two to three years before revenues begin to revive themselves. According to a PricewaterhouseCoopers report the


turnaround for Nevada will begin in 2010 with revenues expected to reach $14.8bn(€9.54bn) in 2012 from $12.8bn


Biggest of the big: Sizing up the Venetian Macao


FEATURE20


(€8.25bn) in 2007, an increase of 2.9 per cent per year. Atlantic City may have to wait a little longer with predic- tions that it will generate $4.74bn (€3.06bn) in 2012, down from $4.94bn (€3.18bn) in 2007. Gross Gambling Revenue in the United States will stay well ahead of other regions, increasing at four per cent annually from $60.3bn (€38.85bn) in 2007 to $73.3bn (€47.23) in 2012, the report said. Mary Lynn Palenik of PricewaterhouseCoopers said the mortgage crisis and high gas and travel prices will lead to declines in 2008 and 2009. “It translates into fewer US trav- ellers,” Palenik said, explaining that the input from interna- tional travellers wouldn’t pick up the decline in domestic travel. Overall, global gambling revenue is estimated to surpass


$155bn (€99.88bn) in 2012 after increasing at an annual rate of 6.5 per cent per year.


Roaring Tiger: G2eAsia takes centre stage in Macau


MACAUREPORT22 Gambling revenue is expected to rise to nearly $114bn


(€73.45bn) in 2007 because of new casinos and upgrades to existing ones around the world with the Asia Pacific region being the world’s fastest growing gambling region. New projects in Macau, Singapore and Thailand will help generate increases of 15.2 per cent annually. Revenue from the Asia Pacific region will hit $37.2bn (€24.4bn) in 2012 com- pared with $18.3bn (€11.79bn) in 2007.


New casinos as well as licences for online gambling and sports betting in the region encompassing Europe, the Middle East and Africa are expected to drive revenues in the region up 4.9 per cent a year from $30.3bn (€19.52bn) in 2007 to $38.4bn (€24.74bn) in 2012. Gambling revenue in Canada is seen to be rising to $6.2bn (€4bn) from $4.6bn (€2.96bn), while in Latin America revenues are expected to climb to $514m (€331m) from $297m (€191m).


www.CasinoReview-Online.com • March 2009 • 077


Capital Expenditure. Record business at IGE


EXHIBITION22


Sands Of Time Wiedener parts company with Sands


NEWS2


Beating The Crunch IGT’s plan to beat the recession


INTERVIEW24


www.CasinoReview-Online.com • April 2009 • 078


Community Chest Uniting play at the slots


FEATURE28


MGM Mirage warns of possible defaults


stressedstates UNITED STATES


Slot machines at the Trump Taj Mahal in Atlantic City


h p n d t I


y


e n s


e e - , t -


holder, has languished. The Trump Organization’s portfo- lio of residential, commercial, hotel, and golf properties has expanded all over the world, while Trump Entertainment Resorts has yet to diversify outside of Atlantic City. “I have watched the col- lapse in enterprise value of the Atlantic City Tropicana, where bondholders’ values have been reduced to almost nothing,” he added. “I do not want to take part in a similar fiasco here.”


As a destination, Atlantic City has suffered terribly since the start of the recession with


GGR dropping a record 7.6 per cent in 2008. The company missed a $53m interest payment at the begin- ning of December, and an extended period to make a defaulted coupon payment ended in February. Bond holders would have been angered by the company’s overnight deci- sion to file for bankruptcy protection as it prevented them from presenting an involuntary petition. Only three quarters of operation have yielded a profit for the company since it emerged from bankruptcy in May 2005.


The market’s valuation of the company fell from its high of $842m in August 2005 to $7.3m on Friday February 13 when Trump resigned. There remains an option to sell but whether investors would offer anything near the asking price remains to be seen. Financier Carl Icahn has


already revealed he would be willing to make an offer as a ‘stalking horse’ which would see him offer a minimum amount in a bankruptcy court auction which would be accepted if no other party’s bid exceeds it.


Austria wins back to back awards


n Empire Events, in January. The London awards cere- mony also saw Wynn Resorts and Melco Enter- tainment crowned best operators in the United States and Australasia respectively, whilst TCS John Huxley was named


Casino Equipment Supplier of the year and IGT picked up the title of Slot Manufac- turer. The ceremony, which raised money for charities Children With Leukaemia and CARE, proved the perfect prelude to a busy week in London which saw


many exhibitors at the Inter- national Gaming Exhibition report record levels of busi- ness. The launch of the inau- gural International Casino Conference, organised by Clarion Gaming, also proved a huge success attracting over 200 delegates.


Global operating giant MGM Mirage is hoping it can modify its senior credit facility warning that it may default on its debt repayment, a point of concern for investors in light of the company still needing to secure US$1.2bn to com- plete construction of City- Center on the Las Vegas Strip. It announced that it lost $1.15bn in the fourth quarter of 2008 and said it had to make some difficult decisions on how to cope with more than $13bn of debt. “I have no illusions that


this is going to be easy,” CEO Jim Murren said. “I do not at all harbor any ill feelings towards people who think we will fail, because this is not without risk. But I wake up thinking that we’re going to make progress every day.” Revenue fell to $1.6bn in the quarter that ended December 31, from $1.93bn a year earlier. “We are not actively out


there marketing our proper- ties to buyer groups. We have had a very high level of inquiry on either individual assets or groups of assets,” Murren said. “We have some smart people looking into all this.” MGM said in an unsched- uled filing with the Securities and Exchange Commission that unless the economy picks up and there is a dra- matic increase in gambling spend, it will break its loan agreements this year, result- ing in a default on its senior credit facility.


The company, which


recently offloaded the Treas- ure Island casino on the Las Vegas Strip to developer Phil Ruffin for $775m, delayed filing its annual report until March 17 because it is still analysing its financial stand- ing and requirements. MGM outlined that the delay fol- lowed its financial realign- ment after tapping into $842m of its $4.5bn senior revolving credit agreement to cover what it termed general expenses. The group had not reported any financial results since September when it had $13.29bn in long-term debt. As well as selling TI, MGM has had less publicised sales of other venues, including land in Nevada and New Jersey, and two airplanes. Analyst Robin Farley of UBS Investment Research revealed that MGM Mirage and City centre partners Dubai World both need to inject about $1.3bn into City- Center this year. “MGM had expected to fund their portion with condo sales proceeds; however, we expect many of the condo sales may not close,” he said. According to MGM chief


Murren, the company is explor- ing a half-dozen deals around the world in which MGM Mirage would lend its name and expertise to generate income. It has already signed up for such a venture in Vietnam. Whilst plummeting shares might suggest that many of the world’s leading operators are close to bankruptcy, Deutsche Bank analyst Bill


In what has been the most visibly worrying month so far for many debt stretched US operators, even MGM Mirage has warned it could be at risk of defaulting. However, as Phil Martin reports, analysts believe there is enough liquidity to pull through.


Lerner believes most includ- ing MGM Mirage have enough options to cash in, slim down and insulate themselves until the economy bounces back. Speaking at the Reuters


Travel and Leisure Summit in New York Lerner said: “I think equity will change hands. The composition of the industry will be different.”


He said that selling assets


would be key. “I wouldn’t be surprised to see more from MGM,” he explained. “I don’t think any property is out of the question They’ve got an arsenal of weapons that they can launch to address liquidity and to some extent leverage.” He included parts of City


Centre, which is due to open in December, in that assess- ment. “They could sell a hotel tower or a residential hotel tower to a hotelier,” he sug- gested, adding that whilst MGM has enough liquidity to resolve 2009 by using its 2010 debt maturities it needed to ‘quell concerns that they are going out of business.’ Lerner added: “Covenant


The Bellagio, one of 17 MGM Mirage properties located in Nevada, Mississippi and Michigan


relief is not that big of a deal. You pay for it, but it happens in other industries all the time. I think companies will be extremely conservative with balance sheets. The focus will be less about expansion, more about consolidation.” Murren concluded that the company, which has access to $600m of cash, would have to lower its debt, but had to view its casinos as long-term money makers and not just commodities to cash in on for quick fix but potentially undervalued sums.


Taiwan is Two: Only two licences for first 10 years


NEWS3


Up In Smoke: The real effect of bans in Europe


FEATURE26


www.CasinoReview-Online.com • May 2009 • 079


Multi-Talented: Who’s doing what with Multi-Players


REPORT28


Waiver eases CityCenter stand off but for how long?


