Harrah's Entertainment
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Submission to the Department of Justice, Equality and Law Reform Review of Gambling in Ireland Harrah’s Entertainment, Inc. Statement of Issue The only forms of legal gambling in Ireland are bookmaking, lotteries and amusement arcades. Casinos operate through what some believe to be a legitimate loophole in the law allowing private members clubs, until recently completely unregulated. The maximum stakes and prizes on amusement machines are controlled but it is easy to find machines with jackpots many times the legal maximum. Some of the laws governing gambling in Ireland have been on the statute books for over half a century and now do not cover many of the technical innovations that have occurred in the intervening time. These laws do need to be updated and modernised to allow for a well regulated gambling industry. Done correctly, learning from what has and has not worked in other jurisdictions Ireland has, through thoughtful legislation, an opportunity to capture significant economic benefits and at the same time reduce regulatory costs, social impacts and concerns This submission is mainly concerned with casino gambling, the forms it takes and the differing legislative/regulatory frameworks. A Useful Casino Taxonomy All casinos are not created equal. A full understanding of the implications of Ireland’s policy on casinos requires clarification of the different types of casinos and their different impacts. There are many ways to categorize casinos, but perhaps the most useful for policy makers is a taxonomy based on their orientation and primary audience.1 Destination Integrated Resort Casinos are complexes that cater primarily to domestic tourists or international visitors which, among the various types of casinos, offer the widest variety of assets and amenities. They typically feature dramatic architecture; a large gaming space with a wide variety of casino table games and slot machines; a variety of restaurants offering meals at various price points; a large number of hotel rooms and suites, often of very high quality; entertainment outlets such as show rooms, theatre and lounge shows, concert venues, etc.); substantial convention, meeting, and exhibition facilities; indoor and outdoor recreation assets; and retail shopping. 1 The analysis here and following draws heavily upon the writings of three of the world’s leading gambling policy experts: Dr. William R. Eadington from the University of Nevada, Reno; Dr. Peter Collins, University of Salford; and Eugene Christiansen, Christiansen Capital Advisors. It also draws on our more than seventy years of experience operating various types of casinos around the world under a wide range of market and regulatory conditions. Examples of Destination Integrated Resort Casinos in various parts of the world include Bellagio, Wynn Las Vegas, Caesars Palace, Mandalay Bay, the Mirage, and the Venetian (all in Las Vegas); Wynn Macau and The Venetian (Macau); Sun City (South Africa); Jupiter’s (Australia); Genting Highlands (Malaysia); and the Atlantis (Bahamas). Construction and opening costs of Destination Integrated Resort Casinos often exceed US$1 billion. Destination Casinos are casino/hotel facilities that cater primarily to tourist visitors (domestic or international) and which, in comparison to Destination Integrated Resort Casinos, offer a more limited mix of gaming and non-gaming assets. They differ from Destination Integrated Resort Casinos not only in size and scale, but also because the primary emphasis within a Destination Casino is primarily the casino floor itself, whereas a Destination Integrated Resort Casino is a multi-dimensional coordinated entertainment centre, with the casino still playing a key role. Some examples of Destination Casinos include the casinos in Lake Tahoe and Reno, Nevada; the smaller Las Vegas Strip casinos; most Atlantic City casinos; the casinos in Biloxi and Gulfport, Mississippi; and the larger casinos in Nova Gorica, Slovenia. The construction and opening costs of Destination Casino is between US$100 million and US$500 million. Urban or Suburban Casinos are complexes located in densely populated centre cities or suburbs of major metropolitan areas that cater primarily to the areas’ residents. Though they may have some tourist oriented assets, such as hotels and convention facilities, most customers are from the local area. Such complexes can be small or large, and their size is often determined either by legislation or by the size of the market and corresponding competitive conditions. The provision of non-gaming amenities in comparison to Destination Integrated Resort Casinos is generally less because the demand from customers who live close to such casinos is more gaming-centric. Furthermore, other