ECA’s European Casino Industry Report

Prepared by ECA’S EUROPEAN CASINO INDUSTRY REPORT

he European Casino Association (ECA) proudly presents the second edition of the ECA European Casino Industry Report. After the great success of the first report in 2013, it was Tclear that the European Casino Industry Report would become an annual standard, not only for all ECA members, but also for many other stakeholders presenting a comprehensive overview of the European casino industry. As was also the case last year, all of the ECA members have contributed to the chapter about their country. Their support is essential to the completeness and accuracy of the report and, as such, is greatly appreciated. This report would also not be possible without the general support from ECA’s associate members, Herzfeld Consulting and GamblingCompliance.

There have been a few recent developments within the ECA membership, which are reflected in the additions to this year’s ECA European Casino Industry Report. ECA is happy to include chapters about its two newest members, , and most recently, the United Kingdom. Though ECA and the National Casino Forum have maintained positive relations throughout the years, both organizations felt that joining forces would help to fulfil the common industry regulatory and policy endeavours and that a unified voice would reinforce our influence in . It is very rewarding to see that ECA continues to amass strength as it reaches the 10 year anniversary of its official founding in January 2005. Today ECA represents an industry of close to €8bn and the interests of approximately 900 casinos and over 70,000 employees in 25 countries across Europe and is the recognised voice of the licensed European casino industry. To meet the needs of the growing membership, our new modern offices at Avenue de Tervuren 168 will serve as a central meeting place in Brussels for our board, working groups and secretariat.

Playing safe and secure

In the field of responsible gaming and consumer protection, ECA’s members have always been at the forefront. They have never shied away from their responsibilities towards their customers. The latest achievement regarding player protection, by the combined efforts of the ECA members, is the creation of the ECA Responsible Gaming Certification Framework. This framework sets the standards for Responsible Gaming. Casinos are audited by independent experts according to these standards, and a positive outcome results in Certification for Responsible Gaming endorsed by ECA. The new framework was completed last year, but will be regularly monitored for possible improvements, since this is a key issue for ECA.

Developing licensed and controlled online gambling

The 2014 ECA European Casino Industry Report not only promises a detailed look into the status of the land-based casino industry in the different European countries, but also describes how several of our members are coping with the challenges and opportunities of online gaming, especially now that it is becoming regulated in more and more European countries. It is clear that there is no standard answer on how to deal with online gaming, other than to simply use the opportunity to offer our services through an additional channel of distribution. This development helps our members stay in touch with their customers, even when they are not onsite. The extent to which our members are able to make use of these additional services depends on the market regulations in their home country. That is, whether online gaming is legal and, if so, how well their market is protected against illegal operators.

Illegal online gambling services are, as in large parts of the world, still a big problem in many member countries. The remarkable thing is that in some regulated countries, the newly licensed online operators, who were previously offering their services illegally, are now claiming that regulators do not do enough to fight the (remaining) illegal operators. These newly licensed online operators are now complaining that the playing field is not even and the competition unfair. Although this is clearly a case of the pot calling the kettle black, these newly licensed online operators are now beginning to understand the real issues at stake.

Online gambling involves a greater risk of addiction than land-based gambling due to the lack of direct contact between the consumer and the operator as well as the omnipresence of the games on the internet. There is a need for control and supervision of gambling activities on a national level, as well as measures to enable gambling to be conducted properly, fairly and transparently. In addition, the risks to the safety and well being of consumers inherent to illegal online gambling seem to be grossly underestimated by some. Illegal operators generally do not abide by any consumer protection or anti-money laundering rules, fraud prevention measures, or taxation obligations.

In contrast with land-based operators, illegal online gambling operators do not offer any guarantees to consumers in terms of the protection of assets, payment of winnings, integrity of games or guarding against excessive gambling. Any and every consumer protection measure has no effect on illegal gambling services, because of the very fact that they are operating illegally. They simply choose not to follow the rules. This is why time and effort should be focused on enhancing the fight against illegal gambling operators in order to create a safe gaming environment for European consumers. This means that illegal gambling websites should face strict action by competent authorities. Time and time again, this issue of illegal online competition has been raised by the land- based casino operators. But in the past, since the proposed measures were not backed by the EU, national politicians and regulators would not support our recommendations.

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As a result, ECA agrees that, in the fight against illegal gambling and betting, the identification of best practices is a worthwhile Applying anti-money laundering measures to the entire gambling industry initiative by the current Italian presidency. ECA believes that combatting illegal gambling, along with the dangers illegal gambling entails for consumers, should be a focal point for the EU. ECA likewise believes that the Subsidiarity Principle, which enables In this highly competitive gaming market, the revision of the Third Anti-Money Laundering Directive is of particular interest to the member states to implement the most effective and appropriate enforcement measures, should be maintained. ECA.

Ideally, cooperation, including the sharing of best practices about how to fight illegal online gambling, should be global. This is Should the status quo regarding the €2,000 threshold for customer due diligence be maintained by the European Council and the simply based on the nature of the internet. A wide range of possible tools available to prevent unlicensed operators from offering European Commission, this would continue the undesirable situation whereby the threshold is lower than the FATF recommended their services illegally already exist. These include blacklisting, blocking illegal sites, establishing secure and traceable payment €3,000. methods, blocking financial transactions and controlling illegal advertising, etcetera. No measure, by itself, suffices. The strength lies in the member states applying a combination of several tools to protect their citizens in accordance with their own gambling policy. Since one of the goals of the Third Anti-Money Laundering Directive is to ensure it is in line with the international FATF standards, On many occasions, the most effective measure has proven to be the arrest and prosecution of the (ultimate beneficial) owners of it is difficult to understand why the threshold would not be the same in Europe. Particularly because the Anti-Money Laundering/ illegal operations. Measures have to be severe, because, at the end of the day, there is no room for criminal behaviour in regulated Combatting the Financing of Terrorism (AML-CFT) standards are much higher than in most other parts of the world. This point gaming markets. of contention is especially important because a lower threshold leads to heavier, albeit unnecessary, administrative burdens for casinos. Concretely, these burdens translate into higher costs, and therefore, cost and job cutting efforts for legal land-based casinos Calling for tax levels that allow casinos to invest in Europe. Online casinos and other gambling sectors are currently not affected by the Directive, thus further exacerbating the problem of unfair competition. Regulated gambling markets also call for reasonable and realistic gambling taxes, which would likewise fall under the country of destination principle. For example, just as VAT will be applied in the country of reception in all EU countries, starting in 2015, ECA believes that broadening the scope of the directive to the online gaming industry, as well as to other gambling sectors, is of so too should gambling taxation be applied in the country of consumption. The United Kingdom has decided to introduce this particular significance. ECA calls for trialogues between the European Commission, the European Parliament and the Council, to principle, beginning December 1, 2014. Online operators who offer services to people who usually live in the United Kingdom will be ensure that the scope of the directive is extended to all forms of gambling and to guarantee that the directive includes measures confronted with the new positioning of the consumption tax. Taxation will no longer be based on the rate of the place of supply, but that strike a better balance between being responsible and being workable. The control of the ultimate beneficiaries, shareholders, rather, on the rate of the place of consumption. and management of all gambling operations is crucial to avoid the biggest risk of AML-CFT in gambling, namely, the misuse of a gambling operation for AML-CFT purposes by the owner/operator. Therefore, we strongly recommend the use of the same AML-CFT These new taxation rules are highly criticised, mostly by offshore online operators claiming that the proposed tax levels make it standards in all facets of the gambling industry. impossible to operate a profitable business. Yet, when compared to the generally very high gambling tax levels, which the land- based casino operators in Europe are facing, these claims make absolutely no sense. European casinos still hit by weak economy

If anything has proven to be a hurdle in the stagnating European land-based casino market, it has been the extremely high gambling When we compare the 2013 revenues of the 25 ECA member countries on a year-by-year basis, we see that only eight countries tax levels. These tax levels make it very difficult for land-based casino operators to invest in the development of their facilities, have shown an increase. These increases vary from a modest 1.9 percent in , to a leap of 75.9 percent in , and are including non-gaming services, in order to attract new customers. often explained by structural changes in the respective markets. The high growth percentage in Hungary can, for the most part, be attributed to the slot results. Slot machines in the casinos saw a 275 percent jump because of the shutting down of all street machines in the arcades in Hungary. Europe Outlook: Online Gambling The other six countries that saw improvements in their results were Latvia, Romania, , , United Kingdom and , with a rise of 4.8 percent, 5.1 percent, 7.4 percent, 10 percent, 10.2 percent and 18.2 percent, respectively. Like Hungary, Poland has been benefitting (+18.2 percent) from the reduction in street machines, which should be banned all together by the end of 2015. In the United Kingdom, the growth of 10.2 percent was mostly realised by one new casino and the table games in London casinos, especially American roulette followed by blackjack. In Latvia, Romania, Lithuania and Slovakia the rise in overall results was mainly due to slot machines.

Unfortunately, with 17 countries showing a decrease in revenues, the European casino industry is not out of the woods, yet. The largest drop in revenues happened in Greece with another -9.7 percent, causing a total drop in revenues of -52 percent compared to 2009. Other countries that were severely hit include , Romania, and the , with results falling between -7.1 percent in Italy, to -6.4 percent in the Netherlands. Compared to previous years, the decrease in Italy was less severe thanks to improved results in table games. The smallest decreases happened in with -1 percent, and Switzerland with -1.7 percent.

Common factors for the decline in revenues in the European casino industry since 2008 are, among others, the recession, stricter regulations, the introduction of smoking bans, the ongoing competition from illegal online operators and from street machines, arcades and VLTs (especially as these are often not as strictly regulated as casinos). Last but not least, bottom lines of land-based casino operators throughout Europe are burdened by heavy gaming taxes, the levels of which date back to the days when the gambling landscape looked entirely different.

On the upside, we see a growing interest among European operators to attract Asian customers who come to Europe for business or tourism. It is an opportunity to make use of all of the wonderful locations spanning Europe, which are rich with beautiful, historic sites and which make this continent unique; to experience the local hospitality and the many different cultures; to get a taste of the original local flavour, something that cannot be found anywhere else.

We hope this report will help you to get a good feel for what is happening in the European casino industry and what can be expected in the near future.

Ron Goudsmit Chairman, European Casino Association

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ABOUT THIS REPORT

ECA Based in London, Washington D.C., California and Taipei, we USE OF INFORMATION WITHIN THIS REPORT offer existing market participants, regulators, governments The ECA, the European Casino Association (www. and investors easily accessible and up-to-date information on In preparing this report the European Casino Association, europeancasinoassociation.org), is a non-profit organisation market realities, and a reliable and independent listening post to GamblingCompliance and Herzfeld Consulting have made seated in Brussels, which represents the interests of almost 800 monitor legislative developments at local level. every reasonable effort to ensure the accuracy of the contents. casinos and approximately 55,000 employees across Europe. However, no representation or warranty (express or implied) Founded in the early 90s as the European Casino Forum, the ECA Tracking regulatory change across the global gambling industry is given as to the accuracy or completeness of the information has gradually grown over the years and today includes members is our core business, which means we can provide immediate contained in this report. Furthermore, the European Casino from the majority of the EU’s member states as well as from access to an independent, cost effective and skilled team to Association, GamblingCompliance and Herzfeld Consulting Switzerland and Serbia. deliver tailored research reports. do not intend this report to be interpreted, by any reader as constituting legal advice. Any reader, or their associated The main purpose and objective of the ECA is to address Commissioned research from GCRS could help you: corporate entity, who relies on any information contained in issues related to casinos and / or casino operations with the this report does so entirely at their own risk. The European European institutions, and in doing so, to provide a focal point • Track gambling legislation and regulation across Casino Association, GamblingCompliance and Herzfeld on casino matters for casino operators as well as for EU and jurisdictions and anticipate and respond to legislative Consulting and its employees do not accept or assume any national policymakers and stakeholders. To this end, the ECA developments liability, responsibility or duty of care for any consequences of aims to serve as a network, communicate and work with the EU • Compare key facets of legislation and regulation across you or anyone else acting, or refraining to act, in reliance on the institutions on anything related to casino operations. jurisdictions information contained substitute for local legal advice in each • Grasp the political fundamentals driving legislative jurisdiction covered. Before acting or refraining to act on any Within said purpose the association aims to: movements information you read in this report it is strongly recommended • Monitor competitor lobbying spend that you obtain independent legal advice. Finally, the content of • Collect and provide information on casino operations and • Gauge the size and growth trajectory of gambling markets this report is based on information available at the time it was casino administration including assessment of European via product-specific data forecasts drafted and does not prejudge any modifications or amendments and national legislation and regulations addressing casino in any form whatsoever that may be implemented after the operations Contact us to find out more: [email protected] drafting of this report and which may influence its content. • Increase awareness and understanding of the casino The European Casino Association, GamblingCompliance and industry amongst EU policy makers and stakeholders www.gamblingcompliance.com Herzfeld Consulting may not be held liable for any of the said • Constructively contribute to EU decision making on matters modifications or amendments. affecting the casino sector. Herzfeld Consulting © Copyright 2014 European Casino Association. All rights The ECA is, amongst other things, active in many different areas reserved. This report may be: (i) copied, photocopied or related to gambling policy. Paul Herzfeld has been CEO of an international casino and duplicated in any form by any means; or (ii) redistributed or gaming group, responsible for its expansion into new markets republished. Furthermore the ECA advocates for solid consumer protection and the development of projects in Europe, Middle East, measures in the field of gambling by ensuring the member Australia, South Africa, Canada and South America. states are in a position to enforce measures against illegal gambling. The fight against illegal gambling is one of the key With his company Herzfeld Consulting (www.herzfeld- priorities for the ECA members, as well as ensuring a certain consulting.com) and based on more than 35 years of experience level playing field between the different actors in the gambling in the gaming industry he provides services for international market. gaming companies. Herzfeld Consulting is specialised in the fields of strategy consulting, identifying suitable business models, efficient search for investors, launching productive GamblingCompliance Research Services cooperations and entry into new markets. Herzfeld Consulting is proud to be an associate member of the European Casino Authors Association (www.europeancasinoassociation.org). Andrew Gellatly Daniel Macadam Lina Sennevall Mark Taylor Daniel Stone

Editing Louise Coleman Hannah Frost

Gambling Compliance Research Services is a full service provider of legal, regulatory, political and business insight for the global gambling industry. 6 European Casino Industry Report European Casino Industry Report 7 ECA’S EUROPEAN CASINO INDUSTRY REPORT

CONTENTS

ECA’s European Casino Industry Report Italy 63 Returning growth boosts Nordic markets 10 Latvia 67 Europe’s land-based casinos go online 12 Lithuania 71 Casinos brace for money laundering shake-up 14 Luxembourg 75 Jurisdictions Netherlands 79 Austria 17 Poland 83 Belgium 23 Portugal 87 27 Romania 91 31 Serbia 95 Estonia 35 Slovakia 101 39 Slovenia 105 France 45 Spain 109 49 113 Greece 53 Switzerland 117 Hungary 59 United Kingdom 121

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RETURNING GROWTH BOOSTS NORDIC MARKETS

BY LINA SENNEVALL

he Nordic region, which has tended to run casinos through machine association, DAB, to boost business by overturning Vaalimaa was chosen because of its closeness to Russia’s Norsk Tipping, its junior coalition partner, the Progress Party, state-owned monopolies, offers an alternative model to the country’s differential tax system was unsuccessful at the second largest city, St Petersburg, located only 200 kilometres has already pushed through a compromise to allow land-based T many European countries, but their casinos are still facing European Court of Justice. Danish land-based casinos are subject away. RAY was hoping the casino would attract customers poker tournaments in for the first time in 250 years. similar difficulties and pressures to those seen elsewhere in to taxation of up to 75 percent of gross gaming revenue, while from Russia where casino gambling is illegal apart from in six The government is currently investigating the economic and Europe. online operators currently only pay 20 percent. Royal Casino dedicated gambling zones. socio-political consequences of a licensing system for online Aarhus and DAB tried to contest the tax arguing it amounted gambling. As with many of Europe’s casinos, the slow and often uneven to unfair state aid. Several European countries that have a RAY is currently re-evaluating how to use the licence but economic recovery has resulted in customers having less differential tax system, or are in the process of establishing one, changing the location is expected to delay the opening of Members of the Progress Party’s youth wing have also called for disposable income to spend in Nordic casinos. Competition from for online and offline casinos, including the Netherlands, Italy Finland’s second casino even further. Timo Kiiskinen, senior vice the casino ban to be lifted and proposed that one should be built low-tax online competitors, which offer a form of convenience and Spain, watched the case closely. president of business operations at RAY, said no decision has yet inside Oslo airport as a pilot project. Norway’s largest airport, gambling that has proven more popular than destination been taken about the second licence, adding that the operator Oslo Gardermoen, was being pitched as the perfect place to gambling in many European markets, has also hampered However, in September 2014, Europe’s highest court dismissed will now “carefully consider the next steps”. trial the country’s first casino to limit Norwegians’ exposure to growth. the case on the grounds that the claimants did not have a right gambling. The casino would only be available to passengers to challenge the tax as they had failed to show a “substantial Kiiskinen said 15 locations were initially considered for the who have passed through the security control, and could be The Nordic countries enjoy a gross domestic product per capita adverse effect”. The decision can be appealed, with the deadline second casino and RAY will now go back to review the list as run by a private operator rather than Norsk Tipping. For now, that is higher than the European average, but land-based casino at the end of November 2014. part of its new assessment. Low-stake gambling machines, players of card games will have to make do with the five regional revenues have gradually fallen or remained stagnant in the last also operated by RAY, are currently the most popular product in qualifiers and one final of the Norwegian Poker Championship. three years, that is until recent results which showed some signs Bertil Jacobi, Royal Casino Aarhus’ lawyer, said after the ruling: Finland. The potential for growth is evident. Finns are some of The government has also submitted a bill that would allow of a small but encouraging rebound. “We believe that this decision is wrong and it is likely that we the highest spending slots players in Europe, with 18 percent of private poker tournaments between friends that can consist of will appeal it. The Danish government has not won the case, and adults saying they had played in the last week. Around 20,000 up to ten participants and a maximum stake of NOK1,000 (€120). The 11 casinos in the Nordic countries generated revenue of there are two ways to continue; one, the appeal and secondly, machines are located across the country in supermarkets, petrol €216m in 2013. The largest annual decline was seen in Sweden going through the Danish Court system with a prejudicial request stations, hotels and pubs and restaurants across the country. where net gaming revenue fell 3.6 percent to €132m, followed to the EU court.” However, the decision about where and how to channel this by Finland with a 3.4 percent drop to €28m and Denmark down slot enthusiasm into a new casino is now one of the biggest 1.8 percent to €56m. Sweden challenges facing RAY.