Towering over the rest of Las Vegas’ sprawling hotels, CityCenter was original pitched as the gambling city’s gateway to the future. Its unique mix of apartments and gaming would bring real life to the Strip like never before. But given the snowballing effects of the credit freeze, CityCenter has become a reluctant icon of the Strip’s struggles long before it is completed. Phil Martin reports on the project’s latest pitfalls and pardons.


waveafterwaive UNITED STATES


A month which began with MGM Mirage struggling to bankroll CityCenter’s spiralling cost and with partners Dubai World threatening to sue and place the project under bank- ruptcy, ended with the US$8bn Las Vegas project winning something of a reprieve. MGM Mirage has kept its senior lenders at bay by committing $200m to allow construction to continue while it seeks addi- tional finance elsewhere. It also moved to quash any


suggestions of a fall out with its partners in the project. “MGM Mirage intends to


work with Dubai World, its lenders and others to find a long- term solution for the financing of CityCenter’s completion,” MGM said in a statement. The united front was in com- plete contrast to that promoted earlier in the month when Dubai World filed a suit against MGM in Delaware Chancery Court demanding to be relieved of its commitments to CityCenter. Half of the $200m put forward by MGM should have been fronted by Dubai World. The Middle Eastern entity owns a 50 per cent stake in the casino, hotel, retail


and residential CityCenter devel- opment as well as 9.5 per cent of MGM Mirage shares. Dubai World confirmed the


payment was ‘a sign of good faith and of MGM’s commit- ment’ and that it would give CityCenter’s board more time to work out a restructuring. It added that the waiver pro-


vided by lenders was ‘an accept- able, albeit temporary, solution to the liquidity issues that MGM Mirage is facing, which are at the heart of the lawsuit.’ In that complaint, Dubai


World’s Infinity World unit said MGM had mismanaged the con- struction of CityCenter and added that further increases in the cost of the project appeared likely. The catalyst for the suit was a statement in MGM Mirage’s annual report which warned it could default on its loans for CityCenter which might force it to seek bankruptcy court pro- tection. Infinity World wants unspecified damages and to free itself from its obligations under the venture. Dubai World’s general


counsel, George Dalton, said: “What we are attempting to do is complete this project. Our concern is for the long term health of the project. We want to see some certainty before


Copycat Ban: Ukraine tries to ape Russia


NEWS2 Sands


MGM’s Summer Sale: Only MGM Grand safe


NEWS3


www.CasinoReview-Online.com • June 2009 • 080


Winning Ways: European Dealer Championship


EVENTS44


VetoVetted President overruled in Ukraine


NEWS10


Feeling rewarded: How loyalty has shaped gaming


FEATURE24


Macao in IPO and sell off rumour


Two unexpected stories burst off the news pages of the Chinese press this month with the Las Vegas Sands rumoured to be looking to raise money either through an IPO in Hong Kong or by selling off some of its operating assets in the enclave. Phil Martin reports on how the operator has remained silent on both suggestions.


we continue with our obliga- tions. We’re not saying MGM won’t be involved. We’re anxious to work with them, but we need to see them come out of their financial problems.” MGM Mirage now needs a


further $800m to access a $1.8bn credit facility which would allow it to fund the completion of City- Center, but in the midst of this current recession hopes of funding are slim. Colony Capital and Australian


operator Crown both denied they were about to offer a solu- tion to the funding freeze. Ana- lysts believe that rescue packages will be few and far between. Citi analyst Anil Daswani said:


“We believe that the completion of CityCenter, one of the world’s largest and most expensive build-


ings, is coming on stream at pre- cisely the wrong time for MGM, and in the wrong place.” Some analysts, meanwhile,


believe that the suit presented by Dubai World is an indication that it wants a greater share in the project.


Adam Cohen, of research firm


Covenant Review, said: “Maybe it gives Dubai World leverage, and they want to control much more than half of this joint venture when it’s all over. When you file a lawsuit that charges mismanagement and a breach of fiduciary duty, how do you have a refinancing discussion with that kind of talk?” Following concern over a pos-


sible bankruptcy at MGM Mirage as well as several other major operators, Nevada’s gaming reg-


ulators are developing a team of securities experts and auditors to oversee casino bankruptcies and debt restructurings. State Gaming Control Board


Chairman Dennis Neilander said: “Unfortunately, Nevada gaming and tourism have not been spared consequences of the ongoing economic chal- lenges facing the country. Already, there are a few large gaming companies in bank- ruptcy, along with a few smaller licensees. More are anticipated.” The recession has been at its most unforgiving in Nevada where Herbst Gaming is to relin- quish control of its casinos while it restructures its debt in bank- ruptcy. Tropicana Entertainment hopes to emerge from bank- ruptcy court protection later


this year. Station Casinos has extended a deadline to arrange a restructuring plan. Harrah’s has been granted an extension on some repayments, whilst Riviera Holdings will miss a $4m inter- est payment and could be heading into real trouble. Despite this, MGM retains most analytical interest due to the size of its current project.


The timing of CityCenter couldn’t be worse. Its mini- metropolis of condominiums, hotels, shops and casinos in the heart of the Strip, is scheduled to open in phases beginning late in 2009. A fully operational City- Centre would dwarf the rest of the Strip’s casinos. If it that doesn’t happen, it would signal Las Vegas’ biggest ever failure. The stakes are that high.


leftfield CHINA


Las Vegas Sands is weighing up its options with number crunchers bringing two solutions to the boardroom, selling off one of its Macau casinos or opting for an IPO in Hong Kong.


Although neither option has been publicly announced by the operator, sources close to it say billion- aire CEO Sheldon Adelson is considering the two options to raise money after it failed to off load its luxury shop- ping centres in the Venetian and Four Seasons.


The sale of the shopping


centres fell through due to the one billion dollar asking price being too high. A source said:


“It was kind of, ‘Okay then, if you don’t want the malls, do you want the Sands?” The source added that the gaming licence would not be up for sale. If it decides to sell, it would value the Sands Macao at US$1.3bn with the deal seeing it sell the building whilst continuing to operate the 21,274 sq m casino and paying the new landlord rent based on performance. Sands has remained tight lipped since the South China Morning Post report high- lighted the option of a sale, citing unidentified sources. The report said that Sands was considering selling the first foreign-owned casino in the Chinese island of Macau under a leaseback deal worth $1.3bn.


Spokesman Ron Reese in


Las Vegas said the company would not comment on the story. The company lost $188.8m in the year ending December 31, compared with a profit of $116.7m in 2007. It had $10.47bn in long- term debt according to its 2008 annual report but has no significant maturities until May 2011. Joseph Greff, a JPMorgan


analyst, said selling some of its Asian assets could gener- ate ‘a sizeable amount of net proceeds.’ He revealed that a recent


investor meeting with Adelson made him think ‘an asset monetization event in Asia is imminent.’ Greff predicts that the sales will take place within the


next three months but ruled out the rumour concerning the Sands Macao. “We don’t think a sale of Sands Macao or a sale-leaseback of Sands Macao is likely,” he said. Sands, meanwhile, has hired Goldman Sachs to look at a potential Hong Kong listing for its Macau division. The source revealed: “They


are considering (the IPO), but nothing is confirmed until they file for it, and it hasn’t happened yet.” Sands operates two casinos in the enclave: the Venetian Macao, the world’s largest casino resort, and the Sands Macao. The Sands Macao opened in 2004 and the company made back its US$285bn investment in less than a year.


However, mounting com- petition, visa restrictions on mainland Chinese visitors and the global economic slump have all bitten hard. Sands had hoped that Macau would insu- late its US operations from any downturn, but if anything the situation in the enclave has just intensified its problems. It is about to axe up to 4,000


more jobs in Macau as it looks to reduce its costs. Between 3,000 and 4,000 jobs will go by September. Last year Sands postponed


expansion work on a US$3.3bn, 6,400-room project close to the Venetian, as it had struggled to secure funding of between $1.5bn and $2bn to complete it. It was forced to fire up to 11,000 mainly con- struction staff. These redun-


dancies took the work force down to 17,500 from 20,000 according to new chief oper- ating officer Michael Leven. “Macanese workers will be


not affected that much; it will affect the expatriate popula- tion more so,” Leven said. “Some of those people are transferred to Singapore, some are no longer required, and some are redundant.” Jonathan Galaviz, of Las


Vegas-based consultant Globalysis, commented: “It should be expected that Macau’s casino operators will continue to adjust their workforce structure to address a softer Macau tourism market. It’s positive to see the company taking proactive steps to reduce unnecessary labour costs.”