businesses in the metropolitan area often provide many of the non-gaming amenities that would typically be provided at Destination Integrated Resort Casinos. Examples of Urban or Suburban Casinos in various parts of the world include the American casinos in and around Kansas City, Cincinnati, Detroit, New Orleans, and St. Louis; Casino de Montreal (Canada); Crown Casino in Melbourne and Star City Casino in Sydney (Australia); Sky City Casino in Auckland (New Zealand); the casinos found in London, Manchester and Birmingham (UK); and the casinos in Cape Town, and Port Elizabeth (South Africa). There are also urban casinos in European cities such as Stockholm, Helsinki, Berlin, Venice, and Zurich. Capital costs for an urban casino can range from the tens of millions of U.S. dollars (i.e. most U.K. urban casinos) to billions (i.e. the Crown Casino in Melbourne.) Gaming Saloons and Slot Arcades are limited gaming facilities that typically offer only slot machines. They are generally spartan and small in size, with the number of slot machines ranging from 30 to perhaps 250 per location. Capital investment is limited, and the facilities are usually integrated into existing retail or business districts. In some jurisdictions, gaming devices are mixed with non-gambling amusement devices, and sometimes there are no age restrictions. Gaming Saloons and Slot Arcades are almost exclusively oriented to a local market and are sometimes associated with other businesses or offerings, such as being part of a bar or tavern. Examples of gaming saloon and slot arcade facilities can be found in such countries as the UK, Australia, the Czech Republic and in Slovenia. Pachinko/Pachisuro parlours in Japan are another illustration. Capital costs of opening a gaming saloon or slot arcade are minimal and also the employment created is minimal. Convenience Gaming Locations are venues engaged in another kind of business (such as a pub, club, hotel or restaurant), but which have a limited number of slot machines or other electronic gaming devices. Typically, the number of gaming devices is fewer than 15 (depending on local laws). There is almost no capital investment associated with convenience gaming beyond purchasing the gaming devices themselves, and the market for such gaming devices is almost exclusively the neighbourhood where the business is located. Convenience gaming venues can be found in pubs and betting shops in the UK and in bars and taverns in many provinces in Canada, Australia and New Zealand, as well as in several states in the U.S. and in many European countries. Betting Shops/Fixed Odds Betting Services refers to those betting shops in the UK having up to four fixed odds gaming machines that offer a variety of fixed odds games, with roulette being one of the more popular. Betting shops in the UK began offering these machines in 2001. They might best be considered a subtype of a convenience gaming location, whose “other business” is in fact another form of gaming, in this case betting. The installation of fixed odds gaming machines adds an aspect of the casino environment to the traditional betting shop. In general, the forms of casino gaming listed first in the preceding taxonomy are associated with the greatest ratios of benefits to costs, when compared with the forms of casino gaming listed at the end of the taxonomy. This is only a general rule, because there can be wide variation within categories, and because a successful facility in a “lower” category can result in greater benefits than an unsuccessful facility in a “higher” category. But the evidence from the various forms of casinos around the world suggests that the greatest ratios of benefits to costs from casino facilities relate to: – the market and the enabling legislation’s ability (principally though not exclusively through moderate levels of taxation) to incent and re-incent capital investment; – the ability of non-gaming offerings such as restaurants, retail shopping, and entertainment to be attractions in their own right; – the ability of facilities to draw customers from outside the immediate area or greater distances; – the ability to implement effective and pro-active responsible gambling programs and strategies; and – the potential for facilities to be catalysts for tourism and leisure industry development extending beyond their specific assets. And again, while these are only general rules, economic development principles as well as the real-life track records of various types of facilities around the world suggest rather convincingly that destination integrated resort casinos, destination casinos, and larger urban and suburban casinos are far more effective economic engines than convenience gaming outlets, gaming saloons, and similar facilities. Global Overview Each jurisdiction