However, in the first half of 2014, the casino market in Denmark Sweden’s state-owned operator Svenska Spel also faces uneven Norway and Finland’s Casino returned to growth. It is a sign that competition from casino websites. The monopoly operates four the casinos are staging a comeback, even if positive regulatory casinos in the country under the name Casino Cosmopol, and Together with , Norway is the only country in Europe that changes in Finland and Denmark are yet to materialise. has blamed an inability to launch a regulated online offering still does not allow land-based casinos. However, a more liberal as one of the main reasons for stagnant revenues. Offshore approach to gambling taken by a new Norwegian government operators are currently able to advertise freely to Swedish elected in October last year has raised hopes that casinos could consumers and have eaten into Svenska Spel’s share, leaving it be introduced. Although the ruling Conservative Party is still in with just 45 percent of the total market. favour of keeping the country’s monopoly held by state-owned

However, change could now be on the way for Sweden’s online gambling sector. In October 2014 the European Commission decided to take Sweden to the European Court of Justice, seven years after first warning that the country’s gambling regulation may contradict EU law. The move led to the new coalition government, which came to power in September 2014, pledging to “speed up” the process to find a licensing system for gambling. The two ruling parties, the Social Democrats and the Members of Norway’s Progress Green Party, have previously said they are in favour of opening Party youth wing are proposing up the online market to allow commercial operators to apply for that a casino should be built in a licence. Oslo Gardermoen airport as a pilot project. Denmark The Danish model has been proposed as a suitable option for Sweden; however, both parties have said they want Svenska Denmark is the Nordic country with the most casinos and is the Spel to remain under state control and neither has expressed a only one that allows foreign investors. At the moment, four of will to open up the land-based casino market. the six venues are operated by Casinos Austria International and two are run by smaller Danish operators. Two more licences Finland are available but are yet to generate any interest as the casino market has struggled to grow revenues in a market dominated Finland’s RAY is the only operator authorised to organise casinos by betting and monopoly Danske Spil and a growing in Finland and currently only one venue located in the country’s online segment. capital is in operation. However, plans to expand with a second casino in the city of Vaalimaa on the Russian border fell through The attempt by one Danish casino and the country’s slot in September 2014 because of “delays and related uncertainty”.

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EUROPE’S LAND-BASED CASINOS GO ONLINE He said the firm’s best chance of halting the encroachment Marc Friedrich of the Swiss Casino Association said: “It is of unregulated online gambling is to emphasise its social forbidden for everybody, but in spite of that there are many responsibility. other offers from offshore sites, so for the players it is not BY MARK TAYLOR forbidden to play. “Svenska Spel’s brick and mortar casino business is operated by its wholly owned subsidiary; Casino Cosmopol,” Käll said. “We think there are about 150m Swiss francs going to foreign companies each year, while the current rules are in place. “Many of our employees in Casino Cosmopol have been with us since the start over ten years ago. “The government is preparing new law and legislation, but we don’t think anything will be in place until 2018, and it will be too “This means that we have substantial knowledge and late for some by then. experience on just about all aspects of casinos, from successful and appreciated games to indicators of problematic gambling “The money is going abroad when it could be kept within our behaviour. borders.”

“A relevant comparison is our online poker, when we introduced As land-based operators across Europe wrestle with different online poker we managed to take a substantial market share regulatory approaches that they believe frequently deny them with a lower share of problematic gamblers than the so-called a level playing field, and fail to protect them from illegal offers, grey market operators.” one thing is common, a knowledge that potentially rewarding crossover is there as long as each operator is aware of their He said the overlap between land-based and online meant limits. the casino had lost customers to grey market operators, which jarred with the company’s ethos of providing a safe “Some of the large companies have their online strategy environment. wrong,” Thomas told GamblingCompliance.

“First and foremost we feel a responsibility towards those “They are offline operators, and they suddenly think they can customers — where the risk is greatest our presence is most take on the online big players, and they can’t, you’ve seen it needed. with the betting shop chains, they have tried, and floundered— until they partner with online chains. “So if we cannibalise from ourselves it really doesn’t matter and he brains behind some of Europe’s most successful land- “People still want the glitz, the glamour and spectacle of an when we channel customers from the unregulated operators “We are offline players, we need to benefit where we can from based casinos are emphasising their own unique skills offline final, and that real world experience. to a safer alternative it is a win for the customers as well as the online, but not try to take on the online people because they are Tand their social responsibility as they seek to extend their society at large. better at it.” brands online. “Somewhere in the middle online is training people, learning how to play blackjack in that home environment, learning how to “What is detrimental is that there are an increasing amount of Simon Thomas, CEO and chairman of one of the UK’s largest play roulette, and then they want to try the real thing.” so-called grey market operators that is outside the reach of the casinos, London’s Hippodrome, has shown astonishing skill at Swedish regulator. making the most of its highly visited site on the edge of London’s Thomas acknowledges the potential of online; however, Leicester Square, but the exploitation of his online real estate he believes his customers will always seek the real world “Over time though the current situation with a completely un- has been far less easy. experience too. level playing field is not sustainable.

The entrepreneur spent more than £40m turning the Grade “If you play online nothing replicates the feeling of playing on a “We have confidence in that the current overview of the 2-listed West End building into a formidable venue, quickly really good blackjack table.” Swedish Gambling Act will rectify many of the problems that gaining a 60 percent awareness ratio among Londoners of the are a reality today.” local landmark. “We are still very social creatures, getting dressed up, going into a glamorous place in the heart of the west end, enjoying In Switzerland, where land-based casinos are forbidden from The development of an online Hippodrome has been far harder. themselves.” offering any form of online gambling, the issue of social The casino has its own online portal but also has a partnership responsibility is again the heart of their argument for looser with American online poker giant PokerStars, which has a live Although UK casinos can offer all of their table games and slots regulation. floor inside the building. online, many operators around Europe struggle with a limited range of products that will never replicate the casino floor “We are trying to make the most of technology, but it moves at experience. an enormous rate,” Thomas said. Online casinos have soared in popularity in Sweden in recent “When we opened online two years ago we were toying with years, but the government considers the games to be “high-risk” mobile-enabled website, it’s now all mobile; people consume on and the state-owned Swedish monopoly has not been allowed tablets and phones, the impact that has had in just a few years to offer them alongside its peer-to-peer poker website. has been breathtaking. The unregulated market thrives, to the chagrin of, among others, “To anticipate too far into the future is too challenging; the skill state-owned Svenska Spel, which has asked the government for is to be sufficiently flight of foot that you can keep up with the permission to offer online casino games in an effort to compete. change, not investing so heavily in one moment that you get stuck with it.” Svenska Spel’s chief executive Lennart Käll said the company knows the business, knows the risks and has a ready-made Sweden’s Casino Cosmopol is still waiting for the “Naturally there is a risk of cannibalisation; it’s almost template from its poker offerings it would feasibly roll out. chance to extend its customer care into the online world, while Swiss casinos, like the one in Lucerne impossible to track on the threshold of a casino. (left), are losing out to unlicensed online competition.

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BY MARK TAYLOR

urope’s resilient casino industry has developed a siege A lower threshold leads to “a heavier and unnecessary Threshold levels, linked transactions and the monitoring of politically mentality in recent years amid the eurozone crisis and the administrative burden for casinos”, meaning higher costs, exposed persons are a growing Econtinued threat of online gambling eating into cost-cutting and job cutting efforts for legal casinos in challenge for Europe’s casinos. profits. Europe, he added. “Tracking But some now see death by a thousand Executives at Finland’s sole casino cuts as a possibility following tighter down each customer’s agreed that the new AMLD could create anti-money laundering proposals which “unnecessary burdens on the business, would intensify bureaucratic burdens. behaviour or movement because it might lead to wasteful use of resources”. Talk of job losses and increased would seriously impact overheads followed the European Marko Hurme, vice president of RAY, Parliament decision on March 11, the casino industry,” Ron the state operator of Finland’s Casino 2014 to pass the Fourth Anti-Money- Helsinki, said that the current regime Laundering Directive (AMLD). Goudsmit, ECA chairman was problematic, and although change was needed, the operator realised it The draft must still go through the hands warned. would mean “heavy” investment. of the Council of the European Union and the European Commission, and it may be 2015 “We clearly need to monitor AMLD process a before operators are compelled to act. little bit longer,” Hurme said. “Naturally there are topics like the threshold-level and politically exposed person Many of Europe’s casinos have already started drawing up their list (PEP) which clearly affects how processes need to be at least contingency plans, even as bookmakers and slot arcades are partially re-evaluated.” studies in respect of the risks, costs and benefits seems lobbying to be carved out of the directive’s scope. inadvisable at this time.” Risk assessments involve Anti-money laundering controls are built into many casino weighing up services Politically exposed persons is also an area of anti-money business models from the Third Monday Laundering Directive, provided, the markets laundering law in which there is seemingly little legal guidance, paper before it and the European Commission agree on final but lawyers have warned procedures will still need an overhaul. they are provided in, and yet also leaves casinos significantly exposed to sanctions text. the customers receiving from gaming regulators and financial institutions. “Casinos will be obliged to re-evaluate entirely their risk services, and the Such is the European Commission’s determination to rid profiles,” said Christine Duhaime, an anti-money laundering payment processing For executives on the casino floor, much is still unknown about gambling of money laundering, it is determined that most lawyer with a specialised financial crime practice. for strengths and timings and key details such as the way casinos have to link up , slot arcades, betting shops and online gambling are weaknesses in to the database of politically exposed persons. included under the directive; but there is no guarantee that once “Implementing the 4th AML Directive will be of significant cost respect of financial the lobbying is finished that there will be a level playing field to casinos,” she added. crimes, mostly money Emmanuel Mewissen, chief executive of Circus Groupe, Circus with Europe’s land-based casinos. laundering, terrorist Belgium, said the company was ready but that investments “Compliance costs with existing AML laws are overwhelming financing and sanctions would be “heavy”. and costly, sometimes prohibitively so.” violations. “Because of changes in the past we lost a lot of regular The new directive has a threshold trigger of €2,000 for all land- “Adding on additional customers,” he said. based casino transactions, deposits and payouts – much lower requirements will drive than the €3,000 recommended by the Financial Action Task up compliance costs “We do not believe at this stage that the anti-money laundering Force. that will be passed on rules and their application in Belgium has had a positive effect on to consumers and stifle the intention to protect the players.” That would create the unwanted scenario of potentially innovation and re- interrupting a high-roller’s game to demand documentation investment,” Duhaime In Spain, Santiago Asensi, founding partner at Asensi Abogados, when they trigger the limit. said. said many casinos already feeling the brunt from previous legislation saw positives in the widened scope of the 4th AMLD Currently, casinos can circumvent this by taking identification as “In reality, the casino to include remote gaming. part of a registration process, or by other means. sector is not known for money-laundering or He said Article 7.5 of Spanish AML legislation (Law 10/2010) Rigorously enforcing the process would be time-consuming, terrorist financing, nor established that casinos apply customer due diligence measures costly and could result in job losses, according to Ron Goudsmit, for sanctions violations when customers carry out operations of purchase or sale of chairman of the European Casino Association. and thus, to target it chips for an amount of €2,000 or more, meaning many were for increased onerous already compliant. “Tracking down each customer’s behaviour or movement would AML requirements seriously impact the casino industry,” Goudsmit warned. without adequate The Council of the European Union could still reject the draft Slot machines, even at low stakes, will find themselves captured by the 4th AMLD. fourth directive, which is the next institution to scrutinise the

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AUSTRIA

Casino Bad Gastein Casino Baden Casino Bregenz Casino Graz Casino Innsbruck Casino Kitzbuhel Casino Kleinwalsertal Linz Vienna Casino Linz Baden Salzburg Casino Salzburg Bregenz Casino Seefeld Seefeld Kitzbuhel Innsbruck Bad Gastein Casino Velden Kleinwalsertal Graz Casino Vienna Velden

The Austrian gaming market is dominated by casino and lottery gaming, which is monopolised and regulated federally, as well as slot machines outside casinos and sports betting, which are regulated at a provincial level.

Player visits to the dozen Austrian casinos bounced back in 2013, rising 1.7 percent to 2.36m visits, after a small decline in visitation between 2011 and 2012.

Still, the players spent less when they visited the properties, creating revenues of €254m in 2013, a 4.1 percent decline. Slots revenues, which fell 4.8 percent, were hit harder than table games which suffered a decline of just 2 percent.

Casinos Austria has retained its concessions to operate 12 casinos across the country for a period of 15 years. Amendments to the Austrian Gaming Act (Glücksspielgesetz), in 2010 saw the creation of three new casino licences, 2 in Vienna and 1 in Lower Austria. A lengthy tender process resulted in two new operators, Baden Group and Novomatic, being selected in June 2014, opening the Austrian casino market for the first time in more than 40 years. However, Casinos Austria announced at the beginning of July 2014 that it will take legal action to challenge the decision which could delay the opening of the new casinos, according to Austrian lawyers.

The licence to operate lotteries in Austria was granted again in 2011 to Austrian Lotteries for an additional 15- year period.

According to Austrian regulation, online casino gambling can only be offered by Austrian Lotteries’ win2day site.

ECA Member: Casinos Austria

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The group aims to complete construction of the 28 table and THE AUSTRIAN CASINO MARKET Award of Licences for the ‘Regional Package’ 290 slot machine venue within 12 months.

The licences for the six casinos in the Austrian “regional One of Novomatic’s casinos will also be located in Vienna, while MARKET DATA package” (Bregenz, Seefeld, Klein Walsertal, Zell an See ( the third casino will be established in the state of Lower Austria. replacing Bad Gastein), Baden and Velden) announced in the Population 8.43m in 2012 (World Bank Data) Federal Ministry of Finance’s December 2011 call for tenders Lottery Currency Euro were awarded to Casinos Austria per official decree by the Ministry of Finance on September 23, 2013 for a licence period of In Austria, lottery is subject to a monopoly licence, which has GNI (Gross National US$47,960 in 2012 (World Bank 15 years, i.e., to December 31, 2030. been held by Austrian Lotteries since 1986. Income) Data) Although the Glücksspielgesetz contains some provisions Internet Users Per 81 in 2012 (World Bank Data) “We are very excited about this great 100 People success. The granting of concessions will regarding non-casino slot machines, state laws regulate them. bring back stability and predictability which Sports betting is not included in the gaming monopoly, and Mobile Phone 161 in 2012 (World Bank Data) licences for this form of gaming are covered by the laws in the Subscribers Per 100 is essential for a responsible company such individual federal states. People as Casinos Austria,” said Casinos Austria chief Limited Bet/Payout Machine Gaming (Kleines Glücksspiel) Doing Business 30 out of 189 in 2014 (Doing Business executive Karl Stoss. – New Legal Status Ranking 2014, World Bank) The tender process for the “city package” (Stadtpaket), which Carinthia Credit Rating AA+ with a negative outlook affirmed contains the existing casinos in six major Austrian cities (Vienna, Games for non-cash prizes remain outside the monopoly. In March 2013, Amatic received the concession to run all 465 February 2012, Standard & Poor’s Salzburg, Bregenz, Graz, Linz and Innsbruck), was completed in legal slot machines in this province. This concession process is December 2012. The licences were awarded to Casinos Austria Formerly these games were permitted on the basis that their currently under legal revision. and are valid from January 1, 2013 for a period of 15 years. stake should not exceed €0.50, but new regulation now applies Regulator to these AWPs currently operated by private companies. Taxation Austria’s Individual Casino Licences The Federal Ministry of Finance is the authority responsible for Current/Former Legal Status Casino tax is calculated on the annual gross gaming revenues supervising gambling in Austria. As a consequence of the 2010 amendments to the Austrian • Limited bet/payout (slot machine) gaming, with authorisation, of each casino operation and, in the case of payouts by gaming Gaming Act (Glücksspielgesetz), three further casino licences regulation and payout at individual province level. machines, the annual gross gaming revenues from gaming Lottery games, casinos, amusements with prizes (AWPs) were issued in Austria in addition to the existing 12 casino • Maximum bet: €0.50; maximum payout: €20. machines in each casino operation, less VAT. and poker are regulated under the Gambling Act 1989 licences. • This arrangement is still permitted in Vienna, Styria (Glücksspielgesetz) which was last adapted in 2014. and Carinthia and applies to approximately 10,000 slot After the amendments to the Glücksspielgesetz, which entered machines. into force on January 1, 2011, the casino tax moved to a uniform Austria’s Licensed Casino Market rate of 30 percent. The current legislation expires in Vienna on 31st December 2014 Until June 2014 Casinos Austria held the sole right to conduct and in Styria on 31st December 2015. In line with the overall contraction of the casino gambling casino gaming in 12 casinos across Austria in Baden, Bad market, gaming taxes paid to the Austrian state by Casinos Gastein, Bregenz, Graz, Innsbruck, Kitzbühel, Kleinwalsertal, New Legal Status Austria fell by 5.4 percent to €69m in 2013. Linz, Salzburg, Seefeld, Velden and Vienna. • Federal Government now regulates Province level provision and pay-outs in the Gaming Act for: stand-alone slot Poker Following amendments to the Austrian Gaming Act machines and slot halls. (Glücksspielgesetz), in 2010 three new casino licences were • Maximum bet now €10. The Austrian Gambling Act has regulated poker as a form of created which resulted in two new operators being selected, • Maximum payouts: on standalone slots, €1,000; at slot gambling since 2010 but has recently been updated. introducing competition into the area of casino gaming in Austria halls, €10,000. for the first time in more than 40 years. • Provinces have the right to decide on lower limits. Under the terms of the 2010 amendment to the Gaming Act • Up to three licences per province. (Glücksspielgesetz), the holder of the monopoly, the Austrian • In Vienna, one slot machine per 600 inhabitants. Federal Ministry of Finance, was expected to issue just one poker • Other provinces are allowed one slot machine per 1,200 licence, for a single location. However, this did not happen. inhabitants. Under the licensing arrangements, existing poker clubs had The call for tenders for these three individual licences (for the New licences are currently operational in Lower Austria, Upper until December 31, 2012 to shut down their services, as from the locations in Vienna Southwest, Vienna Northeast and Lower Austria, Burgenland and Carinthia. beginning of 2013 card games could only be played in the land- Austria) was launched on November 26, 2012. In total eight based casino establishments of Casinos Austria or on Austrian applications were received. Upper Austria Lotteries’ win2day website. In March 2012, three companies received licences to run a total After more than a year, on June 27, 2014, Austria’s Ministry of of 1,176 legal slot machines in this province. The process is Any entity offering poker games without a licence would have Finance confirmed that the licences had been awarded and currently on hold. been operating illegally from that point. the licences were claimed by Austrian gaming conglomerate Novomatic and the Swiss-German Consortium of Baden Group Lower Austria The chairman of Concord Card Casinos, Peter Zanoni, filed a and Gauselmann. In March 2012, Novomatic was issued the concession to operate complaint at the Austrian Constitutional Court in September the 1,339 legal slot machines in this province. 2012 because of the legal situation. Baden Group, operator of the Swiss casinos Grand Casino Baden and Casino Davos, will partner with the German gaming Burgenland The court delivered its decision on June 27, 2013 and found the equipment manufacturer Gauselmann to open a casino, to be In August 2013, Novomatic and related companies were issued regulation of poker games unconstitutional, criticising the fact named Grand Casino Wien, in the Austrian capital. the concessions to operate the 236 legal slot machines in this that as there was only one licence for the operation of poker province. available under the law and that since the sole licence had not 18 European Casino Industry Report European Casino Industry Report 19 ECA’S EUROPEAN CASINO INDUSTRY REPORT ECA’S EUROPEAN CASINO INDUSTRY REPORT