Dreams coming true for Ho and Packer


James Packer and Lawrence Ho, co-chairmen of Melco Crown smashed guitars to mark the opening of the Hard Rock Hotel element of the City of Dreams development


City of Dreams, Melco Crown’s long anticipated and long worried about second project for Macau, is now open. With its watery themes and superb high-specification design, it is a great addition to the Cotai Strip, but is that enough to ensure success? Hugh Sorrill reports.


sinkorswim MACAU


One of only two major new casino resorts in the world scheduled to start opera- tions this year, Melco Crown’s City of Dreams in Macau, opened its doors to the public on 1 June. After a spectacular fire-


works display, as many as 40,000 visitors


f looded


through the doors in the first few hours to see the chic inte- riors of the 39,000sq m casino, and the first two com- pleted hotels: the Crown Towers and Hard Rock Hotel. Lawrence Ho, CEO and co-


chairman with James Packer of developer Melco Crown, said: “City of Dreams is the ultimate destination for urban entertainment in Macau…We


promise to


amaze, delight, excite and to entertain.”


The entire development is themed on water: it is built on reclaimed swampland, but water also signifies the flow of money and fortune. Ho and Packer are keeping their fingers crossed that the reduced vigour of the Macau casino industry over the last year is now coming to an end and the money will flow in their direction. Opening this long-planned US$2.4bn (E1.7bn) resort at this time is a risk they are both aware of. But the resort also signals a new approach to this market that may help to bring in more business to all the casinos on the Cotai Strip on Taipa Island, very different to the tradi- tional gaming centre of Macau on the peninsula - and indeed to the very high end high- rollers now being courted by their other project, the former Crown Macau, now renamed the Altira.


Ho said: “With more quality attractions and more diverse entertainment, I think gone are the days when our visitors are purely here for gambling.” That said, casino gambling


is still very much at the heart of the offer. The City of Dreams casino is spread over two floors: the cool contem- porary design of the lower room contrasts with the more jazzy upbeat Hard Rock Casino upstairs. Baccarat tables, as you would expect, predominate downstairs, however, there is a strong mix of other traditional games for the market and some less traditional ones. In total, there are 520 tables and approximately 1,350 gaming machines - in the smaller, hipper casino upstairs they are far more in evidence than downstairs. Private gaming areas for high rollers are


located on upper floors. Melco Crown is deter- mined to make the guests’ experience a welcoming one and the strategy seems to be working: almost uniquely in Macau from the door inwards, staff are smiling and helpful - that is not to say that other venues are not wel- coming, only that at City of Dreams you can really feel it. It was an aspect that


Lawrence Ho was keen to promote during the opening ceremonies. He said: “We have put great emphasis on recruiting and training our Dream Team of employees, who have really energised us with their enthusiasm and excitement over the past couple of months. We believe it is this combination of having the best people and the best property which will underpin our success.” Part of the training process


includes booklets handed out to all front-line staff detail- ing the pledges that each worker is making: each start- ing “I promise”, the pledges cover everything from per- sonal appearance to keeping their work stations tidy to how they are to deal with customers. Working condi- tions are among the best in Macau: there are hammocks, massage chairs and common rooms for rest and relaxation, plus a free staff restaurant with six cooking stations offering everything from tra- ditional Chinese food to burgers and chips. Keeping the staff happy and engaged is an important part of Melco Crown’s strat- egy to cater strongly to the mass market - while not ignor- ing the extremely valuable VIPs, of course. Another is the creation of a whole retail and entertainment experi-


ence beyond just gaming: once all phases of the devel- opment are completed every- body entering the casino will have to cross The Boulevard, which in its first incarnation already features 8,000sq m of prime retail space and restau- rants. Linking the casino with the hotels, the retail offering - which is being operated by Asian specialist DFS - is divided into two areas, Fashion Ready to Wear and Accessories World on the lower floor and Watches and Jewellery World. This latter area in particular features rare pieces also designed to appeal to the upper end of the market: DFS has also undertaken to try and source any item not carried in the stores from anywhere in the world and get it to Macau as quickly as possi- ble if wanted by a guest. Continued on page 3


www.CasinoReview-Online.com • July 2009 • 081


Milking Macau: Cash cow still has plenty to offer


EXHIBITION32


Ting on Song. Genting to win Singapore’s race


NEWS14


Size Matters. Largest US riverboat opens


NEWS16


www.CasinoReview-Online.com • August 2009 • 082


Taiwan Teaser. The low down on Penghu


FEATURE22


Having been touted for some years now, EuroVegas, the ambitious plan to build a mega casino resort in Hungary, is to go ahead with its developers teaming up with Hard Rock to bring the project to life. As Phil Martin reports, it is the second Las Vegas sized casino to get the go ahead in the country in the last six months.


EuroVegas set to rock after all


rockstar HUNGARY


The second super casino sized project has been announced in Hungary where Euro Vegas, a project bounded around the indus- try for several years, is to team up with the Hard Rock brand for a 2012 opening. EuroVegas Hungary,


owned by Asamer Group and Supersberger Group, already owns the 828 acres of land on which the project will be developed as well as a casino licence awarded by the Hun- garian government that allows for the operation of up to five Category 1 casinos with an unlimited number of slots and tables for a 20 year term with a 10 year exten- sion possibility. Hard Rock Hotel and Casino Hungary aims to be a premium integrated world- class resort and will be located in the northwestern part of the country, immedi- ately adjacent to the Aus- trian and Slovakian borders. It will be developed as a premier entertainment resort, combining a variety of Vegas-style games, enter- tainment, accommodation, dining and shopping. It will boast more than 600


guestrooms, including a variety of suites such as the brand's Rock Star Suites, which are tailored and cus- tomised for the rock star at heart. The new location will also feature a Hard Rock Casino providing a Vegas- style gambling experience with a variety of options of


table games and slot machines. Additional ameni- ties will include a pool and deck for lounging and enter- tainment, a Rock Spa for relaxing and ‘detoxing’ and a Rock Shop, where guests can check out the brand's authen-


tic rock 'n' roll gear and mer- chandise. Additional high- lights will also include signature restaurants and bars, a convention center, concert venue, nightclub, high-end retail shopping and over 2,500 parking spaces.


Jim Allen, chairman of Seminole Hard Rock Enter- tainment, said: “We are thrilled to announce plans for Hard Rock Hotel and Casino Hungary, and we are equally enthusiastic about the opportunity to join in an


agreement with EuroVegas Hungary Ltd. Hungary is the perfect location for Hard Rock to continue building on its base of world-class hotel and casino properties, and this development will facili- tate further expansion of the


Everyone’s Game www.betstone.com


Hard Rock brand in Europe.” With a total of 152 venues in 52 countries, including 126 cafes and 10 Hotels/Casinos, Hard Rock is a brand ideally situated in destinations with unique character and tourist appeal. The properties cater to the evolving and distinctive needs of today’s savvy trav- eller, who, the company sug- gests, seeks a reprieve from traditional, predictable prop- erties. Hard Rock Hotel and Casino Hungary will offer a stylish and modern design, unparalleled service and the singular thread that unites them all - music. Located a short distance from Vienna, Austria, Bratislava, Slovakia and Budapest, Hungary, Hard Rock Hotel and Casino Hungary wants to become the ‘must experience’ desti- nation in Europe. It will face a challenge domestically from Plaza Cen- ters’ Dream Island, a project in Budapest, which will include approximately 3,000 hotel rooms, 200 gaming tables and over 4,000 slot machines. It is set to open between 2012 and 2014. Alfred Supersberger, co-


chairman, of EuroVegas Hungary, said: “We are con- vinced that Hard Rock Inter- national is the ideal partner for our project. Hard Rock International stands for a perfect combination of entertainment and success, having excellent expertise in operating a large world- class hotel and casino as well as offering a unique experi- ence to our guests.”


Private Eye. Uruguay prepares for privatisation


NEWS3


Lions Share. MGM looks to increase Macau share


NEWS14


www.CasinoReview-Online.com • September 2009 • 083


Poker Pace. Boom or bust for tournament play


FEATURE22


US set for unprecedented gambling expansion


The silver lining of the dark recession in the United States could fuel new market expansion the likes of which has never been seen before. As Phil Martin reports, balancing licence fees with risks of bankruptcy will be key for operators, whilst for governments it is all about plugging widening tax deficits.


growthspurt UNITED STATES


Casino gaming in the United States is set for what many analysts believe will be unprecedented expansion as several states move to introduce legalised gambling to shore up battered revenue streams during the eco- nomic crisis. Concerned they are losing


out as residents cross state lines to gamble elsewhere, state governments are expected to expand gam- bling in about a dozen states this year in an effort to gener- ate an extra $2bn in gambling taxes by 2010, a record-break- ing increase if state projec- tions are accurate. Ohio remains the biggest


state without casino gam- bling. It is expected to allow 17,500 slot machines to be installed at seven racetracks boosting its coffers via taxa- tion by $933m in 2010. American Gaming Associ- ation president Frank Fahrenkopf explained the success of the racino sector despite the recession. “Even as the commercial casino industry as a whole faced declining revenues, the race- track casino sector contin- ued to grow in 2008, with three new properties opening and one state, Indiana, becoming the newest racino state,” he said. “Racetrack casinos experi- enced a 17.2 percent increase in gross gaming rev- enues compared to 2007,


growing to $6.19bn.” Trackside slot operators paid $2.6bn in direct gaming taxes, over 16 percent more than in 2007, which is likely to tempt more states to follow suit. William Thompson, a


public administration pro- fessor at the University of Nevad,a said: “Politicians are pushed toward gambling when times get tough. If it’s gambling or a tax increase, the political choice is clear, and the public acquiesces.” He points out that legalised gambling has grown for two decades with the big expansion occurring during economic down- turns. In 2008, the states col- lected $6.8bn in gambling revenue accounting for


about one per cent of all tax revenue in the country. With regional, drive-in


markets fairing relatively better than destination resorts, Indiana, Pennsylva- nia, Missouri,


Iowa,


Louisiana, Michigan and South Dakota all saw GGR increase compared with 2007, many states are looking at creating local markets for their own citizens. Whilst the expansion could tighten the operational noose in destina- tion markets such as Nevada, New Jersey and Mississippi, any new market opportuni- ties could prove a god send to America’s legions of slot manufacturers. In Pennsylvania, work is in


progress to legalise video poker in bars to generate


Sands in Bethlehem Pennsylvania, which opened this year. With regional, drive-in markets fairing relatively better than destination resorts, more States are expected to open to gambling.


gaming tax income of $550m. In , the state has already approved adding video poker at bars to gener- ate $300 m. Casinos are now legal in 40 states, up from 31 in 2000, with regulations on casino locations, hours and betting limits also being relaxed.


As of July 1, Colorado casinos could stay open 24 hours a day, and could intro- duce roulette and craps whilst increasing betting limits from $5 to $100.


“Some states are increas- ing gaming just to keep up with the states next door,” says economist Alan Meister. Long before the first


dollars were fed into slot machines at Sands Casino Resort Bethlehem in May, its owners had confirmed that they planned to bring in 2,000 more slot machines in November, an increase which in other parts of the world would eclipse the offering at a newly opened ‘super’ casino.


The Indiana Legislature is also keen to expand its offer- ing and has formed a com- mittee to ensure its casinos, which generate $800 m a year, don’t haemorrhage business to Ohio, Illinois and Kentucky. However, across the US


last year gambling taxes fell 2.2 per cent, despite the opening of new properties and the installation of 37,000 new slot machines. As this new wave of gambling legal- isation floods the States, the debate over the prohibitive price tags attached to licences has never been more important. Massachusetts is about to set the bar by charging up to a $1bn for two casino licences this autumn. Ohio is believed to be charging around $65m per licence. Some States like Massa-


chusetts, Indiana and New York want the licence fees in the hundreds of millions, yet others such as Ohio, Pennsyl- vania and New Hampshire are mindful of further bank- ruptcy filings.


Cap in Hand: Macau limits junket fee


NEWS2


Well Connected: New French national jackpot


NEWS4


www.CasinoReview-Online.com • October 2009 • 084


Latin Heat: SAGSE 09 in Bueno Aires


PREVIEW36


Macau on the road to recovery with record month


As the first major gaming destination to show strong signs of recovery, Macau is leading the charge out of the doom and gloom of the global recession. Phil Martin reports on Macau’s highest ever monthly gaming revenue.


personalbest CHINA


More money was spent in Macau’s casinos in the month of August than in any other month in the gambling enclave’s history.


As the second consecutive month of year-on-year revenue growth, the record takings sparked hope with analysts that the world’s largest casino market was beginning to recover from the downturn that has gripped the global casino business. Morgan Stanley analyst Praveen Choudhary is predicting that the recovery will continue in September with GGR to surge by 40 per cent on last year’s September takings of 7.09bn patacas. Credit Suisse analyst


Gabriel Chan believes that GGR will reach an even stronger year-on-year growth rate in September due to the extent of the downturn in the market last year. “With excitement about the upcoming IPOs as well as positive macro news flow, including the relaxation of visa restrictions and imple- mentation of a junket com- mission cap, we believe there is still money to be made in the near term,” he said. The Special Administrative Region’s 33 casinos brought


in a record US$1.5bn in August, making it the highest- ever monthly revenue, up more than 17 per cent on the same month last year. The August figure of 11.27bn patacas was also up 17.8 per cent on the previous month and 33 per cent more than the average monthly revenue during the 12 months to July. It eclipsed the previous monthly record of 10.33bn patacas which was recorded in January 2008. The recovery follows a


first half slump in 2009 when a 12.4 per cent drop in GGR painted a gloomy snap shot of the sector. It is particularly impressive as it comes as Macau’s general economy is worsening with GDP shrink- ing 13.7 per cent in the second quarter of 2009. Gross fixed capital formation contracted by 27.4 per cent year-on-year in the second quarter, whilst private invest- ment was down by 30.6 per cent upon suspension or slowdown of some major constructions. Zeng Zhonglu, of the


Macau Polytechnic Institute, believes gaming’s growth in the face of the shrinking GDP proves that Macau’s gaming market is not yet saturated despite the continued roll out of newly completed projects. The latest major project


City of Dreams: the new kid on the block in Macau’s booming once more casino sector


was of course Melco’s City of Dreams which opened in June and August, bringing the city’s total number of casinos to more than 30. Despite the recovery, the Macau govern- ment is predicting a 10 per cent drop in GGR for the whole of 2009. With 19 of Macau’s 33 casinos, including its flag- ship Lisboa, SJM Holdings - the company run by Stanley Ho - led the charge to recov- ery and was indeed the biggest winner. It saw first half profit fall by 40.8 per cent from a year


earlier but said the second half of 2009 had ‘started well, with total gaming revenue in Macau rising significantly.’ SJM plans to open two


more venues before the end of 2009 with L’Arc opening on September 21 and Oceanus at the end of the year. Shares in the company


surged by 4.6 per cent to a one-week high of HK$3.40. SJM, which held the monop- oly to operate in Macau for some 40 years, already has the largest slice of the mass- market and VIP segments. In August its market share increased to 27 per cent up from 23 per cent in July. Citigroup analysts said that


Wynn could have lost market share to a new casino


opening. Its market share fell to 13 per cent in August from 15 per cent in July, leaving it just ahead of MGM Mirage, which has 11 per cent, and Galaxy, which has 10 per cent. Galaxy’s value on the Hong


Kong stock market increased by 6.4 per cent whilst Melco’s rose by 7.1 per cent. With improving GGR,


Macau’s casinos have also slowed down on redundan- cies. Las Vegas Sands has informed local labour authorities that it has decided to suspend its earlier plan to layoff 4,000 employ- ees by this autumn. It has so far laid off 1,000


employees, according to Shuen Ka Hung, director of Macao’s Labor Affairs Bureau.


There is much to be posi-


tive about in Macau with much hope that visa restric- tions will be relaxed in coming months. A cap on the commission charged by junket operators who bring VIPs into the casinos will lessen the vicious competi- tion in local VIP gaming market and increase GGR. The extent of Macau’s


August recovery is captured perfectly in a direct compar- ison to Las Vegas. Macau’s August takings were more than three times the Strip’s average monthly GGR of US$471.25m during the 12 months to June. It is clearly premature for any predic- tions of a global recovery for gaming.


www.CasinoReview-Online.com • June 2010 • 092 e:


am am


Wynn Win: Wynn opens Encore in Macau


NEWS12


Atlantis Rises: Kerzner spends $100m in Bahamas NEWS2


Austria Opens: Goodbye casino monopoly, hello street VLTs


NEWS10


Malaysian giant sets sights on US portfolio


Having snapped up the Brit pack from Stanley, invested heavily in MGM and developed one of the world’s most costly casinos in Resorts World Sentosa in Singapore, Genting Malaysia is turning its attention to the US. Bidding to operate VLTs at Aqueduct Racetrack in New York City isn’t enough. Genting wants a whole portfolio. Phil Martin reports.