been awarded there is a de facto ban on poker outside casinos • A commitment to the prevention of compulsive gambling. restrict the frequency of their visits or ban them temporarily or Sports Betting in place. • Evidence of corporate social responsibility (CSR) activities. permanently from entering casino properties. Sports betting is not classed as a “game of chance” and is, As a result of the Constitutional Court of Austria’s decision to The Casinos Austria Group, which has retained its licences to Entry restrictions/self-exclusion therefore, not covered by the provisions of the Gaming Act. overturn the poker-related provisions of the Gambling Act, the operate 12 casinos in Austria, is the second largest taxpayer in Guests also have the option to self-exclude, a process whereby However, licences are available to private operators under the number of poker licences has now been increased to three, Austria. It provides both financial and organisational support they can request that their number of visits be restricted or have provision of state laws. while poker clubs can now be operated under the country’s to a wide variety of good causes and sponsors a wide range of themselves totally banned from entering a casino. general trade law. cultural, sports and charity institutions and events. The Casinos Austria sports betting “subsidiary” tipp3 holds a Smoking Ban sports-betting licence for all provinces in Austria. Three poker licences will be issued in the future, to be awarded Casinos Austria is a member of, and proactive contributor to, in a tender process, which has not yet been started. the UN Global Compact, Transparency International (Austrian According to the Austrian law there is a general ban on Under the terms of the Glücksspielgesetz, foreign online Chapter) and respACT, Austria’s most important CSR promoter. smoking in public places. However, in the case of hospitality companies targeting Austrian players are liable to pay tax in All so-called poker clubs which received trade authorisations establishments, smoking can be allowed in certain rooms, which Austria, whether they are licensed there or not. from local authorities before December 31, 2012 can conduct At Casinos Austria, over-complying with the corresponding can be separated from non-smoking areas and must comply with their business until January 1, 2017. statutory provisions is a CSR priority. the additional requirements under the law. Companies not licensed in Austria but targeting Austrian players are liable to a 16 percent turnover tax on the games they offer, According to Section 4 of the Austrian Gambling Act, as of On December 3, 2013, the independent Austrian Business VLTs with the exception of betting games. January 1, 2011, non-profit card games tournaments must be Committee for the Arts, in cooperation with the Austrian reported to the finance administration in electronic form. Broadcasting Corporation, ORF, presented its MAECENAS Currently, Austrian Lotteries (Österreichische Lotterien Betting companies licensed in Austria are liable to a 2 percent awards for the sponsoring of culture and the arts in Austria for Gesellschaft) holds the sole licence in relation to lotteries, video turnover tax. Some states such as Burgenland, Vienna and Contributions to Society the 25th time. lottery terminals (VLTs) and online casino games. Lower Austria have additional charges on bets and winnings. Companies not licensed in Austria but targeting Austrian players The player protection programme and capability of the applicant The awards recognise entrepreneurs and businesses for their VLTs are currently marketed under the WINWIN brand in 13 are also liable to a tax rate of 5 percent on turnover. company proved a critical threshold for the awarding of the sponsorship of art projects. In recognition of the Casinos locations: Austria’s casino gaming licences: Austria Alpha Award – a prize for young authors – and the The minimum age for online gambling in Austria is 18 years. establishment of the Casinos Austria Music Line, which supports • WINWIN Bruck/Leitha • The criteria required a minimum authorised capital €22m for music projects beyond the commercial mainstream, Casinos • WINWIN Ebreichsdorf the casinos player protection programme. Austria was awarded the 2013 MAECENAS award in the category • WINWIN Krems “Best Art Sponsoring Concept – Major Enterprises”. • WINWIN Schärding • WINWIN Steyr 2014 Certification of Responsible Gaming Legal Requirements • WINWIN Vöcklabruck Management System • WINWIN Wels Registration • WINWIN Salzburg / Stadt Under the provisions of Art. 25 (1) of the Federal Law on Games • WINWIN Zell am See At Casinos Austria all responsible gaming and of Chance (“Gambling Act”) and the valid licences currently • WINWIN Kufstein responsible advertising measures are managed issued in Austria, only adults who have provided adequate proof • WINWIN Landeck through a responsible gaming management system. of identity (official photo ID) who are not subject to any form of • WINWIN Lienz entry ban can be permitted to enter and gamble in a casino. • WINWIN Mayrhofen Casinos Austria had long sought to obtain certification for its responsible gaming activities National legislation requires customers to be 18 years of age. Remote Gambling and achieved this objective in February 2014 via the Austrian Standards Institute which certified Casinos Austria records and stores the data on the ID provided Online casino-style games form part of the lottery concession the Responsible Gaming Management System of for a period of at least five years. If there is any doubt regarding a guest’s identity or right to access the casino, they will be denied In 2013, Austrian Lotteries’ online gambling website, win2day.at, Casinos Austria according to the Responsible Gaming entry until the matter has been satisfactorily resolved. remained its best performing product in terms of growth. Certification Framework established by the European Casino Association (ECA). Screening In June 2011, the Ministry of Finance launched the tender process By monitoring visit frequency and gambling intensity, Casinos for the sole lottery licence, which included, in addition to online The certification process involved an intensive Austria is able to identify any individuals who are potentially at lotteries, the licence for offering some casino-style games online. audit of eight different areas of activity, namely risk. staff training in responsible gaming, information Among the applicants were Austrian Lotteries, the Swiss for casino guests, access controls, advertising and Credit Checks company Lottelo and Bet-at-Home. marketing, alcohol sales, gambling by company staff, Casinos Austria carries out credit checks on such individuals in stakeholder involvement and researching/raising line with the player protection provisions set out in Art. 25 (3) of • Austrian Lotteries won the tender in October 2011 for awareness of risk factors in the development of new the Gambling Act. another 15 years commencing October 2012. • The three competitors which had also applied for the gaming products. If necessary, specially trained members of Casinos Austria staff concessions filed a claim with the Austrian Constitutional then meet with such individuals to discuss the situation and draw Court. Casinos Austria is the first gaming company their attention to the risks of gambling and the potential threat • In January 2013, the Austrian Constitutional Court rejected worldwide to have its responsible gaming to their subsistence level. They also provide information on the complaints filed by these three bidders. management system certified, confirming its appropriate counselling options and institutions. reputation as a pioneer in this field. Entry restrictions/operator bans Electronic lotteries are taxed at a rate of 40 percent of gross If an individual does not have sufficient financial means to gaming revenues. continue gambling, the operator is required by law to either 20 European Casino Industry Report European Casino Industry Report 21 ECA’S EUROPEAN CASINO INDUSTRY REPORT

BELGIUM

Blankenberge Brussels Chaudfontaine Dinant Knokke-Heist Knokke-Heist Oostende Middelkerke Blankenberge Namur Middelkerke Oostende Brussels Spa Chaudfontaine Namur Spa Dinant

Revenues at Belgium’s nine casinos shrank between 2012 and 2013, as gross gaming revenues contracted 4.4 percent to €113m.

Gamblers paid fewer visits to Belgium’s nine casinos in 2013, a total of 1.39m visits compared with 1.44m a year before. The casinos themselves shed more than a hundred jobs, leaving just 657 full-time staff, 12.4 percent fewer than in 2012, employed at the country’s properties.

The revenue declines stemmed from house-banked games as spend on slot machines in Belgian casinos remained flat but table game hold fell by 8 percent.

The nine Belgian casinos paid €37m in gaming taxes in 2013, down a little more than 5 percent from the €39m they contributed in 2012.

In Belgium only those businesses with a land-based operation have the right to extend their offering online, under the country’s gambling laws.

In November 2013, Belgium became one of a group of countries, including Sweden, Cyprus, the Czech Republic, Lithuania, Poland and Romania, which were served infringement proceedings by the European Commission, as a part of Internal Market tsar Michel Barnier’s online gambling action plan. In Belgium’s case, the linkage of land-based and online licensing was explicitly cited.

The Belgian Ministry of Economy has responded by sending draft royal decrees to the commission which it is asking to have considered under emergency proceedings as it looks to answer the EU body’s criticism of the country’s online gambling laws.

ECA Member: Casinos Belgium

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European Commission for approval. A player can ask for self-exclusion through the BGC. The player For gaming machines and slots, the tax rates are tiered THE BELGIAN CASINO MARKET The Belgian Ministry of Economy asked the commission to is then registered in Belgium’s EPIS database (Excluded Persons according to revenue: consider the decrees under emergency proceedings, as it Information System). • €0.01 to €1,200,000 revenues: 20 percent. looks to answer the EU body’s criticism of the country’s online • €1,200,000.01 to €2,450,000: 25 percent. MARKET DATA gambling laws, but the decrees do not address the European Each customer entering a casino or arcade must be checked • €2,450,000.01 to €3,700,000 revenues: 30 percent. Commission’s fundamental objection about the requirement against the EPIS database, prior to entering. • €3,700,000.01 to €6,150,000 revenues: 35 percent. Population 11.13m in 2012 (World Bank Data) that online gambling operators must be linked with land-based • €6,150,000.01 to €8,650,000 revenues: 40 percent. Currency Euro casinos. EPIS is not just a self-exclusion system. It also includes most • €8,650,000.01 to €12,350,000 revenues: 45 percent. of the persons legally excluded such as judicial officers, bailiffs • Any revenues above €12,350,000.01 are taxed at 50 percent. GNI (Gross National US$44,820 in 2012 (World Bank “We have opened the market for the and police officers (Article 54, para 2 of the Gaming Act). Self- Income) Data) Belgian licence holders and because of the exclusions and exclusions coming from gaming establishments For other casino games, revenues of up to €865,000 are taxed at Internet Users Per 82 in 2012 (World Bank Data) specific features of online gambling, it is are both made for an indefinite period. 33 percent, while revenues exceeding that figure are taxed at 44 100 People crucial to keep control on that market in our percent. country via a restricted opening of the online When in the EPIS database for self-exclusion, a player can ask Mobile Phone 111 in 2012 (World Bank Data) the BGC to be able to re-enter the casino. If the commission Remote Gambling Subscribers Per 100 market,” said Peter Naessens, legal advisor to agrees to this, a three-month period applies before the player People the Belgium Gaming Commission. can return to the casino. Belgium’s Gaming Act of May 7, 1999, amended by the act Doing Business 36 out of 189 in 2014 (Doing of January 10, 2010, decrees that only land-based casinos, or Chaudfontaine Ranking Business 2014, World Bank) Belgium’s Licensed Casino Market arcades which have already obtained a licence for their land- Spa based operations from the BGC, can apply for a licence to Credit Rating AA stable, Fitch, March 6, 2013 The number of Class I casinos is currently limited to nine in operate a website. Belgium and the number of arcades (Class II) is limited to 180. Regulator The same games allowed in land-based operations are allowed According to the 1999 Gaming Act, an operator which has been online. The Belgian Gaming Act of May 7, 1999 created a gaming granted a licence cannot sell it to another operator. supervisory body, the Belgium Gaming Commission (BGC), All nine online operating licences have now been granted; which is responsible for issuing licences, both online and Belgium’s casinos exist alongside a thriving lottery monopoly. however, a number of Belgian casinos changed ownership in offline, and approving the types of machines to be used in The Loterie National pays a fee for its monopoly of €95m. An 2013 as the financially-challenged Groupe Partouche shed some Belgian casinos, arcades and other gambling establishments. extra €40m was added to this fee in 2012. of its properties. It also conducts background checks on applicants and verifies continued compliance with gaming law. Casino Knokke, formerly owned by Partouche, was sold to Napoleon Games. Casino Dinant, also Partouche owned, went The Belgian Gaming Act lists nine different types of operating to Jurgen De Munck (ownder DRGT) at the beginning of January licences, including Class A licences for Class I casinos and 2014. Licence B for Class II arcades. This has had an impact on the ownership and operation of In February 2012, new types of licences for remote gambling Since July 15, 2011, exclusions at the request of a third party Belgium’s online casino websites. were introduced. These licences, called A+, B+ and F1+, entitle have been made possible. Social workers and other interested the holder to expand its land-based products to the internet, parties can apply to the BGC to exclude a person believed to be Changes regulating online casino gaming, online poker and online a problem gambler to a casino or slot hall. betting. • www.partouche.be (Casino Dinant) became www. The BGC issues leaflets regarding player protection and jackpotparty.be and closed down on 17/03/2014 There are currently 7 Class A+ licences, 33 Class B+ (figures discusses the issue of player protection with all members of staff • www.partouche.be (formerly Casino Dinant), became from 5/06/2013) and 33 F1+ licences. ( figures from 2/07/2014) during the session staff members have to attend to obtain their Casino Chaudfontaine and closed down in 2014. 9 Class I casino licences are available and 180 Class II arcade gaming licence. The display of these player protection leaflets is • www.jackpotparty.be (Casino Knokke and Williams licences are available. mandatory for all casinos. Interactive) became www.napoleongames.be • www.ladbrokes.be (Casino Middelkerke and Ladbrokes) Before the Belgian Gaming Act was modified to regulate online Smoking Ban came into operation in April 2014. gambling, the European Commission issued a detailed opinion Contributions to Society on the draft pointing at several concerns regarding the draft law. A general ban on smoking has been in force in the hospitality The Belgium Gaming Commission has always affirmed that Among these concerns was the requirement according to which Contributions to society are made on a voluntary basis. industry since July 1, 2011. Smoking rooms equipped with smoke the Belgian law is compliant with EU law, and in February 2014 online licences are tied to land-based licences. Contributions to charitable and other good causes are extraction systems are permitted, subject to further conditions. the Belgian government submitted draft royal decrees to the determined by each casino. European Commission that would give the BGC some flexibility The Belgian authorities enacted the law, arguing that their Problem Gambling Prevention Policies on server location to allow licensees to have server operations approach would prove compliant with EU law as the aim of the Social Responsibility Measures outside the country, provided data remains accessible in measures is the protection of Belgian consumers. ATMs are prohibited in Class I, II, III, and IV establishments. Belgium. Access to Class I casino gambling and Class II machine In November 2013, Belgium was served infringement gambling is restricted to people of 21 years of age or over, while The provision of credit to players is prohibited. Credit may not be The decrees would also give the commission leeway to proceedings by the European Commission, which explicitly cited betting shops are open to those who are not minors (at least 18 used for the settlement of a loss or for the payment of a stake. approve new games beyond a current list of 200, and allow for the linkage of land-based and online licences. years of age). progressive jackpots. Taxation In April 2014, new royal decrees that would let the Belgium Age restrictions for online games mirror those that apply to The BGC enforces online licensing via payment and ISP blocking Gaming Commission relax restrictions on siting servers in land-based games; therefore, all online games are prohibited to Belgium’s casinos pay tax on their gross gaming revenues. and publishes a blacklist on its own website. the country, plus key details such as payment methods, prize players under 21 years old, except for betting which is prohibited distributions and a list of permitted games, were sent to the to players under 18 years old.

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In 2013, the BGC increased its efforts to stop illegal online gambling, blacklisting websites run by companies including 888 Holdings, Betsson, William Hill, Betfair, 32Red and Bet-at- Home, all of which have chosen not to partner with land-based CZECH REPUBLIC businesses in Belgium.

Two European social gaming firms were also added to the commission’s blacklist, as the BGC considered their products to The Czech Republic has numerous small casinos, be games of chance under Belgian law. encouraged by ownership rules which allow foreign shareholders to invest. In February 2014, the illegal site Oranjecasino.com was fined €600,000, and in March 2014 Betclic Everest Group withdrew all its brands, including Bet-at-Home, from the Belgian market after seeing some of its Belgian bank accounts seized by regulators for accepting online customers.

Total revenues in the Czech Republic’s casinos fell to €140m in 2013, a decline of 4.1 percent compared with a year before. Slots revenues fell by more than 10 percent to €60m, while table games fared better, suffering just a 3 percent decline.

There are 180 casinos in the Czech Republic, compared with 200 that were in existence in 2011. Over the same period jobs created by the country’s casinos fell from 3,000 to 2,800.

Although nine land-based operators in the Czech Republic have licences to offer online gambling exclusively for sports betting, the market has tended to be overwhelmed by unlicensed international operations. Tax On November 20, 2013 the Czech Republic was one of seven countries, including Belgium, Cyprus, Lithuania, Online gambling tax is set at regional level in Belgium. Poland, Romania and Sweden, to see infringement proceedings escalated against them by the European Each of the country’s three regions (Flanders, Wallonia and Commission as part of the so-called action plan on online gambling initiated in 2012 by Michel Barnier, the Brussels-Capital) has adopted an online gambling tax of 11 Internal Market EU commissioner. The Czech Republic received a letter of formal notice. percent of gross gaming revenues (GGR). In 2013 political turmoil and the resignation of the government delayed the introduction of a long-awaited revision to the country’s gambling laws, but the combination of European and significant popular pressure prompted the Ministry of Finance to unveil the first proposal of its new gambling regulation in early 2014, which would “legalise, tax and properly regulate online gambling operators” in the Czech Republic for the first time.

The new regulation was published in October 2014 and is due to be implemented in January 2016, according to the Ministry of Finance.

The Czech Republic’s municipalities recently gained much stronger powers to limit VLT numbers and operating hours in their own territories. As part of a revision of the Lottery Act, more attention will be focused on the regulation of machine halls, while casinos, with stricter operating criteria and higher standards of social responsibility, are not expecting significant changes.

ECA Member: Czech Casinos Ltd

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and it is this flexibility with regard to foreign investment that agencies, and the conclusions of the study of the social THE CZECH CASINO MARKET “The new government is strong and can has helped to encourage growth in the numbers of casinos pathological consequences of the Social Responsibility pursue a new act unlike the former one,” said operating in the Czech Republic. Programme overseen by the Czech Institute for Addiction Radim Haluza, CEO of Fortuna. Research. Additionally, the following measures have been MARKET DATA New Civic and Corporate Codes became valid in the Czech applied: Czech Republic’s Licensed Casino Market Republic on January 1, 2014, replacing a Civic Code from 1964 Population 10.5m in 2012 (World Bank Data) and a Trade Code valid from 1991. • Special programmes are operated by non-governmental Currency Czech koruna (CZK) (CZK1 = €0.04) Compared with the rest of Europe, the Czech Republic has entities (such as the Czech Institute for Addiction Research) taken a relatively liberal regulatory approach to gambling, with Poker to encourage social responsibility by gaming operators. GNI (Gross National US$18,130 in 2012 (World Bank little state control, fostering an influx of small casinos across • The conclusions of the study of the social pathological Income) Data) the country in the 20 years since the Velvet Revolution of 1989. Until 2011 gambling law amendments came into effect, card consequences of gambling, revealed in 2013 by the Czech Internet Users Per 75 in 2012 (World Bank Data) These barely regulated conditions caused a lot of difficulties for games could legally only be played in licensed casinos, but this government, will be incorporated into the newly-prepared 100 People serious operators, making it hard to achieve a reasonable rate restriction was widely overlooked by a wide grouping of card Gaming Law (expected in January 2016). of return on their financial investments. clubs constituted as so-called civic associations. • City councils, as one of the authorities involved in the Mobile Phone 127 in 2012 (World Bank Data) licensing process, frequently demand evidence that Subscribers Per 100 Major players include Casinos Austria International, which Estimates on the number of poker players vary wildly between prospective licensees will behave responsibly. As People operates through its subsidiary Czech Casinos; Novomatic, 10,000 and 200,000, but, in the absence of a law expressly participants in the licensing process, local authorities which established its presence through subsidiary company regulating poker outside casinos, no taxes or fees are payable require strong and demonstrable social responsibility from Doing Business 75 out of 189 in 2014 (Doing Business Ranking 2014, World Bank) European Data Project (EDP); and American Chance Casinos on the fees retained by card clubs. the operators as a basic condition for the licence issuance. (ACC), a European subsidiary of publicly-traded US company • Casinos and casino advertising may not be allowed in so- Credit Rating A1 stable, Moody’s Ratings, July 2013 Trans World Corporation. Contributions to Society called socially deprived areas. • Credit cards may be used for payments in Czech casinos; Regulator Gaming tax represents a significant part of the tax income subject to approval by the Ministry of Finance which, received by local authorities in the Czech Republic. based on an operator’s application, may license gaming The Czech Republic’s Ministry of Finance carries out the transactions in Czech currency or in other requested regulation and licensing of casino games, slot machines and Local budgets absorb 80 percent of the gaming taxation currencies. lotteries within the scope of Lottery Law no. 202 dating from derived from slots operations, providing significant support to • The exchange office, which is itself regulated by the 1990. local sport, cultural and charity activities. Czech National Bank, may also oversee the exchange of currencies into the chosen gaming currency. Additional supervision is provided by local financial offices, with Amendments, which came into force on January 1, 2012, • Operators’ social responsibility programmes incorporate local municipalities also involved in the licensing process. changed the system of charitable contributions, which had ethics guidelines and provisions for the care of employees previously been directed towards sport, cultural, healthy and as a key part of their internal corporate social responsibility The current Czech regulatory framework, based on gaming general charitable activities. From 2012 onwards the offices obligations. laws from the early 1990s, is largely outdated following the of the Ministry of Finance have redistributed this part of the vigorous growth of the gambling sector. gaming tax.