Korea poised for knock-on effect


chainreaction REPUBLIC OF KOREA


The Republic of Korea, unofficially known as South Korea, could be forced into changing its gaming laws due to a butterfly effect of sorts in gaming jurisdictions across Asia.


ies. “The peak period or most urban hotels they tend to cater to lers. The peak period els is obviously the en people have free ith our meeting and usiness and a multi- amenities, the entire ak period,” he said. ny’s experience in eting, incentive, con- xhibition) business reason Singapore egas Sands. To date, ands has more than ooked in its Sands onvention Center. , beginning in May ected to draw more otal attendees. Sands president and Arasi said: “This is a estination. From the mmissioned, multi- r collection of art


ou as you enter our o our attentive staff f your every need


after you check in, Marina Bay Sands is committed to making sure the interiors and service of our property matches the bril- liance of its architecture.” Resembling the casino at the


company’s first foray into Asia with Sands Macau, Marina Bay’s casino boasts 1,600 slots and six varieties of tables games over four levels of gaming,


including Baccarat,


Roulette, Sic-Bo, Singapore Stud Poker, Non Commission Baccarat and Money Wheel. With almost 500 tables available, each game is offered at a variety of betting limits designed to suit all players. There are also more than 200 games avail- able in the High Limit, Ruby and Paiza areas, in exclusive salons on the upper floors of the casino. Adelson said that initial results


were ‘extremely promising.’ “Visi- tation and gaming play levels have been robust,” he said. “The ramp- up of the high end is going well, but it is still ramping up. We’re getting customers from places that we didn’t consider in our pri-


ority countries. We look at the breakdown for the credit and we find they’re coming from the main three areas: Singapore, Malaysia and Indonesia. And there are lots of very high rollers, substantially higher than we’ve experienced in Las Vegas. We don’t get a lot of $10m, $12m credit players here [in Las Vegas]. We don’t have junket reps in Las Vegas. It’s not a system that is seen worldwide. It’s uniquely Asian and primarily in Macau.” The two Integrated Resorts have had an immediate effect on visitor arrivals in Singapore which rose 17.3 per cent in March from a year earlier to reach 928,000, the best ever recorded for the month. In February, visitor arrivals increased 24 per cent from a year earlier. Each casino is expected to con-


tribute a value add of US$1.92bn to Singapore’s gross domestic product (GDP) by 2015. Adelson said he expects to


recoup Sands’ $5.5bn investment in its Singapore casino in five years.


A mountain peak within the Titiwangsa Mountains is home to the famous Genting Highlands Resort with its six hotels, a casino, a golf course and a theme park


powershift MALAYASIA


A remote hill top in Kuala Lumpur seems an unusual place to launch a global gam- bling name to take on the likes of Harrah’s and MGM Mirage, but that is precisely what could be happening with Genting Malaysia, the owner of Genting Highlands, launching its bid to build a US presence. Justin Leong, head of


strategic investments and corporate affairs, has con- firmed that equipped with US$1.7bn and in the envi- able position of being debt free, the group is ‘aggres- sively searching for opportu- nities to invest in the US


casino gaming market.’ This isn’t its first foray into US gaming. In June last year Genting, under its Resorts World brand, subscribed for a combined $100m worth of notes issued by MGM Mirage. It has also bid, along with five other operators, for the licence to own and redevelop Aqueduct Race- track with 4,500 video- lottery terminals in Queens, New York. Success in its attempts to win this ‘racino’ licence would demand a minimum $300m invest- ment just to secure the licence. Leong, though, informed that this latest US announce- ment would be a significantly bigger step into the market.


“It’s unlikely to be a single


asset,” Leong said in an inter- view with Bloomberg. “If we were to acquire something, it’s more likely to be a portfo- lio of assets or a substantial stake in a company. Our strat- egy is building a US presence.” Its global presence is


already strong. In September 2006, in the build up to the UK’s failed super casino, it paid £639m for Stanley Leisure’s 45 casinos, becom- ing the largest operator in the UK. In August last year it opened, through its Star Cruises division, the $700m Resorts World at Manila. Its investments are getting higher though. In February this year its Singapore unit opened the door to its


$4.5bn resort on Sentosa Island. Regardless of its success in Queens, the US is seen as the next strategic expan- sion. Interestingly, having helped secure


MGM


Mirage’s future last year in a deal that spared a potential bankruptcy, Genting has since bought into every capital issue from the Las Vegas giant. With MGM founder and biggest share- holder Kirk


Kerkorian


stating in October that his holding company Tracinda is investigating ‘strategic alternatives’ for its 37 per cent share in MGM Mirage, there are no prizes for guess- ing where analysts expect a deal could emerge.


The staggering income generated by Macau’s casino sector has provoked scurrying activity across the region. Whilst Singapore’s Integrated Resorts of Resorts World Sentosa and Marina Bay Sands are the glittering examples of casino development in the area, a hive of activity under the surface of a plethora of potential gaming jurisdictions could force Korea’s hand.


Union Gaming, a Las


Vegas-based analyst believes that the Korea Tourist Organisation could recommend that four casinos should be developed, two in Seoul, one in Busan and a further one on Jeju Island, to counter any decline in visitation caused by new, competing gaming jurisdictions in the area. “In an effort to bolster visitation to South Korea, following the visibility and early success of Singapore’s two integrated resorts (IRs), we believe the KTO is studying the possibility of licensing its own IRs in the country,” the analytical group said. “We do not see another casino for Korea being approved unless there is a critical, desperate reason.”


But there is plenty of


external pressure. The prospect of casinos


in Taiwan is still up for debate with a public referendum to be held on the topic in Kinmen. The Philippines is in the midst of a gaming revolution with government owned PAGCOR launching opportunities to partner in new licences. Already the country has seen the launch of Resorts World from Genting with 1,600 slots, up to 381 table games but it is braced for much more activity with Belle Corporation promising a casino in Manila Bay more profitable than Singapore’s Resorts World and


Universal Entertainment set to begin work on a US$2.7bn project also in Manila.


Whilst all of these


developments could have an effect, it is Japan that could influence Korea most. In Japan, Osaka Governor Toru Hashimoto has reiterated his call for a casino in his western Japanese city, the Kanagawa prefecture has launched discussions on legalising a casino in Yokohama, as have the island of Okinawa in the south and Chiba in the greater Tokyo area. Any move to regulate in Japan would have a detrimental effect on gaming revenues in Korea due to the simple fact that 38 per cent of Korean GGR is generated by Japanese custom and that is where the knock on effect could be most critical.


The dark clouds coming in from the desert mean just one thing; the depression over Las Vegas is yet to clear. In a latest report, UNLV economists have forecast further job losses for the rest of the year along with dwindling personal income and weak gaming revenue. Phil Martin reports.


doublethetrouble UNITED STATES


At best it’s going to take several years for Las Vegas to recover from its economic slump with the recov- ery not even starting until the first quarter of 2011. At worst, the US is heading towards double dip reces- sion.


These grim eventualities have been mapped out by economy experts at the University of Las Vegas who say the rest of 2010 will continue to be a struggle for the Southern Nevada economy. When the recovery finally hits,


early next year, the turnaround will be ‘tepid at best.’ The UNLV’s Center for Business and Economic Research is even concerned that the United States could be on the verge of a double- dip recession with recent employ- ment and retail sales reports showing the existing recovery is weakening. Mary Riddel, the interim director of the Center for Business and Eco- nomic Research, said: “Overall, the Las Vegas economy continues to show mixed signals, which leads us


recession, then all bets are off on the bottoming of the local economy.” The report suggests that City- Center has not helped the situation for existing operators. Certainly the owners of the Stratosphere blamed excess rooms on the Strip for its $2.7m in losses.


“The addition of the 6,000-room CityCenter complex in December has meant an even more competi- tive environment for the hotel gaming industry.” the report said. “Hotel occupancy rates continue to fall even as hotels offer deep dis- counts on midweek room rates. In the near term, the tourism sector is likely to continue to struggle.” The report added that Southern


Nevada will experience continued losses in employment throughout the rest of 2010 due to the cancella- tion of planned hotel projects. Miller added: “On the brighter


to conclude that a recovery is not yet underway. On the other hand, all signs point toward nearing a bottom in 2010 and beginning recovery in 2011. The dramatic drop in gaming revenue and taxable sales means that new growth will begin from a very low level. It will likely be years before we see the same level of eco- nomic activity in Nevada as we enjoyed in 2007.” Riddel doesn’t expect any casinos to be built on the Strip until 2015 at the earliest and that could be further away if more operators are forced into Chapter 11. The postponement/cancellation


of projects such as Echelon, Fontainebleau and Crown Las Vegas cost the construction sector US$1bn of lost work in 2008 and $2bn in 2009. These and other stalled projects are still impacting the economy. During the last 12


months alone, Vegas has lost 24,000 construction jobs. Riddel believes that the recov-


ery hinges on more than just the recovery of gaming. In a report UNLV economists


predict there will be moderate growth in gaming revenue and visitor volume in 2010. GGR should rise by one per cent for 2010 as a whole and visitor volume will increase 2.5 per cent. Occupancy rates should remain


below historical averages for the remainder of 2010, but by the end of 2011, the low room rates should help boost visitor volume and bring occupancy rates closer to histori- cal averages. During 2011, UNLV economists


believe GGR will increase by 1.2 per cent and visitor volume will improve two per cent. Stephen Miller, chair of the


Department of Economics at the University of Nevada, Las Vegas, said: “Overall, we remain concerned about the state and local economies. Nevada with its large exposure in the tourism and con- struction sectors will continue to lag the US recovery, since the current recession was driven by the dramatic contractions in tourism and construction. When seasonally adjusted, Nevada’s unemployment rate of 14 per cent is the highest in the nation. Job creation remains uncertain. Gaming revenues, on the other hand, rose 4.5 percent in April, but fell 5.7 percent from the previ- ous year. Taxable sales and gaming revenue produce more than two- thirds of the state budget revenue. At the moment, these two numbers suggest that we may have reached the bottom. That said, if the national economy experiences a double dip


side, private-sector employment is rising unlike its trend over the last several years. But, on the darker side, the Fed just announced a mark down in its expectation for the strength of the economic recovery. This was supported by other pundits who legitimately raise the issue of a double-dip recession and, as such, the Fed will consider options to support the economy as conditions warrant. The large overhang in residential and commercial investment means that the construction sector will not likely improve for many months, if not years. The leisure and hospitality sector must lead us out of recession, but that sector continues to show weak progress. Until the US economy creates a significant number of jobs and disposable income, the Southern Nevada economy will remain in the doldrums.”


www.CasinoReview-Online.com • July 2010 • 093


Italian Job: VLTs concentrate the mind


FEATURE20


Premium Plans: Burswood starts A$350m expansion NEWS3


All Out: Columbia attempts total gambling ban


NEWS18


www.CasinoReview-Online.com • August 2010 • 094 Complete


Coverage: ICE regains its name EVENTS22


Vegas braces itself on fear of double dip recession


Risky Business Harrah’s gambles on growth NEWS2


Sent Up Resort World Sentosa booms in Q2


NEWS3


www.CasinoReview-Online.com • September 2010 • 095 Far Out


State of play in the Far East markets


REPORT26 Russia set to scrap Azov City


Reports out of Russia suggest that the Duma is ready to admit defeat on one of its four remote zones, and that Azov City, the only one even in operation, could be struck off in favour of Black Sea resort Anapa. Phil Martin reports.


gameover RUSSIA


Too remote and too lacking in infra- structure. These were the main doubts regarding the success of the Russian Duma’s attempts to ban gambling in all but four gaming destinations:


Azov-City, the


Sibirskaya Moneta zone in Altai, the Yantarnaya zone in the Kaliningrad region and Primorye in the Far East. Since the laws came into effect on July 1, 2009, little has happened. One main casino has opened in one of the zones amid claims that there are now twice as many casinos operating underground in Moscow as there were legitimate casinos before the ban. Things could be about to change


though, in one region at least. The governor of the Krasnodar


region, Alexander Tkachyov, is pro- posing that the Azov City gaming zone be relocated to Anapa city, which although in the same region on the coast of the Black Sea, is already a very popular tourist desti- nation for Russians. He wrote to President


Medvedyev a few weeks ago, saying that it makes little sense to have a gaming zone where it is at the moment, on the border of the Rostov and Krasnodar regions, as it is located so far from any popu- lated areas and hasn’t attracted


Royal Time's Oracle casino: the first to open in Azov City in February 2010


suitable location would be the Insti- tute for the coastal defence, which is affiliated with the FSB border control agency. It takes up more than 25 hectares of land and has access to the sea. Anatoly Kuznetsov, president of hotel and casino developer Korston, described Anapa as the ‘latest half-measure.’ He advised that if any zone was going to work in the Krasnodar region, then it had to be developed in Sochi. He said five-star hotels with casinos could be built in time for the Olympics. Plenty of money has been invested in the four zones already. The Krasnodar region injected about 1bn rubles (US$33m) into its infra- structure, while the Rostov region invested 170m rubles ($5.6m). Those gambling companies who have already invested in Azov City would also need to be compen- sated. Royal Time’s Oracle casino became the first to open in Azov City in February 2010. About $10m was invested into the project, and was to invest from 4bn to 4.5bn roubles (US$150m) over the next three to four years. Royal Time managing director


many players or investors. Medvedyev has asked the govern- ment to study this proposal. Gleb Hob, a member of the United Russia party (the ruling party) who also has a position in the Duma committee for budget and taxes, said: “So far, since the law has come into force, it has become apparent that nobody wants to go to these zones. In Azov City there is not enough infrastructure. However, in Anapa, there is a modern airport, beaches and tourists.”


Hob has submitted to the Duma


his own revisions of the law gov- erning the gambling industry, in which he proposes to exclude the Rostov Oblast from the list of terri- tories where gaming is allowed. He also wants to remove a clause from


the current law, which forbids the closure of a gaming zone until it has been there for ten years. The revisions have apparently already been approved by the Economic Policies and Entrepreneurship Committee of the Duma. The government officials of the


Rostov Oblast have said that they have not received any official doc- uments yet, but are aware of the letter. Krasnodar Deputy Governor


Alexei Agafonov said that the target area was not Anapa. It would be a family-orientated resort and would not be located in a population centre but on ‘free territory.’ “We want to build a new, high-


quality family-type resort,” Aga- fonov said. Casinos would only account for


one-third of its infrastructure with the remaining two-thirds being beaches and entertainment and leisure facilities. He said the admin- istration was ready to invest a total of 2.5bn rubles in resort infrastruc- ture development. A source close to the presiden- tial administration has said that this idea has been given approval, and that one of the options proposed was Sochi, however, since there is no land there for this purpose - Anapa was chosen instead. According to this information, the gaming zone would be allo- cated on the grounds of a military facility within the city limits although representatives of the military have claimed they do not know anything about the plans. Sources have revealed that the most


Rashid Taimasov said at the time: “We plan in the development of the gambling business in the next three or four years. Oracle will be the central facility in a future resort area, which apart from the casino will have an aqua park and other entertainment spots.” It opened with 200 slot machines and 10 table games although its Kazan owners are believed to have purchased another 1,300 slot machines at a price of $3,900 to $6,500 each. The Odis Group had finished develop- ing plans for its own project for the region at a cost of 12m rubles. Alexander Odintsov, chief execu- tive of the group Odis, said he was ‘shocked’ by the news and said that despite being in regular contact with the authorities no one had told them anything.


www.CasinoReview-Online.com • October 2010 • 096


Two in a Million Two Singaporean landmarks hit in July NEWS2


The ‘time is now’ for casinos in Japan


Japan, home to almost 15,000 pachinko outlets, allows betting on horse, cycle and boat racing as well as on a national lottery, but, as of yet, there are no casinos. Toru Mihara, one of Japan’s leading casino experts, believes ‘the time is now’ for Japan to make its move on casino friendly legislation.


biginjapan JAPAN


Tokyo, Yokohama, Hokkaido and Okinawa are just some of the loca- tions being discussed as Japan makes definite strides towards legalising casino gaming. The start of August saw a govern- ment advisory group called the Bipartisan Legal Movement for the Promotion of International Tourism present a skeleton draft proposal of the bill, which would allow the development of two ‘integrated tourism zones’ to be licensed by the government for casino proj- ects, although more may be estab- lished at a later date. Toru Mihara, a professor at Osaka


University of Commerce and one of Japan’s leading lights on gam- bling legislation who is advising on the casino board, said that any out- standing issues with the proposed bill would be discussed at an extraordinary session of the Diet next month. He believes that six months is a


realistic time span for sharehold- ers, investors and the private sector to discuss the proposal as part of


the process to presenting a formal bill next year. The next stage would be the creation of a Casino Control Authority that would piece together the relevant regulations over a two year period. “The draft bill is not perfect,”


Mihara explained, “core informa- tion regarding taxes has not been fixed yet. If Congress approves the bill, things will start moving very quickly. The time is now. Once the next election comes up, everything we have worked for until now will come to an end, as we will have to start over with the new govern- ment.”