Although the Czech Republic notified a new draft gambling act The central state budget absorbed 70 percent of the €29m that to the European Commission in August 2012, the controversial casinos paid in gaming taxes in 2013. restrictions imposed on foreign remote gambling operators ensured a critical response from Brussels in November 2012 With more than 2,800 full-time employees in the country’s and none of the measures were subsequently implemented. Casinos are unique in the Czech gaming market in that they do 180 casino properties alone, casinos and other gaming houses not need to follow the same complex ownership requirements provide a significant boost to Czech employment, particularly The commission requested more information on the country’s as other providers of gaming services, which prohibit Czech in those provincial regions on the German and Austrian border legislation, which restricts the supply of certain gambling entities with foreign shareholders from obtaining a gaming areas that have relatively high unemployment rates. services, and wanted to verify if the measures are compatible licence. with EU law. Social Responsibility Measures Casinos may be operated by a Czech entity with foreign A letter of formal notice followed in November 2013, but by investment, if the Ministry of Finance grants this exception, National legislation requires all customers to be at least 18 that time revision of the gambling act was already underway, a years of age. process that the newly-elected government has accelerated. The Ministry of Finance sets out detailed terms and conditions The Ministry of Finance unveiled the first version of its new for the operation of each casino licence. It must also approve gambling regulation in early 2014, which would “legalise, tax the operator’s internal controls, visitation plan and the types Taxation and properly regulate online gambling operators” in the Czech of games that can be operated. The operator must inform the Republic for the first time. A draft bill was then unveiled in ministry (and give it at least 30 days’ notice) before it alters any In January 2012 the Czech Republic’s gaming tax regime October 2014. of its internal control procedures or types of games offered. was simplified to be defined solely within the lottery law. Previously, the gaming tax had been defined in several different The ministry said that the new regulation would ensure citizens Smoking Ban regulations. were protected from pathological gambling, improve state supervision and properly tax all gambling. There is no smoking ban in place in Czech casinos. Casinos, slot machine operators and VLT halls all pay 20 percent of gross gaming revenues, while the machine sector, The government said that the planned changes to the Problem Gambling Prevention Policies including VLT operators, pay a fixed fee per machine of CZK55 gambling regulation are expected to generate an extra (€2) per day. CZK716m (€26m) a year to the state treasury. There are no legal requirements for player protection in the Czech Republic, although most Czech casinos follow Gross gaming revenues are not subject to VAT. the guidelines of various institutes and non-governmental 28 European Casino Industry Report European Casino Industry Report 29 ECA’S EUROPEAN CASINO INDUSTRY REPORT ECA’S EUROPEAN CASINO INDUSTRY REPORT

This amendment could be introduced in Summer 2014, according to statements made by Ondřej Závodský, the deputy minister of finance, and could result in the removal of 10,000 of the country’s 60,000 VLTs. DENMARK The ministry is also believed to be considering a higher tax rate on games that are felt to be more “dangerous” in terms of player addiction, including some categories of slot machines. Casino Aalborg However, the regulation and taxation of gambling remains a contentious subject in the Czech Republic and some minority Royal Casino (Aarhus) political parties are still pursuing a complete ban on slot Casino Copenhagen machines and online casino games. Casino Marienlyst (Helsingør) Casino Odense Casino Aalborg Remote Gambling Casino Vejle (Casino Munkebjerg Vejle) With the exception of sports betting, online gambling is not regulated in the Czech Republic. Until 2011 the gross gaming revenues of casino, slot machine Royal Casino (Aarhus) and VLT operators had all been exempted from corporate Online gambling is currently prohibited for unlicensed Casino Marienlyst (Helsingør) taxation, but since 2012 that exemption has been removed and operators based outside the country, but licences have been Casino Munkebjerg Vejle all gross gaming revenues are now subject to corporate taxes. issued to each of nine operators that have a land-based Casino Copenhagen presence where customers are required to register before Casino Odense VLTs and Slot Machines playing online.

The Czech Republic’s gambling market remains dominated However, many foreign online operators offer casino games by VLTs. 2011 data from the Ministry of Finance had VLTs which are widely advertised in the Czech language. commanding 46.8 percent of market revenues, with traditional slot machines holding a 21.6 percent revenue share and casinos The lottery law does not allow the advertising of games of Gross gaming revenues at Denmark’s six casinos slipped backwards by 1.6 percent from €57m to €56m taking 5.3 percent of the market. chance not authorised by the state regulator; however, this between 2012 and 2013, as visits by players declined by 4.4 percent from 430,000 in 2012 to 412,000 in 2013. does not mean that the advertising of otherwise permitted A consensus has been building for changes in relation to the games are fully allowed as under local restrictions even legal Revenues from table games again remained flat during 2013 bringing in €31m, but slots win dropped back by proliferation of VLTs and the compulsory contributions made games can be forbidden in those territories. 6.6 percent, surrendering gains made in the previous year. by operators to good causes. In 2008 the Czech government licensed five domestic betting Gaming tax paid to the Danish state remained flat at €26m. On June 21, 2011 the lower house of the Czech parliament operators — SAZKA, Synot Tip, Chance, Tipsport and Fortuna passed a bill that extended the powers of municipalities to — to offer online games at the beginning of 2009. These Although online licensing for sports betting and online casino games including poker came into effect on regulate gambling in their territory, with a three-year transition licence awards have since become the focus of anti-corruption January 1, 2012, casino revenues were largely unaffected. period. Seeking faster results, Klatovy municipality made investigations. a complaint to the Constitutional Court in June 2012 which enabled municipalities across the country to limit the number Three more licences were granted in September 2009 and, as Denmark’s land-based casino and machine operators pay tax at markedly different rates to the country’s of VLTs on their territory with immediate effect. of June 2013, there were nine licensees. newly licensed online operators. Online firms pay tax at 20 percent compared with the 45/75 percent levied on land-based operators, an arrangement backed by the European Commission in 2011 which found that Slot machine operators and VLTs are currently subject to a Although the Czech Republic notified a new draft gambling the different tax rates were justifiable to encourage online operators to move within the regulated market. variable 20 tax rate of gross gaming revenues and, in addition, act to the European Commission in August 2012, due to must pay a fixed per machine fee of CZK55 €2)( per day. the restrictions it would have imposed on foreign remote A long-running legal appeal, made to the European Courts by Denmark’s machine operators, has failed to gambling operators, the draft received criticism from the overturn the differential tax bias. In September 2014 the courts found that land-based operators had failed to Under the latest 2014 proposals, the Lottery Act will likely European Commission that was escalated to a formal notice of show a “substantial adverse effect” from the tax rates. be amended to unify the technical conditions for gaming infringement in November 2013. machines and VLTs and will introduce time and spending limits. The online division of the former Danish monopoly Danske Licens Spil still dominates the licensed online Proposed measures that would impose a duty on internet market in Denmark, holding what is believed to be a more than 50 percent market share. With regard to the Constitutional Court decision that currently service providers (ISPs) to block advertising and access to sees slot machine operators seek approval from local games offered by unlicensed operators have also stalled in the authorities to operate VLTs, the government is also seeking to face of popular protests. ECA Member: Danish Casino Association speed up the process by which licence revocations, which must be performed by the Ministry of Finance, can be undertaken.

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THE DANISH CASINO MARKET Casino staff are subject to additional requirements and may not However, the Danish tax ministry was successfully able to argue participate in games at the property. that rate was necessary to ensure that online operators would move operations to the regulated market and combat illegal MARKET DATA The Danish Gambling Authority is in charge of supervising the offerings. machine market as a whole. Population 5.571m in 2011 (World Bank Data) Currency Danish krone (DKK) (DKK1 = €0.13) For online gambling, a Register of Voluntary Excluded Players (ROFUS) has been established. GNI (Gross National US$60,160 in 2011 (World Bank Data) Income) Internet Users Per 90 in 2011 (World Bank Data) 100 People Mobile Phone 128 in 2011 (World Bank Data) Subscribers Per 100 People Doing Business 5 out of 189 (Doing Business 2014, Ranking World Bank) Poker Credit Rating AAA (Standard & Poor’s) According to the Act on Public Gambling in Tournaments, a licence to organise public gambling in tournaments can be Regulator obtained by application to the Danish Gambling Authority. Denmark’s gambling regulator is the Danish Gambling Authority. The case was appealed to the Court of Justice of the European Land-based casino licences are granted for a period of ten years. Union, by Denmark’s machine operators, but in a long- awaited decision handed down on September 26th 2014, the The Act on Gambling of 2010 partially liberalised the Danish court concluded that Royal Scandinavian Casino Aarhus and gambling market, which officially opened on January 1, 2012. the Danish Gaming Association (DAB) had failed to show a As of July 2013, 53 licences have been granted to 40 operators. “substantial adverse effect” from the tax differentials. Danske Spil still holds a monopoly licence to provide lottery Players can directly register themselves on the system and once games. registered they cannot cancel it. Online operators are obliged A further appeal, on points of law, is being considered. to verify whether a player is registered on this self-exclusion The executive order on land-based casinos sets out restrictions system. VLTs and Slot Machines on the size of the stakes for each game. A player may not bet less than DKK5 or more than DKK50,000, except for games on Temporary exclusions are also possible and cannot be for less State-controlled operator Danske Spil conducts its gaming gaming machines, on which a player may not bet less than DKK1 than one month or more than six months. Players can also machine operations through a wholly-owned subsidiary, Danske or more than DKK20. choose a shorter break of 24 hours, dubbed the cooling-off Automat Spil. In 2011, Danske Automat Spil merged with the period. company Elite Gaming A/S. Each casino has the obligation to set minimum and maximum bets for each game, which must be posted at each game table. Taxation There are also a significant number of private operators in the Danish slot machine market, most of whom are members of the In 2012, requirements previously seen in the Gaming Act were Casinos are subject to a tax of 45 percent of revenues up to industry association Danske Automat Brancheforening (DAB) Contributions to Society added to the executive order, regarding exchange of gaming DKK4m and 75 percent for any portion of revenues above this and slot machines outside a casino, typically amusements with tokens and use of cash in the casinos, as well as requirements on amount. prizes (AWPs), in Denmark are also governed by the Act on Information not available at the time of this report. gaming technology equipment, the tronc, annual accounts and Gambling. audit and control issues. A new regulatory regime for online gambling came into force in Social Responsibility Measures Denmark on January 1, 2012, putting in place a licensing system As of January 1, 2012, slot machine operators pay the following Denmark’s Licensed Casino Market for sports betting and online casino games including poker. taxes: In Denmark national legislation requires all customers, both The new gambling law partially dismantled Danske Spil’s online and in land-based venues, to be at least 18 years of age. There are currently six casinos in Denmark and one licensed on- exclusive rights regime that applied to sports betting, although Restaurants: board ship casino. the state-controlled company maintains its monopoly over • 41 percent of monthly gross revenues up to DKK30,000. A smoking ban has been in force in public areas in Denmark national lottery products and bingo. • 71 percent for the portion of monthly gross revenues above since 2007, although designated smoking areas are permitted. Casinos in Denmark are regulated by the Act on Gambling and DKK30,000. the Executive Order on Land-Based Casinos. Following a complaint from a land-based casino and slot Problem Gambling Prevention Policies machine operators, the European Commission opened an in- According to the Act on Gambling, casinos may offer the depth investigation regarding the taxation system applied to “The slot machine industry here in Denmark’s casinos are subject to stringent requirements relating following games: roulette, baccarat, punto banco, blackjack, online and retail gambling in this new piece of legislation, which to the registration of customers, including video registration, and Denmark will be smaller as a result of the poker and gaming machines offering cash winnings. delayed the opening of the market in Denmark. for the storing of data. new online market, there is no doubt about In a decision concluded on September 20, 2011 the commission it,” said Knud Larsen, director of Dansk Every guest must provide identification on request and every found that the Danish government was, in effect, providing Automat Brancheforening (DAB) casino must record information about every arriving guest’s online operators with state aid by allowing them to be taxed at name, address, and date of birth, nationality and an indication of 20 percent of gaming revenues, in comparison with a 75 percent each guest’s arrival time. The casino must store this information rate for the land-based sector. for five years.

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Arcades: • 41 percent of monthly gross gaming revenues up to DKK250,000. • 71 percent of gross revenues over DKK250,000. ESTONIA In addition, there is a fee of DKK600 per machine per year.

Arcades have the same status as casinos in Remote Gambling Estonia and, by May 2013, there were 60 arcade/ Along with Italy, Finland and the UK, Denmark is one of a small casino premises in the country, a steep decline group of countries in Europe where online casinos have been from the 171 premises recorded in November licensed and legalised. 2008. The total number of gaming tables stood at 82. As of April 2014, 43 online licences had been granted to 30 operators, but the online arm of the former monopoly Danske Licens Spil is still the most significant online and offline operator in Denmark for sports betting and online poker and casino games.

Danske Licens Spil’s gross gaming revenues grew 8 percent in 2013, amounting to GGR of DKK1.3bn (€174m) for its betting product. Oddset was the highest ever and was the most popular game in 2013 along with the Eurojackpot lottery.

Currently a tax of 20 percent of GGR applies to online operators and a much higher tax rate of 75 percent applies to land- based operators, a tax differential which has been the cause of significant dispute between operators and the government.

The Danish Gambling Authority is in the process of reviewing the Players made 720,000 visits to Estonia’s casinos in 2013, the same as the year before. Total casino revenues Act on Gambling, with only cosmetic changes to the taxation grew 1.9 percent to €53m, but in a reverse of the previous year’s results, table games enjoyed revenue growth system applying to online operators expected at this stage. of 16.7 percent, while slot revenues remained the same.

The tax rate for slot machines is set to change in 2015 from a flat per machine tax to a more progressive system. The system of taxation for land-based poker tournaments will also change.

A surge in both slot machines and gambling premises ahead of the passage of Estonia’s 2009 Gambling Act was followed by a dramatic decline in slot machine numbers, gambling table numbers and the number of gambling premises, which has now levelled out.

Since January 1, 2010 casinos have been required to have at least 40 slot machines and five gambling tables.

The 60 casinos in Estonia in 2013 remained unchanged in number from the year before.

Estonian-listed Olympic Entertainment estimated that it had attained a 56 percent share of the Estonian land- based gaming market for the first six months of 2013, a 2 percent gain year-on-year.

Remote gambling was regulated in Estonia from the beginning of 2010 and, following recent approvals, nine operators are licensed in the country. There is a blacklist of approximately 902 unlicensed sites.

ECA Member: Olympic Casino Eesti AS

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THE ESTONIAN CASINO MARKET The act was introduced to better regulate an industry that had Following a sharp decline in 2009, the number of slot machines, Organisers of games of chance are prohibited from processing grown into many small, widely dispersed, gambling locations. tables and premises has on the whole levelled off since the start the data on the list for the purposes of direct marketing, or to The government sought to decrease the demand for gambling of 2011, although the number of tables has been more fluid. transfer the data to third parties. MARKET DATA through industry consolidation by raising minimum machine numbers and giving local authorities more power to control The number of slot machines stood at 2,181 as of February 2014. Smoking Ban Population 1.34m in 2012 (World Bank Data) where gambling locations can be placed. Table numbers as of May 2013 stood at 82, while there were 58 Currency Euro arcade/casino premises in the country, considerably fewer than Smoking has been banned in Estonia since 2005 in indoor public The legislative update also allowed Estonia the opportunity the 171 premises in November 2008. places, with the ban being extended in 2007. The law, however, GNI (Gross National US$15,830 in 2012 (World Bank to regulate previously unregulated types of gambling, and allows for the establishment of designated smoking areas. Income) Data) particularly online gambling. Legislation relating to online In July 2013, Olympic Entertainment signed an agreement with gambling came into effect at the beginning of 2010, with Hilton Worldwide to replace one of its casinos in Tallinn with Problem Gambling Prevention Policies Internet Users Per 79 in 2012 (World Bank Data) 100 People two licence applications being submitted within days of the the first casino and luxury hotel resort in the country. It has an provisions coming into force. expected opening date of late 2015. Estonia’s 2009 Gambling Act contains a number of general Mobile Phone 155 in 2012 (World Bank Data) requirements for gambling organisers, obliging them to: Subscribers Per 100 In Estonia, the only type of gambling currently subject to a state People monopoly is lottery. • Display rules of play. • Display clear warnings regarding the addictiveness of Doing Business 22 out of 189 in 2014 (Doing Business Poker gambling. Ranking 2014, World Bank) • Conduct staff training on gambling addiction awareness. Credit Rating A+ from Fitch Ratings with a stable Increasingly popular in Estonia, poker tournaments have been • Put in place fraud prevention measures. outlook, June 2012 regulated since 2009 under the category of tournaments of • Restrict access to those not entitled to enter/participate, chance. such as those under 21 years of age for games of chance Economic Situation and 16 years of age for lotteries. Games of chance tournaments are currently taxed at a rate of 5 • Ensure safety and public order. Before the global economic downturn Estonia’s economy was percent of participation fees, but from 2015 that rate will change growing at astonishing rates. In the period between 2003 and to a 5 percent tax on company poker tournament GGR. Taxation 2007 gross national income (GNI) grew from US$5,820 to US$13,380. But by 2012 GNI had only reached US$15,830, a 3.7 Contributions to Society The tax rate for slot machines is set to change in 2015 when a flat percent increase compared with the previous year. rate per machine tax will change to a more progressive system. Funds collected through gambling tax payments go towards the Estonia is home to domestic operators, including Olympic following areas of the state budget: In a two-part shake-up gaming machines will be taxed at a flat Entertainment, and local brands of other international casino Estonia’s gambling market consists of gambling machines, rate of €300 per machine per month, plus 10 percent of gaming operators, such as Ritzio, which operates the two brands Bally’s casino operators, skill games, sports betting and a state- 1. The Cultural Endowment of Estonia receives 46 percent of machine GGR. and CityCasino. owned lottery operator. Although the majority share of the the proceeds. market belonged to gaming machines in the past, the number 2. The Council of Gambling Tax receives 37.4 percent of the Gambling tables are taxed at a flat rate of€ 1,278.23 per table Regulator of machines has dropped drastically since the introduction of proceeds. per month, and that system will remain unchanged in 2015. legislative changes in 2009. 3. The Ministry of Internal Affairs receives 12.7 percent of the Gambling regulation falls under the remit of the Ministry of proceeds. The tax rate which applies to poker tournaments will be 5 Finance and the Tax and Customs Board, and casino gambling is Under the 2009 Act minimum machine numbers have been 4. The Estonian Red Cross receives 3.9 percent of the percent of the host’s tournament GGR, a change from the subject to the provisions of the Gambling Act under the general raised and local authorities have been given more power to proceeds. current system of a 5 percent tax on participation fees. term “games of chance”. decide on the location of gambling premises. Social Responsibility Measures Casino operators (public or private limited companies) are Nevertheless, it remains difficult to accurately quantify the required to have share capital of at least €1m and hold both an number of casinos in Estonia because the legislation makes no Those under the age of 21 are not allowed to enter a casino or activity licence and an operating permit. Although the activity distinction between a slot hall and a casino – both being “games work directly with games of chance in casinos. licence is for an unspecified term, operating permits are valid for of chance operators”. In some instances slot halls have the term 20 years. “casino” in their title. A player protection programme has been established according to the law and includes a self-exclusion programme. In addition to the share capital requirement of €1m, casino operators must pay fees of €47,933.73 for a review of an activity A database of excluded people is operated and maintained licence and €3,195.58 for a review of an operating permit. according to the statutes of the Tax and Customs Board and the Ministry of Finance. Share capital requirements will only come into force on January 1, 2015 for those operators that were licensed before the 2009 Players can place themselves on the list and become excluded Gambling Act came into force. from casinos for a period of six months to three years.