Once local governments get the


go ahead, they will then be able to tender casino development proj- ects to casino development com- panies both at home and abroad. The two main blockades in the


way are Congress and the public with opinion split among most parties, regardless of party affilia- tion. The idea has also been mooted that Japanese will not be allowed to gamble with Chinese tourists instead expected to play baccarat. Mihara believes the earlier casino bill, presented in 2007, failed


because the LDP-led government had proposed that a state body should be in charge of redistribu- tion of gaming tax. The new bill will propose that


tax revenues are allocated to pension funds instead so that Japan- ese citizens benefit from casino introduction. According to a 2002 study by the


Tokyo Metropolitan Government, a casino and hotel could generate JPY 57bn (US673.8m) in earnings, yielding taxes of JPY 13.84bn. Osaka Governor Toru Hashimoto


recently suggested that a casino should be built in the western Japanese city, saying it would raise 150bn yen and alleviate any need to increase taxation elsewhere. He believes that all the earnings should be used to fund social welfare pro- grammes.


Osaka is a sprawling city in the


Kansai region of Japan’s main island of Honsh and is the third largest city by population after Tokyo and Yokohama. Elsewhere, the Kana- gawa prefecture has also opened discussion on launching a casino in Yokohama, as has the island of Okinawa in the south and Chiba.


The city of Sasebo has, meanwhile, put forward the idea that a desig- nated structural reform district should be set up to oversee the introduction of casino gaming for foreign tourists at the Huis Ten Bosch theme park in Sasebo, Nagasaki Prefecture. While the vast majority of sur-


veyed experts in a recent American Gaming Association questionnaire at G2e Asia agree that Macau will remain the region’s largest casino market throughout the decade, 38 percent think Japan will become the second largest market, even though no casino resorts currently operate there. The same percent- age of respondents name Japan as the next Asian nation most likely to legalise casino resorts. Steve Jacobs, the ex-president of Sands China, believes that if the Japanese market were to open up, it would be ten times the size of Macau. Any move to launch two licences would spark fierce com- petition from the world’s leading casino operators who would view the licence as potentially more lucrative than those recently devel- oped in Singapore.


The Golden ticket: Any licence offered in Tokyo would send casino operators scrambling to the banks. Government casino advisor Toru Mihara says the time is now


Pachinko operators are already in the process of setting up joint venture proposals with US casino operators. Stuart Witchell, senior vice-presi- dent of the corporate advisory firm International Risk, confirmed he had been conducting due diligence on such matters. The president of Japanese


pachinko machine maker Univer- sal Entertainment, Kazuo Okada, confirmed some time ago that it would submit a bid, along with Wynn Resorts to operate casinos in Japan but the list of names also linked is impressive. A report by CLSA in 2007 suggested that Las Vegas Sands, Melco/PBL, Genting, MGM, Wynn, Sega Sammy, Konami, Grand Korea Leisure and Mori would all compete for a chance to operate in Japan. Mihara said: “We have already seen interest not just from US casinos such as Wynn and MGM, but global manufacturing firms and real estate developers and, of course, there is also a great amount of domestic interest.”


Loss Vegas Vegas buoyed by single digit losses


NEWS3


Hot Scot CAI’s Corinthian shows class


NEWS6


Letter Of Intent: Penn snaps up recessive M NEWS3


Latin Beat:


Upbeat SAGSE holds its own SAGSE REPORT32


www.CasinoReview-Online.com • November 2010 • 097


Desert Knights: Batman takes Center Stage at G2e


G2E PRODUCT PREVIEW68


Golden Macau


Baccarat brings Strip to its feet


‘pulverises’ previous records


Macau 2010 can do no wrong. As year-on-year predictions soared to 50 per cent better revenue than in 2009, China’s Golden Week holiday saw the record for daily GGR smashed not once but twice. Phil Martin reports on a gaming territory that doesn’t have ‘recession’ in its vocabulary.


goldenchild CHINA


With more than 680,000 tourists arriving in Macau during the National Day Golden Week, running from October 1 to 7, it was perhaps to be expected that gaming revenues would reach new golden heights. In truth, previous records


were ‘pulverised’ forcing annual GGR predictions from the director of the Gaming Inspection and Coordination Bureau, Manuel Joaquim das Neves, sky high. He has changed his 2010 forecast from a 30 per cent increase on last year’s GGR to a 50 per cent increase. “We have pulverised daily records for two days in a


row [during the Golden Week],” Neves explained. “On October 3 the gross gaming revenue set a new day record, and it beat that on the next day. It is now possible to say that [gaming revenue] will increase more than 50 per cent year-on- year.”


According to preliminary


figures released by the Macau Government Tourist Office, visitor levels over Golden Week were nearly 13 per cent higher than in the same holiday period last year.


The average occupancy


rate of three, four and five star hotels reached 90 per cent, a 2.7 per cent increase compared to the same period last year. Five-star


hotels recorded the most impressive figures reaching 91.8 per cent of average occupancy.


Whilst the unverified


figures for the start of October were described by Neves as ‘very positive’, Sep- tember’s confirmed figures increased by 39.8 per cent year-on-year to 15.3bn patacas (US$1.91bn dollars). September’s growth rate plateaued somewhat with August’s rate at 40 per cent. GGR in the first nine months increased 60.1 per cent year- on-year to 133.2bn patacas (US$16. 65bn), easily sur- passing last year’s record. Analysts believe GGR in the third and fourth quarter will ease off at a growth rate of 34 per cent year-on-year,


slowing from the first half’s 66.9 per cent surge. So how far can Macau’s 33


casinos, 4,828 gaming tables and 14,659 slots, grow? Analyst Jonathan Galaviz said: “Asia’s macro-economic performance continues to be strong and Macau will benefit as long as this dynamic remains. There con- tinues to be tremendous asset bubbles in the region. Hence, we are also cautious on Macau due to its sensitiv- ity to what we see as an even- tual Asia downturn sometime in 2011.” Janet Brashear, an analyst


at Sanford Bernstein, added: “Presently, Macau’s growth rate is indicative of what is yet to come, even as the rate depreciates it is still at attrac-


tive levels. The real news is the share battle under way. Reports suggest that MGM and Melco have been partic- ularly aggressive in attempt- ing to shift junket share to their casinos.” Sterne Agee has lowered


its third-quarter for Wynn Resorts due to signals that Wynn Macau is losing ground in this battle for junkets. Analyst David Bain said:


“Reports indicate certain Wynn Macau VIP operators have ‘spread their wings’ and are now also operating in competitor facilities, some that may be offering greater than 40 per cent revenue share or more than typical credit under a rolling scheme.”


backfromthebrink UNITED STATES


Following a near knockout blow by the recession, the Las Vegas Strip is back on its feet to fight another day.


The highest ever drop for baccarat in Strip history along with rebounds on the slots, on roulette and in the sports books all helped the 41 casinos on the Strip to a 21 per cent increase in gross gaming win for August.


At $544.3m the Strip’s GGR was its biggest gain since February. Baccarat increased to $160m, up 47.1 per cent from last year’s figures, marking the second biggest baccarat win in Strip history. The rebound in the slot sector was hugely encouraging. Slot win increased to $245.9m, representing a rise of 13.3 per cent and the biggest slot surge since Septem- ber 2007. Slot drop came in at $3.1bn. Elsewhere, win from the craps tables increased by 84.3 per cent, roulette by 77.7 per cent whilst sports betting jumped a massive 155.5 per cent due to baseball games. The only major fall saw blackjack win down 12.1 per cent compared to a year ago.


The state of Nevada as a whole was up too with the Gaming Control Board reporting a gross win of $994.4m, up 11.5 per cent.