Since January 1, 2010 casinos have been required to house at Information included on the database includes the player’s least 40 slot machines and five gambling tables, a measure that name, personal ID code, or, if not present, date of birth and a has accelerated consolidation across the sector. photo. VLTs and Slot Machines

Estonia’s Licensed Casino Market Operators are obliged to establish an adequate system to Slot machines are the most prevalent form of gambling activity ensure that persons on the list are not permitted to play games in Estonia. With the introduction of the new Gambling Act, the Estonia has thoroughly modernised its gambling regulation with of chance. number of slot machines has fallen sharply from approximately the Gambling Act of 2009. 5,200 machines at the beginning of 2008 to 2,067 as of May 2013. 36 European Casino Industry Report European Casino Industry Report 37 ECA’S EUROPEAN CASINO INDUSTRY REPORT ECA’S EUROPEAN CASINO INDUSTRY REPORT

Gaming machines are currently taxed at a flat rate of€ 447.38 Limits can be modified, but only after 72 hours following the per machine per month. That system will change in 2015 when expression of intent to renew them. a flat rate tax of€ 300 per machine per month will operate alongside a monthly tax of 10 percent of gaming machine GGR. The draft foresees the requirements relating to online gambling FINLAND entering into force on June 1, 2014 and the identification If a gambling machine allows several players to participate, the obligation for lottery operators entering into force on January 1, tax is calculated based on the number of playing positions. 2016. Casino Helsinki, which employs 140 full-time staff and 42 part-time staff, is located in the “I would be extremely happy if land-based centre of the Nordic nation’s capital. Casino casino tax were at the same levels as online Helsinki unveiled a facelift project for the tax,” said Madis Jääger, Olympic’s CEO. property’s ten-year anniversary in 2014, including a new sportsbook and the Pajazzo Trattoria restaurant, which opened in February 2014.

Remote Gambling Casino Helsinki

Olympic Entertainment was awarded an online gambling licence in January 2010, and launched its online casino and poker room Raha-automaattiyhdistys (RAY), the Finnish slot machine association, is the only operator authorised to Olybet.com on February 10, 2010. Olybet has also operated in operate casino games and casino activities in Finland. Latvia since August 2013. Finland has a gambling sector built on a foundation of exclusive rights, with three state-owned monopolies A second licence was awarded to Alands Penningautomatforening (Paf) in April 2010. effectively controlling the market over: lotteries and betting (Veikkaus); slot machines and casino (RAY); and horse race betting (Fintoto). These rights extend to the offering of online games. Subsequently, licences were awarded to Nordic Gaming Group subsidiary Triobet and PokerStars (REEL Estonia Ltd) in 2010. Finland’s exclusive rights framework for gambling initially attracted the scrutiny of the European Commission, Following recent approvals, nine entities are now licensed in which launched infringement proceedings in 2006. Estonia to offer online gambling. The country strengthened its sports betting and gambling monopolies at the start of 2012, and in November As of April 2014, 902 sites appeared on a blacklist of unlicensed 2013, the commission confirmed that the revised Finnish gambling system complied with EU law and was sites in Estonia. applied in a consistent and systematic manner. Consequently, the commission’s case against Finland has now been closed. “The most challenging part is that the land-based businesses are very established There is currently just one casino in Finland, the Casino Helsinki. A proposal, which obtained initial approvals, and very strictly regulated and in parallel, for to create a second land-based casino in the eastern part of Finland bordering Russia was abandoned in online, this is not the case,” said Madis Jääger, September 2014. Olympic Entertainment CEO. In the first eight months of 2014 RAY reported that revenues for the Casino Helsinki had returned to growth, adding 1.1 percent to €18.5m. In June 2013, the Ministry of Finance submitted draft amendments to the Gambling Act which would introduce RAY’s online casino games have proved far more popular than its poker network, which has struggled to additional player protection requirements for both online compete with foreign websites since it launched at the end of 2010. gambling and lottery games. Collectively Finland’s gambling monopolies raise €1.7bn every year to finance social activities. A lottery operator would be required to identify players purchasing lottery tickets to ensure that players suffering from gambling addiction and included in the database of excluded people do not have access to games.

For operators offering online gambling, players would be required to set weekly or monthly limits on their losses. Without these limits players would not be allowed to play. 38 European Casino Industry Report European Casino Industry Report 39 ECA’S EUROPEAN CASINO INDUSTRY REPORT ECA’S EUROPEAN CASINO INDUSTRY REPORT

Contributions to Society, Good Causes THE FINNISH CASINO MARKET Casino Helsinki uses environmentally friendly Ekoenergia energy, which is certified by the Finnish Association for Nature MARKET DATA Conservation.

Population 5.41m in 2012 (World Bank Data) Casino Helsinki also handles the recycling of waste from its Currency Euro property.

GNI (Gross National US$46,940 in 2012 (World Bank The Finnish Ministry of Education is in charge of allocating profits Income) Data) of the monopoly gambling operators to several social and cultural causes. Internet Users Per 91 in 2012 (World Bank Data) 100 People The profits from RAY’s games are used for promoting health Mobile Phone 172 in 2012 (World Bank Data) and social welfare in Finland. Funding is annually distributed by Subscribers Per 100 With a population of 5.4m, the Finnish propensity to play 94 member organisations to various health and social welfare People lotteries and slot machines is high, with slot usage in the nation Casino Vaalimaa organisations based on applications which are assessed fairly among the highest in the world. and equally. Doing Business 12 out of 189 in 2014 (Doing Business In 2012, RAY received governmental authorisation to develop Ranking 2014, World Bank) a second casino near the Russian border, at a shopping centre The fund allocation is guided by policies created by RAY’s board Credit Rating AAA (Fitch 2012) Casino Helsinki’s return to growth in 2014 less than 200 kilometres from St. Petersburg in Russia. of directors and as a result of an agreement prepared with the is ”a notable result even on the European Ministry of Social Affairs and Health. In 2013, casino revenues of €28m were modestly less than the Construction of the property began in 2013, with an intended year before. Net gaming revenues at the Casino Helsinki peaked scale”, said RAY managing director Velipekka opening in 2015, but in September 2014 RAY confirmed they had Nearly 900 organisations receive funding each year. In 2013, RAY in 2008 at €32.5m but have since gradually fallen. Nummikoski. withdrawn from the Vaalimaa project citing “delays and related noted that €422m was distributed to non-profit organisations uncertainty.” and the rehabilitation of Finnish war veterans. In 2013, Casino Helsinki introduced a new table games layout and utilised new RFID chip technology. The minimum bets In 2013, RAY’s net gaming revenues grew 2.1 percent to €91.4m Social Responsibility and Player Protection Measures were raised from €2 to €2.5, opening hours were modified and (after lottery duty) despite a continuing economic downturn in “The decision to withdraw is a result of additional poker tournaments were introduced. the country. In an update delivered in September 2014, the slot delays and related uncertainty. RAY will now In its legislation, the Finnish government has traditionally put and casino monopoly reported that gaming revenue across its take a timeout to carefully reconsider how to a great deal of emphasis on addiction prevention and player five core business segments fell 1.5 percent year-on-year in the prooced with regard to the casino permit,” protection. first eight months of 2014 to€ 512m. said RAY managing director Velipekka The year-to-date decline is the first that the Finnish slot Nummikoski. monopoly has suffered in more than four years, with full-year revenue having improved at a compound annual rate of 5 percent from €650.8m in 2009 to €791.4m in 2013. Among the uncertainties were concerns over the introduction of In an earlier statement, RAY had blamed a “degradation of visa-free travel between Russia and Finland to ease the border citizens’ purchasing power” for the year-to-date revenue decline. crossings.

Revenue from indirectly-operated slots in restaurants, bars and A report issued by the Finnish Ministry of the Interior in 2012 clubs fell, but the contribution from Casino Helsinki grew 1.8 suggested that the Russian visa requirement could only be percent over the eight-month period to €18.5m, following a 3.1 erased in 2018 at the earliest. percent decline in 2013. Several of the Finnish cities that also expressed an interest in hosting the casino in 2012 have now said they would be willing to be considered by RAY again, should it start looking for a new Still, 2013 table games figures struggled against a tough 2012, location. slipping 3.0 percent in the same period a year before to €8.3m. Regulator Following the reforms which came into effect in 2012, Finland Poker was hit worse than house-banked table games, with stuck by its monopoly framework, considering gambling not revenues falling 8.4 percent to €1.3m, while other table games Licences are issued by the Ministry of Internal Affairs. The to be a normal economic activity. The European Commission saw total hold fall 1.4 percent to €6.99m. regulatory authorities charged with the supervision of gambling confirmed the compliance of Finland’s gambling laws with EU in Finland are the Ministry of Internal Affairs and the Gambling law in 2013. Players made 276,601 visits to Casino Helsinki in 2013, down 1.3 Administration of the National Police Board. percent on the year before but, encouragingly, new registrations Finland has put in place player protection measures such as grew more than 10 percent to 44,587. In 2012, the regulator was able to raise the maximum permitted maximum wagers, self-exclusion measures and restrictions to number of slots and table games in land-based casinos. operating hours. Customers must be at least 18 years of age, and A smoking ban is in place in Finland; however, smoking- must be registered when they enter a venue. permitted rooms are allowed. Smoking-permitted rooms are not €10m was mandated as the maximum permitted win at a land- able to offer any forms of gaming. based casino. A RAY customer programme introduced in Autumn 2012 makes it possible for the player to set limits to control how much time and money they want to spend gambling. So far 200,000 customers have already signed up. 40 European Casino Industry Report European Casino Industry Report 41 ECA’S EUROPEAN CASINO INDUSTRY REPORT ECA’S EUROPEAN CASINO INDUSTRY REPORT

Online Player Protection Local gambling publications quickly saw advertising revenues As part of the government’s commitment to enhance Finnish from foreign online gaming firms dry up, and the media have citizens’ awareness of safe and legal gambling in the country, Before playing online, the player’s name, social security become increasingly cautious over running unapproved adverts. the group will examine ways to tackle issues related to number, age and address are checked by the Finnish gambling unlicensed gambling services, including illegal marketing. corporations. Although the regulator has been broadly successful in blocking advertising from foreign gambling companies, they have not The group’s remit will not include the recommendation of To be allowed to play, customers must: chosen to implement IP or payment blocking. payment blocking, but alternative means will be assessed in cooperation with Finnish gambling operators and relevant • Be at least 18 years of age. RAY moved online at the end of 2010 offering slot and casino authorities. • Have a Finnish bank account. games as well as poker throughout Finland. Despite a slow • Have a Finnish social security number. start due to competition from illegal foreign operators, internet The Åland Islands, a Swedish-speaking autonomous region of • Have a permanent address in mainland Finland. gaming has grown into a lucrative product for RAY. Finland, has licensed Ålands Penningautomatförening (Paf), which is the Ålandic version of RAY and Veikkaus combined, Finland forbids any free games or “play-money games” before In 2013, RAY’s online gambling revenues reached €60m, up 21.5 which also offers games in mainland Finland. players are registered, and customers are only allowed one percent in comparison with the previous year, representing the account. company’s strongest growth area.

The information that players provide is then checked against the Still, in the first four months of 2014, revenue from online gaming Population Information System (PIS), which provides up-to-date VLTs and Slot Machines edged up just 0.9 percent to €19.7m, a positive change but and real-time data from the National Public Register. decelerating significantly from the growth levels of the previous Rahaautomaattiyhdistys (RAY) is the sole authorised operator of year. Self-exclusion measures and session timers are in place. gaming machines in Finland. The RAY gaming service (www.ray.fi ) offers more than 150 Games in which players play each other, including poker, have There are approximately 20,000 low-stake / low-win slot different games, including casino table games and online poker. no daily cap, but there is a maximum limit of €5,000 on all machines operating under the RAY monopoly in Finland, with Between 2011 and 2012 the group prioritised the cross-selling of gambling accounts and customers cannot put more funds into very little incidence of unlicensed machine operation. Casino Helsinki and www.ray.fi. The www.ray.fi site offers weekly their account between 12am and 6am. chances to win seats at Casino Helsinki’s tournaments. All the licensed machines are manufactured by RAY with €1 As part of the registration process for online gambling, players maximum stakes and maximum jackpots of between €50 and €100. For Casino Helsinki’s dedicated ray.fi tournament, all 100 must set daily and monthly loss limits. These limits will apply to participants were exclusively chosen from several online all types of online gambling at www.ray.fi. Finland is one of the countries in the world that plays most on qualification tournaments to participate. slot machines, with 18 percent of the adult population saying There are maximum daily loss limits of €500 for both slot they had played in the last week. Still, efforts to draw poker players away from offshore sites have machine and table games. so far had mixed results. According to research conducted by Finnish slot monopoly RAY between 1994 and 2012, almost 40 percent of people questioned RAY’s online casino games have proved far more popular than “RAY always welcomes developments said they had played in the last year. For comparison, using the its poker network, which cannot compete with the sheer number which utilise facts and once again Finland and same research methodology, neighbouring Sweden recorded of players on foreign websites, since it launched at the end of Finnish authorities are showing a consistent 14 percent having played in the previous year and just 2 percent 2010. and systematic approach towards gambling- having played in the previous week. related issues,” said Jarmo Kumpulainen, Slot machine gaming has been rising in popularity in Finland, director of business intelligence at RAY. with Finns spending an average €122 on slot machines in 2011, an increase of €7 from 2010.

In a 2011 report by Pelihaitat, a Finnish support organisation for Remote Gambling gambling, it was found that a total of approximately 2.7 percent of 15- to 74-year-old Finns could be classified as problem Finland was an early adopter of online gambling; Veikkaus gamblers (SOGS points 5+) or had experienced problems trying was granted a licence under the Lottery Act to operate games to control their gaming (SOGS 3-4 points). The 2007 figure was on the internet in 1996. Subsequently, Fintoto commenced its 3.1 percent. totalisator operations on the internet in 2001.

Taxation Finnish law considers the internet to be another distribution channel, not a separate form of gambling. Of RAY’s gross profit (defined as gross gambling revenue), 12 percent is returned to the government as taxes. In Finland, land-based operators are allowed to extend their product offerings online to a “bricks and clicks” model, a licence Following the European Commission’s decision to drop the For bingo games, 5 percent of the total value of winnings and extension process sometimes described as License PLUS. infringement case against Finland’s gambling laws last year, the prizes are taxed, but prizes that entitle the player to a free repeat Cabinet Committee on Economic Policy said in February 2014 game are not included. Coming into effect on October 1, 2010, the Finnish Lotteries that it would set up a digital monitoring group to analyse ways to Act and Criminal Code tightened the ban on advertising illegal keep unlicensed online operators out of the market and prevent gambling companies and increased the maximum prison operations that violate the Lotteries Act. sentence for marketing unlicensed operators from six months to two years. 42 European Casino Industry Report European Casino Industry Report 43 ECA’S EUROPEAN CASINO INDUSTRY REPORT

FRANCE

France’s principal casino operators have consolidated their businesses in recent years but have been unable to take advantage of the controlled opening of the online gambling market.

Revenues at France’s 198 casinos have steadily drifted downwards in the last three years, with 2013’s revenues at €2.205bn, some 4.3 percent lower than a year before.

Table games win was broadly flat in 2013, just 1.4 percent lower than a year before at €218m, while machine hold slumped 4.5 percent in revenue terms to below €2bn as competition from unlicensed and largely untaxed online and social gaming offerings took its toll.

Players made fewer than 32m visits to France’s casinos in 2013, a 4.3 percent decline on 2012 as tough economic conditions continued and competition from online gambling, first legalised in France in 2010, became entrenched.

France’s casino sector, a significant employer, shed more than 500 jobs in 2013, despite the reopening of three casino properties. Currently 15,000 staff work full time in the country’s casinos, compared with 17,500 in 2010.

Following financial difficulties at Partouche casinos, a number of its properties have been sold off by liquidators and rival Lucien Barrière now leads in terms of revenues and properties in the French market.

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THE FRENCH CASINO MARKET continuing with online gaming (poker, betting) is JOA group, Some land-based casinos have created their own list entitled which also has 20 casinos. “ANPR”. A player can ask to appear on this list to be banned from playing in one specific casino. This measure may not stop MARKET DATA In 2013, gross gaming revenues from online poker contracted 13 the player from entering other casinos. percent from €297m in 2012 to €258m, while the total amount Population 65.7m in 2012 (World Bank Data) wagered on online poker declined 18 percent to €5.05bn, the According to the 2007 Decree regulating casinos, operating Currency Euro biggest drop since regulation began. hours for each casino are defined in the licence granted to each casino. GNI (Gross National US$41,850 in 2012 (World Bank Contributions to Society, Good Causes Income) Data) In February 2013, an amendment to this decree authorised Internet Users Per 83 in 2012 (World Bank Data) French casinos are legally obliged to reach their own the separation of operating hours for table games and slot 100 People agreements with local towns and municipalities where the machines, meaning casinos will now be able to let their property is situated and participate in the funding of treatment customers play slot machines after the closure of their table Mobile Phone 97 in 2012 (World Bank Data) centres and helplines to help players who are vulnerable to games. Subscribers Per 100 gambling addiction. People Smoking Ban Social Responsibility Measures Doing Business 38 out of 189 in 2014 (Doing Business France’s Licensed Casino Market A law enacted on January 1, 2008 banned smoking in public Ranking 2014, World Bank) The Ministry of the Interior conducts inspections every three places in France. Casinos are counted as public places and Credit Rating AA+ from Standard & Poor’s, French casino revenues have declined substantially overall years and each time a casino renews its new agreement to although smoking rooms may be provided within the casino November 2013. since 2007 when overall gross gaming revenues (GGR) stood at operate – usually at a maximum of every five years. premises, no gaming activities may take place there. 2.788m. Regulator Employee training must take place annually. Problem Gambling Prevention Policies Casino gaming activity in France has been very much affected by Casinos fall under the authority of the Ministry of Finance two decisions: increased identity checking controls introduced In France, according to national legislation, casino entrants must and the Ministry of the Interior, which in turn have set up the for all customers in 2007 and the smoking ban which began be at least 18 years old. “Commission Consultative des Jeux de Cercles et de Casinos” in 2008. The global economic downturn and the impact of (CCJCC) to grant licences and administer casino regulations. competitive online gambling offerings have also proved Until 2007, casino players paid a fee to enter a French casino, According to the 2007 decree that regulates casinos (“Arrêté damaging to the sector’s fortunes. set at a minimum amount of €10 for one day’s access. The du 14 mai 2007 relatif à la réglementation des jeux dans les decree from May 2007 abolished this practice and included new casinos”), licences are granted by the Ministry of the Interior on a At the beginning of 2014 France had 198 casinos, of which provisions requiring all casino players to prove their identities, temporary basis. approximately 118 belonged to four large groups – Partouche, without charge, before being allowed to play. This measure was Lucien Barrière, Tranchant and JOA – with a combined global implemented originally to restrict access to minors, monitor The licence issuance follows a complex procedure involving GGR of €2.205m. financial transactions and enforce self-exclusion programmes. the creation of a local government advisory panel. This body is composed of MPs, mayors and senior civil servants who Taxation examine a certain number of applications for the creation, renewal or extension of casinos during their monthly sitting. Casinos are taxed 10 to 80 percent of their gross gaming revenues. Part of this taxation is given to local authorities. Each application is considered according to a number of criteria, In 2013, French casinos paid €1.174bn in taxes, a decrease of 4.5 varying from the population of a town to local competition, local percent on the year before. economic interests, as well as public morality. The CCJCC then issues a positive or negative opinion for the application, which is Exclusion Measures By contrast, the government collected €320m in taxes on online adopted. games the same year, about the same as 2012, but revenues Since 2007 the “L’interdiction volontaire de jeux”, or self- from poker have been decreasing (except in tournament play), The new law 2014-344 (from March 17, 2014) called the “French exclusion programme, has introduced a general prohibition on particularly when notable sports betting events are underway . consumer bill“ has modified the homeland security code on the access to online games, as well as land-based casino games In France, slot players are taxed at 12 percent when their jackpots prohibited lotteries. and gaming halls; however, the incumbent operators PMU and or single payouts exceed €1,500. FDJ are not currently subject to this requirement for their land- In spite of heavy lobbying pressure from e-gaming operators, based activities, a discrepancy that many observers see as a the scope of authorised games has not changed but provisions distortion of fair competition. about unauthorised games have been mentioned. Originally created for land-based casino gaming, the Social games where financial participation is required from Poker programme was extended to online games by the Online VLTs and Slot Machines players are forbidden even if a possible ulterior re-payment is Gambling Act 2010. announced by operators. Poker is the only casino activity authorised online in France. All Slot machines may be played in licensed casinos only. VLTs are large casino groups in France obtained online gambling licences Persons who appear on the list of excluded or self-excluded currently prohibited in France. All games, with financial participation, that even partially rely on to expand their poker products and benefit from cross marketing players cannot enter a casino or gaming hall or open a player chance (for example: skill games online and poker tournaments with their land-based venues, but the market has proven tough account on a licensed website. Slot machines may accept pre-paid cards or be fitted with bill organised outside a casino or an authorised gaming club/cercle for the land-based operators. acceptors in France. de jeux are now strictly forbidden). Once on the list, the prohibition lasts for three years. If the Both Partouche and Lucien Barrière chose to shutter their online applicant wishes to stay on the list after three years, no specific Remote Gambling poker operations in 2013, finding competition too fierce in the action is needed as the ban remains until the person concerned shrinking market dominated by companies including Winamax, explicitly asks the Ministry of the Interior to be removed from the Because of the dominant position of the land-based duopoly PokerStars and PartyPoker. The only French casino group list. of PMU and FDJ, gambling constitutes an important source of 46 European Casino Industry Report European Casino Industry Report 47 ECA’S EUROPEAN CASINO INDUSTRY REPORT ECA’S EUROPEAN CASINO INDUSTRY REPORT

revenues for the state. Successive governments have tended to adopt a protective attitude against allowing a greater role to private operators in the market, but the activities of unlicensed operators, and the realisation of economic benefits to be gained GERMANY from the taxation of online gambling, prompted a gradual opening of the French market in 2010. At the end of 2013 there were a total of 70 Early enthusiasm for the highly taxed and regulated market was casinos in Germany, around half of which are short-lived and, by April 2013, just 21 online operators remained in France, down from 35 at the beginning of 2012, as the market state-owned and the other half mainly owned consolidated and operators exited the market. by private state-licensed enterprises.

All casino games were excluded from the 2010 controlled opening of the online market and have continued to be unavailable to licensed operators.

In France, operators which have mostly failed to turn a profit since the opening of the market in the country were hoping that the mandatory revision of the law scheduled for late 2011 would address the issues of heavy compliance costs and a high tax burden.

However, the former French government decided to maintain the status quo until the presidential elections were held in May and June 2012.

These elections produced a new socialist government that has so far given no indication that it will proceed with any revision of the law. Although their earnings declined, Germany’s casinos still carried some of the highest gaming tax burdens in Online gambling in France also has a dedicated regulator, ARJEL the world in 2013, sending €248m to their respective treasuries. (Autorité de Régulation des Jeux en Ligne). In a declaration on January 16, 2013, ARJEL indicated its own desire that the market Germany’s 70 casinos earned revenues (gross gaming revenue plus tips) of €610m in 2013, 2.4 percent less be opened to player pooling within the EU with a number of selected jurisdictions with which agreements would be signed. than the year before. In the same declaration, ARJEL mentioned that social gaming could be put under the scrutiny of the regulator in 2013. The Table game and slots revenues were hit equally, with tables’ gross gaming revenues (GGR) decreasing by 2.7 authority highlighted legal uncertainties related to social gaming percent to €144m and slots declining 2.8 percent to €375m. and declared that the issue should be addressed to better protect consumers. Players made 5.76m visits to German casinos in 2013, 112,000 fewer than in 2012 and a decline of nearly 2 percent. Although a change of the law would be needed to set up shared liquidity with other EU member states, the first step towards Consumer spending remains under pressure in Europe’s largest economy and casino revenues have declined it has been achieved with the implementation of cooperation more than 45 percent since 2008. agreements between the UK, Italy and Spain.

However, parliament has so far given no indication that it will Casinos have faced smoking bans, restrictions on their advertising, tougher ID rules and the effective denial proceed with any revision of the law, and in 2013 France’s of ATM cash access for players, combined with competition from unlicensed online operators and, until 2012, parliament refused to permit international liquidity sharing in its expanding numbers of arcades, in addition to new requirements for player protection and documentation of review of competition laws. suspected money laundering.

At the end of 2013 there were a total of 70 casinos in Germany, around half of which are state-owned and the other half mainly owned by private state-licensed enterprises.

48 European Casino Industry Report European Casino Industry Report 49 ECA’S EUROPEAN CASINO INDUSTRY REPORT ECA’S EUROPEAN CASINO INDUSTRY REPORT

THE GERMAN CASINO MARKET On July 1, 2012 amendments to the Interstate Treaty on Contributions to Society, Good Causes Smoking Ban Gambling, the core gambling legislation in Germany, entered into force, introducing important changes. The amendments, Germany’s casinos contribute substantially to good causes on a Smoking regulation is the regulatory remit of the states. MARKET DATA however, remain bitterly contested among industry voluntary basis, while most state gaming laws attribute a share Although the regulation varies state by state, generally smoking stakeholders, with casinos, online bookmakers, arcades and of gaming tax to good causes or sports. is banned in casinos, with some states allowing for exceptions Population 80.43m in 2012 (World Bank Data) lotteries disagreeing on the tax and regulatory burdens. such as separate rooms for smokers. Currency Euro When the amendments were submitted to the European Arcades and Slot Machines GNI (Gross National $45,170 in 2012 (World Bank Data) Commission, the commission responded with concerns Income) regarding compliance with EU law in terms of consistency and After a rapid proliferation of slot arcade locations, and the lifting coherency. of technical restrictions that brought street machines closer Internet Users Per 84 in 2012 (World Bank Data) in format to casino slots, the states have pushed back against 100 People Online casino games are still banned. However, in a last minute federal ordinances to regain control of street gaming and its Mobile Phone 112 in 2012 (World Bank Data) move the state of Schleswig-Holstein assigned 23 online associated hazards. Subscribers Per 100 licences for virtual casino games at the end of 2012 and the People beginning of 2013. Additionally, a much lower taxation gives Since 2011/2012 states, for the first time via the Interstate online licence holders a huge advantage compared with land- Treaty, have introduced location-based regulation with several Doing Business 21 out of 189 (Doing Business 2014, based casinos. Online licenses are valid until 2018. A recent CJEU restrictions, such as minimum distance requirements, advertising Ranking World Bank) ruling, however, confirms that these licences are only valid in the restrictions and opening time cuts. Credit Rating Standard & Poor’s credit rating for state territory of Schleswig-Holstein. Germany is AAA, January 2014 This development added confusion to an already messy legal Regulator situation for gaming operators, both land-based and online, and “Smoking bans for casinos harm land based has hindered enforcement against activities that are otherwise Social Responsibility Measures operations and drive players to online games” Games of chance are regulated by individual state laws and the clearly illegal in Germany. said Otto Wulferding, chairman of Deutscher common Interstate Treaty in conjunction with corresponding Germany’s land-based casinos today abide by a wide range of Spielbankenverband DSbV. casino implementation laws. The Ministry of the Interior is the legal requirements with regard to player protection measures, regulatory and supervisory body in most states, but in some What is missing is a cross-sector consumer ranging from strict registration and identification procedures states the responsibility lies with the Ministry of Finance. protection concept. Such a one has to be to the establishment of player protection concepts. Casino In 2013 the parliament and the federal council, the Bundesrat, the starting point for a gambling regulation employees participate in regular training and the casinos demanded further amendments to curb the federal Gaming According to the casino laws, the land-based casinos have to adjusted to effective player protection,” themselves comply with responsible advertising controls and Ordinance, the Spielverordnung, to strengthen player protection abide by a demanding licensing system whereby the licences said Martin Reeckmann, chairman of anti-money laundering measures. rules under the act. are strictly limited in numbers and locations, as well as further Bundesverband privater Spielbanken in restrictions on operations. Deutschland e.V. (BupriS) The German casinos originally initiated and established all The amendments include lowering hourly maximum winnings player protection measures contained in the Interstate Treaty, and losses, banning slot machines from betting shops, Land-based casinos have to follow very elaborate regulations Germany’s Licensed Casino Market specifically the social concept requirement and the joint client restricting the operation of slot machines in restaurants with regard to consumer protection and rules to prevent exclusion system. and bars, banning simultaneous play on more than one slot money laundering. They must also comply with restrictions on Casinos are regulated at state level and the 16 German states machine, as well as introducing obligatory breaks during playing advertising. They are subject to permanent on-site control and are entitled to license, regulate and tax casinos independently. The Interstate Treaty requires licence applicants to submit a time. supervision by the authorities. so-called “social concept” in which they outline how they will The states set a limit on the number of casinos in their territory, guarantee a high level of player protection, in particular by The federal government has so far not taken the opportunity to There is also a special taxation regime for licensed casinos. The and these quotas vary from region to region. Each state passes means of early diagnosis and prevention. They are also required follow the state’s requests for amendments, leaving an uneven level of taxation is up to 90 percent of gross gaming revenues its own legislation regarding the types of games it permits to provide information and warnings on the addiction risks of playing field for the operation of games of chance. (GGR). in the casinos within its borders. Some states such as Hesse, gambling and on the probabilities of possible wins and losses. Brandenburg and Bavaria have stipulations as to where casinos Together land-based casinos also operate a joint client exclusion Remote Gambling can be located. Eight states allow private operators in their gaming system that applies across the industry. laws. The offer of online casino gambling is generally strictly Casino licence holders are required to develop and document forbidden in Germany. Land-based casinos have to comply with At the end of 2013 there were a total of 70 casinos in Germany. individual programmes for player protection, which incorporate the complete ban on online casino gaming and poker, and their They are run by 17 different state-licensed private and public records of staff training and interviews with vulnerable players. use of this distribution channel is completely restricted. companies and state-operated enterprises. Barring can take place either at the request of the player, at the initiative Germany’s blanket ban on online gambling was lifted to a Licensed casinos can be found in the following states: Baden- of casino operators, or by third parties that are directly involved. The certain extent with amendments to the Interstate Treaty on Württemberg, Bavaria, Berlin, Brandenburg, Bremen, Hamburg, barring lasts at least one year. After this period the player can make a Gambling that entered into force on July 1, 2012. However, the Hesse, Lower Saxony, Mecklenburg-Western Pomerania, North written request to lift the ban. Operators can be held liable for losses if provisions will only allow sports betting, horse race betting and Rhine-Westphalia, Saarland, Rhineland-Palatinate, Saxony, they fail to prevent vulnerable players from playing. lotteries to be offered online, while the legal situation for land- Schleswig-Holstein and Thuringia. Thuringia state assembly based casinos remains unchanged. decided in 2014 to cease issuing licences in 2015. All licensed operators are obliged to control access to slots and table gaming areas to ensure that self-excluded gamblers are In 2012 the state of Schleswig-Holstein issued 23 licences to Unregulated and less strictly regulated competition from online not permitted to play. mostly non-German operators of online casino games, and 25 casinos and slots located in arcades and bars has contributed to the licences for sports betting, with the proviso that the licences did economic pressures that have forced several casinos out of business. The participation of minors in gambling is forbidden. Although not apply beyond its state borders. generally players should be at least 18 years of age, some state casino laws require players to be at least 21 years of age. German land-based casinos did not receive any licences in the process. The licensing regime survives, even though a new 50 European Casino Industry Report European Casino Industry Report 51 ECA’S EUROPEAN CASINO INDUSTRY REPORT ECA’S EUROPEAN CASINO INDUSTRY REPORT

coalition has repealed the legislation in Schleswig-Holstein and Casino tax in each of the 16 states is as follows: joined the other 15 states. Baden- GGR up to €20m - 50 percent Nationwide, a chronic lack of enforcement measures against Württemberg GGR up to €25m - 55 percent unlicensed online gambling has created a situation whereby GGR which exceed €50m - 60 percent GREECE Germany is the second largest black market for online gambling, Bavaria GGR up to €25m - 30 percent according to the European Commission. GGR over €25m - 35 percent Berlin GGR up to €10m - 30 percent For online poker the situation is even more pronounced and GGR exceeding €10m - 35 percent Greece’s Licensed Casino Operators 600,000 online poker players help make Germany the biggest Brandenburg GGR up to €3m - 25 percent. black market in Europe. GGR between €3m and €4m - 30 percent. Club Hotel Casino Loutraki Casino Thraki GGR between €4m and €5m - 35 percent. Regency Casino Thessaloniki Florina Casino The regulator of Hesse is currently coordinating the licensing GGR between €5m and €7.5m - 45 percent. Regency Casino Thessaloniki GGR exceeding €7.5m - 60 percent. Regency Casino Mont Parnes process for the 20 sports-betting licences that can be assigned Bremen Casino Rio under the latest revision of the Interstate Treaty, but by mid-2014 50 percent of GGR, with an additional fee of 30 percent Casino Porto Carras of GGR. the regulator in Hesse had not granted a single licence. Internal Casino Rhodes Corfu Casino sources claim that licences will not be issued before 2015. The senator for interior and sports affairs, with the Casino Porto Carras permission of the senator of financial affairs, can reduce the casino tax to 25 percent of GGR. Casino Thraki (formerly listed as Casino Xanthi) However, in the meantime, several applicants have brought Syros Casino (formerly listed as Aegean Casino) proceedings before the courts on grounds that the process lacks Hamburg 55 percent of GGR plus a special tax of 25 percent to 35 Casino Rio Regency Casino Mont Parnes transparency and has been subject to unacceptable delays in the percent Corfu Casino Club Hotel Casino Loutraki licensing procedure. Hesse GGR up to €25m - 50 percent Florina Casino Syros Casino GGR between €25m and €50m - 55 percent It remains unclear if and when the licensing process will be completed. GGR which exceed €50m - 60 percent Casino Rhodes In addition, the licensee is required to pay a levy of: Taxation GGR up to €25m - 30 percent GGR between €25m and €50m - 25 percent GGR exceeding €50m - 20 percent Taxes on German casino profits are among the highest in Europe, but player winnings in Germany are not subject to income tax, Lower Saxony 50 percent of GGR; plus if the GGR exceed €1m. GGR up to €7m - 10 percent except for the earnings of professional poker players. GGR between €7m and €10m - 20 percent GGR over €10m - 25 percent8 Revenue at Greece’s nine casinos has more than halved since the 2008 peak of €804m. Between 2012 and 2013

Mecklenburg- 40 to 80 percent depending on GGR, subject to an gross gaming revenues shrank 9.7 percent from €339m to €306m. Western additional levy. Pomerania Although they spent less, Greece’s, largely domestic, customers continued to visit the casino properties, with North Rhine- 50 percent of GGR. a small decline of less than 1 percent in visitation terms. But fewer employees were there to greet the players, Westphalia There is a tax allowance amounting to €1m. In the first three years after opening a casino, this tax rate can be as lay-offs and cost cutting meant staff numbers were decimated, shedding 9.9 percent off the headcount to lowered to 35 percent. leave 4,239 full-time workers.

Saarland GGR up to €45m - 40 percent GGR which exceed €45m - 50 percent In October 2013, the Greek government sold a 33 percent stake in OPAP to a Czech-led consortium, Emma The tax rate can be lowered to 30 percent until up to five Delta, after a long-running and controversial sale process, but other stakeholders in the gambling market years after the opening of the casino. continue to protest the claimed entitlements of the former stake-owned group, leaving the government Rhineland- GGR up to €25m - 40 percent Palatinate GGR between €25m and €50m - 50 percent inundated with a variety of legal complaints. GGR which exceed €50m - 60 percent Greek casinos have complained to the European Union about OPAP’s planned launch of thousands of video Additional levy: GGR up to €25m - 40 percent lottery terminals (VLTs) scheduled for the second half of 2014. The casinos argue that, combined with the GGR between €25m and €50m - 30 percent significant illegal machine and casino market that already exists in Greece, the additional machine rollout GGR over €50m - 20 percent would have a strong negative effect on the licensed operators. Saxony-Anhalt GGR up to €7.5m - 25 percent GGR between €7.5m and €10m - 35 percent GGR between €10m and €12.5m - 45 percent As of July 1, 2014, Greek casinos began to pay their gaming taxes on a daily basis. GGR which exceed €12.5m - 50 percent Casino operators are also liable to an additional levy. Already under pressure from competitive properties, Greek casino operators in the north of the country Saxony 50-70 percent depending on GGR. fear they could lose even more gamblers to venues in neighbouring Macedonia after Austrian gaming giant Schleswig- GGR up to €10m - 30 percent, with a 10 percent additional Novomatic re-launched a casino in Gevgelija, five hours from Athens and less than one hour from Thessaloniki, Holstein levy. on the border of the two countries. GGR which exceed €10m - 40 percent, with a 15 percent additional levy.

Thuringia GGR up to €2.5m - 25 percent. GGR between €2.5m and €3.5m - 30 percent. GGR between €3.5m and €5m - 40 percent. GGR between €5m and €7.5m - 50 percent. GGR over €7.5m - 60 percent.

52 European Casino Industry Report European Casino Industry Report 53 ECA’S EUROPEAN CASINO INDUSTRY REPORT ECA’S EUROPEAN CASINO INDUSTRY REPORT

Austerity measures imposed by the government in exchange for THE GREEK CASINO MARKET Greece’s Licensed Casino Market Siding with Club Hotel Loutraki, which filed the original a total of €240bn in international bailout money since 2010 have complaint, the commission agreed that the lower fees could not also devastated casino businesses. Since 1994, when the casinos in Rhodes, Corfu and Parnitha be justified. MARKET DATA were the only ones operating legally in the country, several The vast majority of Greece’s casino customers come from international companies have come to own or operate casinos The commission further decided that the casinos should repay Greece itself, with little significant tourist spend in the properties. Population 11.3m in 2012 (World Bank Data) in Greece. There are now nine licensed casinos operating in the difference for entry fees paid since 1999. The amounts The country’s northern casino properties, including Thessaloniki, Greece, with Florina Casino to begin operations in July 2015. totalled €77m for Mont Parnes and €114m for Thessaloniki. Currency Euro have also suffered in recent years from competition from casinos in the nearby Macedonian gaming hubs of Doiran and Gevgelija. GNI (Gross National US$23,260 in 2012 (World Bank Regency Entertainment operates two of the largest casinos in The scale of these fines were challenged on the grounds that Income) Data) Greece — the Regency Casino Thessaloniki and the Regency they were arbitrary figures set by the Greek state which the In 2014, Greek casino operators were dealt a further blow after Casino Mont Parnes, as well as the Hyatt Hotel in Thessaloniki. operators paid against state-issued invoices, and the Greek state Internet Users Per 56 in 2012 (World Bank Data) Austrian gaming giant Novomatic re-launched a casino on the consequently became a co-defendant in the case alongside the 100 People border of the two countries. Club Hotel Casino Loutraki, which opened in 1995, is one of casinos. Europe’s largest casinos, owned by a consortium of Israeli Mobile Phone 117 in 2012 (World Bank Data) Greek operators say that the three large casinos on the border of Subscribers Per 100 backers, Casinos Austria and the Loutraki municipality. In 2013, casinos Parnes and Thessaloniki appealed against the the Former Yugoslavian Republic of Macedonia (Macedonia) — multi-million euro fines to the Greek Administrative Court, asking People Princess Casino, Hotel Apollonia and FlaminGO — solely target The Loutraki casino-resort, which is seeking to raise extra for an elimination of the entry fees or for admission ticket parity Greek gamblers. Doing Business 72 out of 189 in 2013 (Doing Business funds to help pay €21m of debt to the Greek state, was thrown to be set at €6 per ticket. The court decided to halt recovery of Ranking 2013, World Bank) a financial lifeline by a recent bankruptcy court decision that the fines. “The only reason that they’re there is to gave it permission to pay the outstanding amount over 90 Credit Rating B- from CCC stable outlook affirmed monthly instalments; however, that arrangement is contingent In 2014, the European Union agreed to ask the Court of Justice December 2013, Fitch Ratings. target Greek players of Thessaloniki and other on Loutraki re-capitalising to maintain an operating debt level of the European Union (CJEU) to again assess the decision to Syros Casino small towns that sit on the Greek border,” said below €16m. halt the recovery of the fines following intervention by the Greek Economic Situation Ian Gosling of Regency’s Casino Thessaloniki. finance minister Yannis Stournaras, who argued that collection of the fines would assure the bankruptcy of the casinos. Casino Rhodes The Greek population’s gambling expenditure has historically been considered among the highest in the world. In a decision handed down on September 11, 2014, the General Casino FlaminGO, one of the largest casinos in Macedonia, has Court of the European Union found that the commission had a total of 470 gaming machines, adding further pressure on the In the 1990s Greece boasted three out of four of Europe’s largest failed to establish that this system conferred an advantage on gaming machine market in Greece. casino properties, with extraordinary levels of turnover and the publicly-owned casinos, both paying the same percentage profitability. rate.