Anapa: Can Black Sea resort solve Russia’s casino dilemma? NEWS3


London Calling: ICE promises stunning showcase


EVENTS20


London Clubs to bring Playboy back to London


Following a series of false starts, the Playboy bunnies will now definitely be hopping back into London where Playboy once operated one of Europe’s most glamorous of casinos. London Clubs International will be delighted to be the chosen operator.


makingaplay UNITED KINGDOM


Playboy Enterprises, Harrah’s and London Clubs International (LCI) have con- firmed they are to finally bring the Playboy bunny back to London with a new Playboy gaming and enter- tainment venue featuring a restaurant, lounge, members club, table games and high- limit salon privé gaming rooms.


Set to open in the first half of 2011, Playboy Club London will be located in the exclusive Mayfair area of London following a renova- tion of the Rendezvous club, in Old Park Lane. “When we first opened


the Playboy Club in London it was one of my favourite times for the brand,” said Hugh Hefner,


Playboy founder, editor-in-chief and


chief creative officer. “With Playboy now more popular than ever, I look forward to our return to London and again sharing the notions that are celebrated in the magazine, the concept of good food and drink, pretty girls and exciting entertain- ment.” Creatively designed to incorporate influences from the original Playboy Club London that opened in 1966, the new venue will integrate gaming with contemporary nightlife in a property that combines the sexy and sophisticated feel of Playboy with the international allure of London. The 17,000 square foot property spread over two floors is being designed by acclaimed London-based architects Jestico + Whiles. The most attractive


feature of Playboy Club London will undoubtedly be


the return of the Playboy Bunnies to Europe. The beau- tiful Playboy Bunny host- esses, croupiers and cocktail servers have a world-wide, and well-deserved, reputa- tion for their style and gra- ciousness. “The heritage of the


Playboy brand in the UK together with an attractive Mayfair location and the proven operating skills of London Clubs International will make Playboy’s London club one of our most antici- pated, must-visit properties,” said Scott Flanders, CEO, Playboy Enterprises, Inc. “When Hugh Hefner opened the original London Playboy Club it redefined class and luxury, setting a new nightlife standard around the world,” said Michael Silberling, managing director of London Clubs International, owned by US


Fiji invites casinos to impress


licencetothrill REPUBLIC OF THE FIJI ISLANDS


Fiji’s government is inviting expressions of interest for the development and operation of the cash-strapped Pacific nation’s first ever casino from internation-


ally successful full-casino devel- opers and operators that are rep- utable and would enhance Fiji’s brand.


The attorney general and minis- ter for tourism, Aiyaz Sayed- Khaiyum, said the government is looking at this development as a


giant Harrah’s. “LCI is hon- oured to partner with Playboy to return the brand to London and create a club and casino experience for a new generation of Playboy Club members.” The original Playboy Club London opened in 1966 at 45 Park Lane. At that time, the club attracted some of the most influential clientele in London including Sean Connery, Michael Caine, Joan Collins, George Best, Jack Nicholson, John Cleese, Roger Moore and Muham- mad Ali. The new exclusive club will again cater to some of the biggest names in enter- tainment, sports and busi- ness.


Hefner opened the first


Playboy Club in Chicago in 1960 and the venues quickly became the embodiment of urban sophistication around the world. There were more


means of attracting more visitors and also increasing length of visitor stay particularly from new emerging markets of China, Europe and India as well as build- ing upon the US market which has a great deal of potential.


“The obvious economic benefits


from such development will create another segment in the tourism sector, creating jobs as well as additional revenue for the govern- ment,” he added. The Minister, however, stressed the government will ensure that


www.CasinoReview-Online.com • December 2010 • 098


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Hidden Treasure: Troia set for NY opening


NEWS4


Levelling out points to 2011 recovery


There was only one main question on the lips of attendees, delegates and exhibitors at this year’s Global Gaming Expo held November 16-18 in Las Vegas; just when will the recession relinquish its two-year grip on the US casino industry? Respondents to a survey on the health of the sector believe recovery will take much longer than they previously hoped but there are signs it might be loosening. Phil Martin reports.


greenneonshoots UNITED STATES


Carmen Electra shows how glamorous the Playboy Club in Palms in Las Vegas can be


than 30 Playboy Clubs at the height of its success, which left a lasting impression rep- resenting quality, style and contemporary refinement. As Playboy continues to expand the global presence of the brand through multi-


the casino development does not erode the strengths of Fiji’s tourism brand.


“While casino operations means Fiji is developing leisure activities for the tourism industry, at the same time we do not want to harm Fiji’s tourism brand which the gov- ernment and the people of Fiji have invested so much in.” Sayed-Khaiyum has also


assured that there will be laws put in place to protect the people of Fiji and minimise any possible nega- tive social impacts as a result of


faceted entertainment venues, Playboy London will join Playboy Club Las Vegas at the Palms Casino Resort, as well as future Playboy venues planned in Cancun, Macau and South Beach, Miami.


casino operations in the country. “Such protective mechanisms have been successfully imple- mented in countries such as Malaysia and Singapore,” he said. Sayed-Khaiyum said the devel- opment of a casino could also include a convention facility. “Expressions of interest will also be soon advertised interna- tionally in other magazines as well as specific representations being made to particular casino opera- tors and developers who have a credible track record,” he said.


Industry experts at Price Waterhouse Coopers believe a recovery for Las Vegas’ casinos is just around the corner, earmarking the last quarter of 2011 as being the time when the long awaited green shoots will begin to flourish.


Whilst opinion was split


from the exhibition floor and conference halls at the 2010 edition of the Global Gaming Expo, industry analysts at PwC believe that Nevada rev- enues will decline by 2.9 per cent for 2010 as a whole, with a recovery beginning in late 2011 and mid-single digit gains projected for 2012 to 2014. Frank Fahrenkopf, chief


executive of the American Gaming Association, revealed a leveling out of earnings in his address at the Las Vegas exhibition point- ing to an increase in Gross Gaming Revenues in com-


mercial US casinos of 1.3 per cent in the third quarter to just over US$8bn. There is, of course, as


always a spin. Whilst this increase equates to a US$100m increase in casino earnings compared to the same period last year, several states have dramatically increased their gambling offering over the year. This might have led to five states recording increases in GGR ,but states such as Pennsylva- nia, where table games were introduced this year sending GGR up by 27 per cent in the third quarter, have eaten into the profits of others; most notably Atlantic City, where GGR has been savaged and has dropped for 26 consecu- tive months.


“I hope this is the begin- ning of things bottoming out and looking up,” Fahrenkopf said in his address. “We’re still dealing with depressed con- sumer confidence. The outlook is decidedly mixed. The impact of the recession


Cancun hits the Playboy jackpot


Model Carmen Electra welcomes the Playboy bunnies to Cancun where Mexican slot operator Palmas group has hit the jackpot by launching South America’s first Playboy club. The gaming group has teamed up with Playboy Enterprises to offer not just the first Playboy club in the region but also the first fully fledged casino with roulette, poker, Caribbean poker and blackjack tables along- side slot machines and a sports book. FULL STORY PAGE3


Playboy Ahoy: Macau warms to US casino club


NEWS12


www.CasinoReview-Online.com • January 2011 • 099


Conventional Thinking: G2e says bye to LV Convention Centre


EXHIBITIONNEWS23


has been deeper and the recovery slower than nearly everyone predicted. Con- sumer discretionary spend- ing has been significantly depressed throughout most of the year, which means that the gaming industry, and others like it, have continued to struggle. The slot compa- nies are all asking if casinos are ready to refresh their floors and buy new games. That’s what we’re waiting to see.”


Mary Lynn Palenik, direc- tor of gaming practice at PwC


US, believes that improved economic conditions will trigger a recovery in US gaming revenues in late 2011, although 2007 gaming revenue levels will not return until 2012.


“The gaming industry is


facing an evolution, which presents both challenges and opportunities for the indus- try’s established players and those considering entering the market,” she said. “The explosion of entertainment choices for consumers will make it vital for the industry


to produce an offering and experience that consumers want to spend money on.” PwC is predicting that US gaming revenues will increase to $68.3bn in 2014 from $57.2bn in 2009, a 3.6 per cent compound annual increase. Eric Tom, chief operating


officer of International Game Technology, said: “Everybody would love it to be back to where it was in 2007. But no one is sure when the players are going to come back and start spending more. At some


point in the next three or four quarters, somebody’s going to want to take that first mover advantage, and then everything cascades from there.” Former IGT chairman


Chuck Mathewson added: “It’s going to be a long recov- ery, and we’re starting to see some traction. The industry won’t be as robust as it was but it will recover. We just need to continue to provide the entertainment options that people want.” CONTINUED ON PAGE 3


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February 2011 • feature 49


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