The 2008 global economic crisis, which seriously affected the The decision effectively cleared the way for the Greek debt-laden Greek economy, has decimated Greece’s land-based government to sell its stake in Casino Mont Parnes, in which it casino industry and continuing dire economic circumstances holds a 49 percent stake. across the country have resulted in unrelenting declines in revenues, as personal disposable incomes have contracted. Regency Entertainment held the venue’s operation rights until 2013. The Hellenic Republic Asset Development Fund (TAIPED) Greece’s casinos were able to avoid the worst effects of a extended the management rights for an additional two-year national smoking ban, introduced in 2009, by paying additional period in 2013. taxes until 2011, but they now operate under a system by which they pay taxes on designated smoking areas, typically between TAIPED has confirmed the sale of the Greek-owned stake in 35 and 40 percent of total floor area. Restaurants and theatres State Aid the venue, appointing Alpha Bank and the Investment Bank of are designated non-smoking areas. Greece as financial advisors. Beginning in 2010, the European Commission investigated three Greek casinos — Regency Casino Mont Parnes, Regency Thessaloniki and Corfu Casino — in a state aid case, following a “The implementation of the state aid fines complaint made by Casino Loutraki. Although two of the casinos would cause the immediate bankruptcy of were partially government owned, the third, Casino Corfu, was the supposed beneficiaries and an unbearable “The whole marketing philosophy around privatised in 2010. cost to the state budget,” said Greek finance Novomatic will be around the slot product,” minister Yannis Stournaras. Ian Gosling, COO of Regency Entertainment. The commission analysed the difference in taxation between the three casinos and other privately-owned casinos established in Greece. The sale of Casino Mont Parnes continues to be delayed Regulator After a ten-month investigation, the European Commission ruled because of the Greek state’s reluctance to crystallise the value that the lower taxation was unlawful discrimination because it of its stake, once estimated at €200m but now likely to achieve The Hellenic Gaming Commission, the regulator for gaming created a fiscal discrimination in favour of public casinos. far less in an open market bidding process. activities within the Hellenic Republic, was brought into existence by ministerial decree on December 20, 2011, and in Although all casinos in Greece to some extent give Although the sale of the government’s 33 percent stake in Greek September 2013 assumed its responsibilities for the Casino complimentary entry tickets to their players, the burden fell betting monopoly OPAP was completed in August 2013, the Supervision and Control. more heavily on the private operators. As admission tickets in deadline for the sale of rights to take bets on Greek horseracing Greece has been forced to privatise several gambling assets, Greek casinos are taxed at 80 percent, the commission noted has continued to stretch into 2014. The Hellenic Gaming Commission consists of eight members, including 33 percent of its ownership in OPAP, 49 percent of this equates to a €12 admission tax per person for private with Evgenios Giannakopoulos confirmed as president of the Casino Mont Parnes and the total ownership of the Hellenic casinos, while public casinos paid only €4.80. The Greek privatisation agency TAIPED re-opened the tender Horse Betting Association (ODIE). committee, serving a four-year term. in August 2014, after securing only one offer from the lottery services group Intralot which it described as “unsatisfactory.”

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In September 2014 TAIPED declared OPAP as preferred bidder in as well as funding of scientific events and lectures to increase Regency Entertainment’s Thessaloniki and Mont Parnes casinos, In 2012, Greece issued temporary licences to 24 operators, the tender for the privatisation of ODIE, but Intralot is seeking an public awareness, in an effort to prevent problem gambling. and Casino Rhodes, were not called for hearings by the Gaming conditional on the retrospective payment of two years injunction to prevent the conclusion of the procedure. CHCL, in collaboration with the Metamorphosis Support Centre, Commission, as they had paid back the state royalties in time. (FY2010 & FY2011) of taxes based on their history of operations in trains its personnel to detect gambling addicts that are in need A further tax of 20 percent on all entry fees is levied by the state, Greece, and on the newly voted law which imposes a 30 percent of professional help and support and refer them to the centre. and since 2013 all casinos in Greece have charged the same €6 tax on gross gaming revenues and a 10 percent tax on players’ CHCL does not serve alcoholic beverages to visibly intoxicated entry fee. winnings. individuals. Additionally, 2 percent of the gross gaming revenues is allocated In November 2012, the Hellenic Gaming Commission issued Measures of self-barring – The measure extends to procedures to the municipal authorities on a monthly basis, with the warning orders to all unlicensed operators still serving the Greek for immediate family members to exclude other family members exception of one casino, in Rhodes, which pays 4 percent. market, some of them holders of temporary licences, ordering from entering the casino. The barring is applicable for a them to cease providing services in Greece by December 5, 2012, minimum of six months. On an annual basis, each casino has to pay a fixed annual under threat of consequences including blacklisting, fines from contribution to the Greek National Tourism Organisation, ranging €200,000 to €500,000 and even criminal sanctions of up to ten Promotion of responsible gambling – Leaflets concerning from €147,000 to €3.5m. years in prison. gambling problems (self-test) and describing responsible gaming, in addition to leaflets about the gambling helpline and VLTs In July 2013, a 401-strong blacklist of outlawed online gambling the institution providing treatments for problem gamblers. sites was circulated to Greek ISP providers, but an unregulated In October 2011, OPAP paid €560m to the Greek government market still operates in online casino games. As of July 2014, Taxation for the exclusive right to operate 16,500 video lottery terminals there were 437 entries on the blacklist. (VLTs) and the right to sub-lease a further 18,500, which was In 1995, Greece’s casinos made one-off payments for the confirmed in the gaming Law 4002/2011. In the meantime, Greece’s casinos have been informed that they exclusive right to operate in one of the 12 pre-approved locations may be eligible to obtain online licences for games that feature Contributions to Society for periods of between ten and 12 years. Those payments varied Delays in regulations have meant no VLTs have yet been live dealer play but not random number generated play. from €4.4m in Corfu to €16.1m in Mont Parnes. installed but OPAP had indicated it hoped to launch the first VLTs Good citizen – contribution to society, good causes, etc. before the end of 2014. At the same time, internet gambling companies, largely through Following the expiration of the exclusivity periods in 2007 there the London-based lobbying group the Remote Gambling Greece’s casinos return money to society in a number of ways. has been nothing to prevent the Greek government from issuing In response, Greek casinos have complained to the European Association, have filed a series of complaints with the European Most obviously the Greek state receives gaming tax, applied on new licences, although it has chosen not to do so. Union about OPAP’s planned launch of thousands of VLTs. Commission to prevent OPAP from being given a monopoly on the gross gaming revenues of the casinos, that ranges from 22 online sports betting. percent to 35 percent (as of November 2012), depending on their Casinos also pay a yearly percentage of all casino profits in Club Hotel Casino Loutraki and five others argue that the Greek location and size. tax. The tax level is currently set at 32 percent for Thessaloniki, betting monopoly will benefit from unfair state aid when it starts Some major operators, including Bwin.Party and William Hill, Rhodes and Rio. For the casino at Mont Parnes, the tax is 30 operating 16,500 of the slot machines, The case was discussed at have chosen instead to withdraw from the Greek market, with Additionally, 2 percent of the gross gaming revenues are percent if revenues are under €200m, 31.5 percent if revenues the General Court of the European Union on July 3 and a decision the belief that Greece’s legislation contravenes EU laws. allocated to the municipal authorities on a monthly basis, with are between €200m and €250m and 32.5 percent if revenues is expected later in 2014 the exception of one casino which pays 4 percent. reach €300m or above. The European Commission is awaiting notification of new Club Hotel Casino Loutraki is pushing for European courts to online gambling regulations drawn up by the Hellenic Gaming On an annual basis, each casino must pay a fixed annual Loutraki pays taxes at 35 percent, but is seeking to be scrutinise the commission’s decision and the original deal that Commission to assess whether there may be some element of contribution to the Greek National Tourism Organisation, reclassified to be eligible for a lower tax rate. saw the then-government hand OPAP control of the VLTs. state aid in OPAP’s favour. ranging from €147,000 to €3.5m. Casino Rio pays 2.25 percent of its gross gaming revenues to the Regency Casino Mont Parnes, near Athens, has also filed a Because of this, Greece escaped inclusion in a group of countries municipal authorities on a monthly basis. complaint against the Greek government for allowing smoking in — Sweden, Belgium, Cyprus, the Czech Republic, Lithuania, Club Hotel Casino Loutraki’s (CHCL) commitment to the OPAP shops with VLTs. Poland and Romania — that were served infringement principles of corporate social responsibility (CSR) is a strategic Other outlying casinos including Corfu, Thraki and Syros pay proceedings by the European Commission in November 2013 choice and is linked to its business operation and growth. taxes at 22 percent. Greece’s casinos contend that VLT parlours will, by stages, seek as part of the online gambling action plan launched in October to out-manoeuvre casinos. 2012. CSR policy embraces the following four main pillars: Casino Porto Carras is currently seeking a seasonal exemption marketplace, human resources, society and environment. from the taxation regime that would allow it to pay tax during Mont Parnes’ letter to the commission argues that, in addition to the busy summer months, but close its doors during off-season the absence of an entry fee at the VLT premises, “the lifting of the Social Responsibility Measures months and pay a reduced gaming tax rate. smoking ban at the VLT gaming venues constitutes a clear advantage for OPAP as the exclusive owner of a VLT operating licence”. Player protection As of July 1, 2014, Greece’s casinos began to pay their gaming taxes on a daily basis in a measure designed to minimise the One element of the new machine regulation may favour the Underage protection: According to national legislation, states’ exposure to default. existing land-based operators. Under the terms of the latest customers must be registered and over the age of 21 to enter government regulations, VLTs players will pay a 10 percent casino gaming premises. Additionally, from July 2014, Greece’s largest casinos were winnings tax and will be obliged to register for a players card required to hold more cash in reserve while the smaller casinos which records their gambling transactions, although no player Problem Gambling Prevention Policies are required to hold proportionately less. This change is widely gaming limit has yet to be defined. viewed as a move by government to allow it to act more swiftly Problem gambling prevention policies – Club Hotel Casino against casinos that have fallen into gaming tax arrears. There is currently no winnings tax in Greece’s casinos, leaving Loutraki (CHCL), in collaboration with the Metamorphosis casinos hopeful that VLT parlours may act as a conduit for a new Support Centre, offers a free 24-hour SOS Hotline for In January 2014, Eugenios Giannakopoulos, president of the generation of players. psychological support for those in need, as well as specially Hellenic Gaming Commission, wrote to Greece’s finance and designed therapy programmes. Information for contacting the development ministers pointing to the €10m in outstanding Remote Gambling relevant centre is printed on the back of every, obligatory, casino debts owed in royalty payments to the Greek state by the admission ticket. casinos in Corfu, Thraki and Syros, and suggesting they be OPAP claims a monopoly on online gambling games, but a stripped of their licences if they could not pay. public tender for online licences, enabled by the 2011 gambling Newsletters are distributed to clients as an immediate priority, law, has yet to take place.

56 European Casino Industry Report European Casino Industry Report 57 ECA’S EUROPEAN CASINO INDUSTRY REPORT

HUNGARY

Casino Sopron Casino Las Vegas Casino Tropicana

Casino Sopron Casino Tropicana Casino Las Vegas

Hungary’s casinos were again Europe’s best performing casinos in 2013, as the three properties’ combined slot revenues nearly tripled from €8m in 2012 to €30m in 2013, but new legislation is set to more than double the number of available casino licences.

Hungary’s three casinos have continued to feel the hugely positive effects of a ban on street slot machines enacted in 2012, and their revenues jumped 75.9 percent in 2013, topping a nearly 34 percent gain the year before.

Visitor numbers more than doubled from 296,000 in 2012 to 640,000 in 2013 as players flocked to the only available slot machine play.

The fresh demand saw the casinos hire more staff, adding 70 new jobs to the existing 300 employee headcount, a 21 percent increase.

Although the Hungarian state has suffered significant losses in taxation revenues that it formerly levied on the slots industry, it has gained some of that back from the casinos. Gaming taxes paid by Hungary’s casinos rose sharply from €8m to €16m, an increase of 77 percent year-on-year.

The Hungarian National Assembly approved government plans that will regulate and tax new forms of online gambling introducing ISP blocking for unlicensed gambling sites in June last year, and in June 2014 amendments were put forward in a new remote gambling bill designed to make the market more attractive for international online gambling operators through tax cuts and licensing changes.

Ahead of the introduction of online licensing in Hungary it is estimated the online market is worth HUF100bn (€324m) in revenues, with 100 illegal websites catering for 500,000 players.

ECA Member: Magyar Kaszinó Társaságok Szövetsége (Hungarian Casino Association)

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THE HUNGARIAN CASINO MARKET On May 5, 2014 five of the seven new casino licences were Economic Situation In 2012, the Hungarian Poker Association reported that there awarded to Casino Las Vegas, owned by Hollywood producer were approximately 100 illegal poker tables throughout Andy Vajna. Hungary is the most indebted eastern member of the European the country, 50 of which can be found in Budapest. Around MARKET DATA Union, and the consequences of the 2008 economic crisis HUF0.5bn per year in tax revenues is being lost due to the Two more licences were granted to Aranybónusz 2000 Kft. for continue to be felt with the government seeking a sequence of unlicensed tables, according to estimates. Population 9. 92m in 2012 (World Bank Data) casino properties in Debrecen and Nyíregyháza. spending cuts and tax increases, amid high levels of government Currency Hungarian forint (HUF) (HUF1 = debt. Contributions to Society €0.003) Once the process is complete a total of five casinos in Budapest or Pest County will be licensed, along with three in East Hungary In June 2014, the country’s quest to regain its investment credit In 2013, Casino Sopron contributed to funding a local basketball GNI (Gross National US$12,410 in 2012 (World Bank Data) and three in West Hungary. grade status flopped, with Fitch Ratings keeping Hungary’s team and supported a local hospital. Income) long-term foreign-currency issuer rating at BB+, the highest junk The Hungarian gaming market currently consists of the state grade, over concerns that a nascent economic recovery will run The casino also gave its financial support to an amateur 24-hour Internet Users Per 72 in 2012 (World Bank Data) operator, Szerencsejáték Zrt. (SzRt), which holds a monopoly out of steam. swimming competition. 100 People over the lottery, and betting operations, with the exception of Mobile Phone 117 in 2011 (World Bank Data) horse race betting and bookmaking, as well as casinos, poker In 2012, Prime Minister Viktor Orbán’s government levied high Social Responsibility Measures Subscribers Per 100 clubs and horseracing. SzRt also holds the exclusive right to corporate taxes, including Europe’s highest bank levy, to plug People distribute number lottery games and instant tickets throughout budget holes, and in November 2012 the country sought an National legislation requires customers to be at least 18 years of Hungary. additional HUF10bn (€35m) from online gambling taxes. age and registration is required on their first visit. Doing Business 54 out of 189 in 2014 (Doing Business Ranking 2014, World Bank) Casino Las Vegas and Casino Tropicana are both owned by Orbán’s government said it expects to generate HUF30-40bn Players can self-exclude upon their own request or upon the Credit Rating BB+ with a stable outlook, Fitch Szerencsejáték Zrt., while Casino Sopron is owned by Casinos (€107m-€142m) annually from regulating online gambling. request of a legal guardian for up to five years. Once the casino Ratings, June 2014 Austria. has recorded the ban it remains in place and cannot be revoked. The 2012 austerity measures also included an additional HUF10bn (€35m) in revenue to squeeze from Szerencsejáték Zrt., Smoking Ban Regulator the state-owned gambling company, by doubling its dividend. On January 1, 2012, a ban on smoking inside public places Since January 1, 2007, regulatory oversight of the gaming In 2011, the company contributed HUF60.4bn (€214m) to the entered into force. Casinos had hoped for an exemption from industry has been the responsibility of the Gambling Supervision budget, after reporting record sales of HUF181bn (€643m) for the the ban but their exceptional status was overruled on the day of Department of the Central Bureau of the Tax and Financial year. the ban’s entry into force. Control Administration, since 2011 called the National Tax and Customs Administration (NAV). Problem Gambling Prevalence

In the wake of the slot machine ban, Hungary’s casino watchdog A prevalence study published by Ipsos Zrt. in 2010 indicated that has reviewed the number of available licences and has greatly around 1.2 percent of the Hungarian population over the age of increased the scale of the regulated casino market across 18 is heavily addicted to gambling. With Hungary’s population Hungary. being around 9.9m, this translates to around 100,000 people.

Hungary’s Licensed Casino Market Taxation

In 2014, the Ministry for National Economy issued seven new Casino gaming tax, including tax on slot machines operated in a licences for land-based casinos without a formal tender process. casino, is 30 percent of gross gaming revenues. In addition, three mega casino projects have been proposed in recent years. On April 21, 2013, casino tax law amendments came into force which mean gross gaming casino revenues exceeding HUF10bn In 2008, the Seminole Hard Rock brand put forward a plan for a will only be taxed at a rate of 10 percent. property named Vegas in Europe to be located in north-western Hungary, close to the Austrian and Slovak borders, with the early stages scheduled to be completed in 2012. This timescale has not been met, but in 2013 two new investors were added to Poker the project. In Hungary, poker historically has been unregulated and The Eurovegas Hungary Group was granted a gaming untaxed; however, an amendment passed on May 1, 2010 concession licence from the Hungarian government in 2006, specified that card games including poker fall under the which allows for up to five Category 1 casinos (“super casinos”) definition of “gambling operations and activities for conducting to be constructed with an unlimited number of slots and tables. contests of chance” and may be organised in card rooms. Texas These licences are valid for 20 years, with a possible ten-year Hold’em poker is available at Casino Tropicana and Casino extension. Sopron.

The Ministry of Finance has revoked the “priority investment” Card games are subject to a 40 percent gambling tax calculated Instead, the ministry sought out operators that it deemed to be status of two other projects, King’s City and Dream Island, amid on gross gaming revenues. “reliable gambling organisers”. controversy and legal wrangling. Since the new law entered into force authorities have made The requirements to be considered a “reliable gambling several spot checks throughout the country, and two major organiser” include no criminal history, no existing debt and poker halls decided to close down following raids. appropriate professional experience. 60 European Casino Industry Report European Casino Industry Report 61 ECA’S EUROPEAN CASINO INDUSTRY REPORT ECA’S EUROPEAN CASINO INDUSTRY REPORT

Concession fees for a casino in Hungary differ depending on the Each concession costs €350,000 per year, with a 20 percent location of the casino. For casinos located in Budapest and Pest gaming tax and 2.5 percent regulatory cost, costs which are County, a fee of at least HUF600m is levied annually for Class I viewed as high by many industry observers. casinos and at least HUF350m for Class II casinos. “It’s a great step for Hungary to implement ITALY For casinos located elsewhere, the annual fees levied are at least the new online gambling rules. It opens up HUF500m for Class I casinos and HUF50m for Class II casinos. the gate to gambling organisers to launch Casinò di Venezia, Casinò Sanremo, Casinó de la When calculating monthly turnover for the purposes of taxation, their licensed sites in Hungary,” said Gábor Vallée, Saint Vincent and Casinò Campione d’Italia casino operators include 50 percent of any tips received in Helembai, partner at the Budapest-based law Campione monthly gambling receipts. Italy’s four land-based casinos in Venezia, firm Forgó, Damjanovic & Partners. St Vincent Sanremo, Saint Vincent and Campione, all in the Venezia VLTs Still, in June 2014 Hungarian lawmakers put forward a new north of the country, enjoy a special regulatory remote gambling bill designed to make the market more Estimates from EUROMAT, the European Gaming and attractive for international online gambling operators through status which entitles them to offer fully-fledged Sanremo Amusement Federation, indicated that there were more than tax cuts and licensing changes. gambling services without contravening the 24,000 gaming machines in Hungary in 2010. However, tax general gambling ban established in the Criminal increases of more than 500 percent, levied in 2011, resulted in a The proposed amendments would halve the current 20 percent Code. contraction of the slots industry to 6,600 machines by the time tax rate for online gambling to 10 percent of gross gaming the outright ban was introduced in 2012. revenue, making it one of the lowest rates in Europe.

State secretary Janos Lazar said the fast-tracked ban was needed Operators would also no longer need a physical presence in because of new information that elements within the industry Hungary and could instead be a business association with a posed a “serious national security threat” and because of a registered seat outside the country. perceived negative social impact of the machines in the poorest regions of the country. Under the changes, the minimum capital requirement for operators would also be reduced from HUF200m (€650,000) to Lazar conceded that the treasury expected to lose around HUF50m (€160,000), allowing smaller operators to apply for an HUF30bn (€104m) in tax revenue annually due to the crackdown online licence. but that the shortfall would be replaced by regulating online Helped by a significant revival in table game play, Italy’s four land-based casinos have broken their run of gambling. The new draft law would apply the same “reliable gambling double-digit turnover falls but machine spend has continued to drift in the face of competition from online organisers” criteria to any operator seeking a remote gambling slots and an influx of street VLTs. The slot machine ban, which came into force on October licence and would not require a formal concession tender to be 10, 2012, is currently being contested by EUROMAT, which conducted before licences are issued. Revenues at Italy’s four land-based casinos shrank by 7.1 percent to €338m in 2013, down from €364m in the requested that the European Commission examine whether the notification of the slot machine ban was conducted lawfully. The bill also proposes to lower the concession fee for game year before, but a number of properties posted strong individual months of growth during the year. types, as well as the control fee that is paid to the tax authority The commission, in its response to EUROMAT, noted that it was every three months. Increasingly popular calls for a reduction in the number of slots in bars and amusement arcades have given in discussion with Hungarian authorities on the issue. Italy’s four casinos some reason to hope the worst of their declines may finally be over.

Remote Gambling A long-awaited sale process for Europe’s oldest casino, Casino di Venezia, got underway in 2014 but the initial tender process floundered, with the debt-laden property attracting no bids. A second bidding process is likely, The online gambling bill passed in July 2013 brought under but with no clear timescale. regulation a sector that had grown rapidly in Hungary, both in betting and poker. Poker tournaments sponsored and hosted by operators in Italy’s competitive online cash poker market have proved a bright spot in an otherwise dismal picture, boosting visitation in several land-based properties. The draft law, which was sent to the European Commission in January 2013, was delayed until June that year after it received a detailed opinion from Malta. Casino di Campione d’Italia also benefitted from a new law which eliminated the annual €60m fee paid by the casino to its owners, the Provincia di Como, Provincia di Varese, Provincia di Lecco and the Comune di The bill envisions an unlimited number of licensed operators Campione d’Italia. The same law also handed over the ownership of the casino exclusively to Comune di for online casino, card games and sports betting, authorised Campione d’Italia. by the National Tax and Customs Administration (NAV) with a maximum licence length of five years at a time. By pressuring online software suppliers such as Playtech and Microgaming, regulators achieved significant victories in taming the formidable unlicensed online casino market in Italy. One of the only existing licensees, state lottery Szerencsejáték Zrt (SzRt), launched its new online sports-betting site Tippmixpro A widespread political and media backlash against the proliferation of street AWPs and VLTs involving in June 2013, in partnership with Gtech. sustained attacks on the industry by MPs of all parties.

ECA Member Organisation: Federgioco (representing the four Italian land-based casinos)

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EconomicTHE situation: ITALIAN CASINO MARKET representing a 12 percent decline on 2012 and well down on the The apparently untouchable and well-remunerated working In 2013, the casino association for land-based casinos, 3m figure recorded in 2011. conditions of the current personnel are also thought to have Federgioco, adopted a self-regulation code for advertising and proved a disincentive to potential bidders. communications, which adopted the existing legal obligations MARKET DATA Employee numbers also fell, with nearly a tenth of the country’s but also sought to create a culture of “virtuous behaviour”, casino staff departing and fewer than 1,900 full-time employees The prospects of a second tender process later in 2014 have going beyond the minimum legal requirements, for its gaming Population 60.7m in 2011 (World Bank Data) remaining. been derailed by the arrest of the mayor of Venice, Giorgio operators. Orsoni, on corruption charges related to public works contracts Currency Euro The continuing contraction of revenue in the casino market and his subsequent resignation. Smoking in enclosed public places has been prohibited in Italy GNI (Gross National US$32,400 in 2011 (World Bank stiffened the resolve of local governments, which control the since 2005. Income) Data) casino venues and assume their losses, to push forward their In 2013, helped by a significant revival in table game play, Italy’s plans for the privatisation of their local casinos, but with little four land-based casinos broke their run of double-digit turnover Italy’s Licensed Casino Market Internet Users Per 56.8 in 2011 (World Bank Data) immediate success. falls but machine spend has continued to drift. 100 People Increasingly widespread and popular calls for a reduction in Mobile Phone 158 in 2012 (World Bank Data) Casinò di Venezia Federgioco statistics suggest that total spend in Italy’s casinos the number of slots in bars and amusement arcades are giving Subscribers Per 100 declined 7.1 percent over the course of 2013 as table game Italy’s four casinos some reason to hope that the worst of their People Casinò di Venezia, the largest of the four concessions and revenues steadied considerably, falling just 3.1 percent to €124m, declines may finally be over. Europe’s oldest casino, was put up for sale in a complex tender compared with a more than 17 percent plunge the year before. Doing Business 65 out of 189 in 2014 (Doing Business process that began on January 2, 2014. Ranking 2014, World Bank) Slot spend fell 9.3 percent year-on-year in 2013, also an Credit Rating BBB+ from A- with a negative improvement on an 18 percent decline suffered between 2011 outlook, Fitch Ratings, March 2013. and 2012.

Economic Situation Regulation

The economic situation in Italy has remained difficult, with public Italy’s regulatory framework for the supervision of gambling debt set to reach 130 percent of gross domestic product in 2014, operations is one of the most centralised legal regimes in the but there have been signs of hope for Italy’s land-based venues, world, but casino operations in the country remain controlled by particularly in the latter part of 2013 when three of the four local authorities in the areas where the venues are located. properties reported much improved business at the end of the year, despite continued growth in gaming machines and the first In Italy there are four land-based casinos, totally under public year of competition from online slot games. control, and regulated by the Ministry of Internal Affairs.

Italy’s casinos have seen revenue fall every year since the peak Gambling operations in Italy outside of casinos, including slot of €585m in 2007, but at the end of 2013 Campione d’Italia, machines and online, are controlled and regulated by the which is aimed at the Milan market, remained on course for its Agenzia delle Dogane dei Monopoli (ADM) (previously known as Poker first year of growth since pre-crash levels. Amministrazione Autonoma dei Monopoli di Stato (AAMS). All four casinos have also been authorised to offer remote gambling The strategy of hosting poker finals for almost all online The casino on the Italian-Swiss border posted the best results of services under the control and supervision of the ADM. operators and the government’s continuing failure to license the three as it grew revenues to €7.29m in November 2013, an dedicated poker rooms are both helping to encourage patrons increase of almost 14 percent. The change in the name of the Italian gambling authority was to attend venues. introduced in 2012 as part of the restructuring process of the The Sanremo casino also reported double digit growth as a 38 Italian administration. The Amministrazione Autonoma dei Poker tournaments sponsored by online operators have percent increase in table-game spend helped revenue rise to Monopoli di Stato was merged with the Agenzia delle Dogane proved a lifeline for Italy’s four land-based casinos, with all four €3.1m during November. (Customs Agency). operators to some extent partnering with online poker firms to serve as venues for poker tournaments. The casino’s online version added a further €100,000 in gross Recent Key Regulatory Developments profit from turnover of€ 3.7m, almost exclusively from live Bidding stipulations for the concession, which is housed in two Suggestions first voiced in 2011 that 1,000 low-stakes poker casino gaming. locations, one near Marco Polo airport and another in the Ca’ The “Delega Fiscale”, a bill currently with the Italian Senate, will rooms might be introduced to the country as part of the Vendramin on Venice’s Canale Grande, called for an investment empower the government to reorganise the gaming sector in Manovra fiscal stabilisation measures appear to have been “We need a dedicated law and clear rules that was expected to exceed €500m during the course of the the next 12 months and could affect a number of issues related frozen amid the polemical national debate on the costs and 30-year term of management of the casino. to land-based and online gambling, particularly betting on horse social consequences of gambling addiction. for a [slot] sector that is a jungle. We are not races. looking for a policy based on prohibition Despite many requests for access to the data vault housing Competitive Offers but regulation of the sector,” said Marco the casino’s financial details, bidding closed for the debt- Although online slots were legislated in 2011, they did not Cambiaso, head of the Federgioco and encumbered property on April 18, with no bids received, despite become available until December 2012. Italy’s network of slot machines outside casinos has grown managing director of the Casino di San Remo. a one-month deadline extension to allow bidders more time to by around 10 percent in the past year to 420,000, according prepare their offers. In September 2012, the Decreto Balduzzi, a broad health and to figures released by SOGEI, the technical body that works welfare bill, established additional measures with regard to the alongside Italy’s gambling regulator. VLTs have mushroomed to Of the total spend in land-based properties in 2013, slots The hefty €508m price tag, which required upfront payments of advertising of gambling services in Italy. The law mandated the 50,000 with ever-increasing turnover and there is extra pressure accounted for €185m, a slide of 9.3 percent, as competitive €140m and performance guarantees before any investment was provision of correct information about actual odds of winning on from online slot games, which in their first year of activity are street and online slot offerings took their toll, while table game made, was certainly an issue, however, along with the casino’s each game type, required additional information about risks of estimated to have generated gross gaming revenue of €106m. spend was little changed on the year before at €124m. current debt load of €170m. gambling addiction, and outlawed the involvement of minors. The success of online slots in Italy continues to give rise Visits to Italy’s casinos also became less frequent as players The Decreto Balduzzi came into force on January 1, 2013. to concerns that online casino offerings are beginning to came through their doors on just 2.34m occasions in 2013, cannabalise those of land-based properties. 64 European Casino Industry Report European Casino Industry Report 65 ECA’S EUROPEAN CASINO INDUSTRY REPORT ECA’S EUROPEAN CASINO INDUSTRY REPORT

The Italian regulator, formerly known as AAMS, has come VLTs in the so-called stability bill for 2015. under increased pressure to shut down illegal casino sites since an influx of new licensees as part of the launch of regulated Remote gambling online slot games in December. Additionally, in October 2013, LATVIA the Italian customs and monopolies agency planned to force Revenues for online gaming operations have grown consistently software providers to take a licence similar to those held by year-on-year since the regulation process began in 2006 and operators, according to Francesco Rodano, the agency’s head of Italy now has one of the largest gaming catalogues for remote remote gaming. gambling activities in Europe, including betting on sports and There are five casinos in different locations in Latvia, horseracing events, cash and tournament poker, lottery and with a total of 76 gaming tables. online casino games including online gaming machines.

In Italy, every online gaming platform must be authorised and licensed by ADM and meet the criteria for responsible advertising and player protection.

The ADM, Italy’s gaming authority, has now been blocking unlicensed gaming sites, and those affiliated with them, for more than seven years, which makes Italy’s blacklist the oldest and biggest in the gambling world. Currently, the total number of websites on Italy’s blacklist nudges 5,000.

But with IP address forgery, proxy servers and other evasion strategies being so widespread, it remains easy enough for tech- savvy punters to get around the primitive obstacles placed in the way of finding a better deal offshore.

Contributions to Society According to data released in 2014 by advisory firm Ficom Leisure, turnover on unlicensed online casino sites amounted Every casino acts independently in funding organisations to almost €10bn in 2013, delivering offshore operators a GGR Latvia’s gaming industry of five casinos and 324 slot halls generated revenues of €157m in 2013, €7m, or 4.8 supporting those with gambling addictions and by participating of some €296m, up 7 percent on 2012, while tax-paying Italian percent, more than in 2012. in or organising charity events. licensees saw their own margins contract by 4 percent. Gamblers left less behind at the tables though as the 5 casinos earned revenues of €11.57m from their house- Social Responsibility Measures According to the Ficom numbers, €160m came from online slots, banked games in 2013, a 3.5 percent decline from their 2012 result. 3.7 percent more than the year before, while the remaining In Italy, in the absence of any legal obligation, the four land- €134m came from other casino products, up 10.5 percent on the based casinos have started enforcing their own player protection previous year. Player visits to casinos were up sharply in 2013, rising by 16 percent, as more than 606,000 individual visits measures, and each casino has an internal commission were made, despite the closure of one casino property. responsible for all matters related to player protection. Technical regulations for the operation of remote gambling services dictate that operators must also facilitate players with Slot machines are the principal gaming activity for Latvia’s players, and their performance improved gaming Typically these player protection measures include entry being tools to self-exclude from gambling services, with the option in 2013. Measured across all installed machines, including those outside of casinos, slot revenues swelled 5.4 restricted to those over the age of 18 and the availability of self- to establish a fixed or indefinite term of self-exclusion. The percent to €142m. exclusion options and measures. list of players who decide to self-exclude from participating in gambling services must be notified to the ADM. Gamblers left less behind at the tables, however, as revenues for house-banked table games contracted 3.5 Additionally, casinos offer information about gambling addiction percent to €11.57m. and the help available to combat gambling addiction, while Land-based casinos that choose to also operate as online staff are trained to recognise behaviour that is characteristic of platforms must also be licensed by the ADM, and meet the In 2014 Latvia’s Cabinet of Ministers adopted a new proposal to link all gambling machines to an online problem gambling. same criteria for player protection as other online operators. Land-based casino websites have links containing all the above system with central server oversight, a precedent which many observers view with concern. The transitional Like the majority of venues in operation across Italy, local elements, plus links to the ADM website. period for the set-up of the control network is set to extend until January 1, 2019. authorities establish casinos’ operating times. Gaming taxes paid to the state were up by more than 4 percent to €31.5m in 2013. Taxation Online gambling is regulated in Latvia, with four online gambling licences issued in 2013, and three more In Italy, no specific gaming tax is applied to casinos. Every casino applications pending, all from Latvian operators, but the activities of unlicensed operators have also pays ISI, tax on entertainment devices, which is 10 percent of the expanded and financial and ISP blocking measures are being adopted in 2014. difference between gross gaming revenues and the amount due to the local municipality.

In contrast, the machine sector pays specific taxes for the machine sector are 12.7 percent on turnover for so-called NewSlots (AWPs) and 5 percent of turnover on VLTs.

Amid calls for hikes in gaming taxation by anti-gambling groups, the government included an increase in tax rates for AWPs and

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The inspection’s activities are focused on the implementation of Municipal Control The Ministry of Finance has prepared additional amendments to THE LATVIAN CASINO MARKET government functions across the operation of draws, gambling allow for self-exclusion by vulnerable persons. and lotteries of goods and services, and its key functions are: Latvia’s municipalities also have considerable discretion in terms of allowing gaming activities. Good Citizen - Contribution to Society, Good Causes, etc. MARKET DATA • Licensing the arrangement of games. • The supervision and accounting of slot machines and casino The decision on organising gambling games in each case takes Latvia’s gaming association members support the non- Population 2.275m tables. the Municipality Council (board) evaluating if the operation of governmental organisation (NGO) “Esi brīvs!”, which translates Currency Euro since 2014 • The control and arrangement of games. gambling games in the specified place entrenches on essential into English as “Be free!”. • Other functions determined by the statutory law governing legal rights and interests of the state and inhabitants of the GNI (Gross National US$14,120 in 2012 (World Bank Data) the supervision of the games of chance. relative administrative territory. The NGO’s goal is to reach young people, their parents, teachers Income) and the general public by promoting the belief that to be free The 2006 Gambling Act established the rules for all games Economic Situation from any addiction is stylish and a lot more interesting than if Internet Users Per 74 in 2012 (World Bank Data) 100 People authorised in the country, and permitted a range of games you depend on seemingly pleasant substances and processes. including roulette, card games, gaming machines, betting, Latvia’s credit rating has recently returned to pre-recession Mobile Phone 103 in 2012 (World Bank Data) totalisator, bingo, lotteries and remote gambling, including levels following an economic downturn which wiped out more Esi brīvs! organises educational seminars on the topic of Subscribers Per 100 telephone gambling. than a fifth of output and prompted the government to seek a dependence for pupils and parents / teachers, during which People bailout of €7.5bn in December 2008. everyone has the opportunity to gain useful information and All forms of gambling require a licence and only games answers to their questions. Doing Business 24 out of 189 (Doing Business 2014, regulated under the Gambling Act may be organised. The In June 2014 Fitch Ratings assigned the country an A- rating, the Ranking World Bank) licensing process is based on a two-stage procedure, where a fourth highest, as the debt agency cited economic growth, lower Several casino companies support culture and sport projects, as Credit Rating A- from BBB+, June 2014, Fitch general licence to organise gambling is initially required. debt ratios and the adoption of the euro during 2014 as positive well as local communities. Ratings factors. In July 2011, the Latvian government presented a draft law aiming Slots and VLTs Regulator to re-regulate the industry, clamp down on illegal gambling Latvia’s economy is predicted to expand 3.6 percent in 2014, and enhance the competitiveness of the legal Latvian gambling before accelerating to 3.8 percent in 2015, driven by domestic There were 324 slot halls in Latvia at the end of 2013 and each The Lotteries and Gambling Supervision Inspection of Latvia is market. The main focus of this draft is to restrict unlicensed demand and a recovery in investment. gaming hall is required to have a minimum of 20 machines. Only the principal regulatory authority in Latvia and was established remote gambling operators having access to the Latvian market. registered and certified slot machines, using certified and tested by the Gambling Act of 2006. The Ministry of Finance, however, is still assessing it. slot machine software, are permitted for use.

The Lotteries and Gambling Supervision Inspection is divided The gambling industry in Latvia is primarily composed of The registration and marking of a slot machine, table and into two main departments: the control department, which gaming machines, which are responsible for the majority of slot machine’s game program are carried out under orders supervises compliance with laws and regulations, and the legal revenue; however, the number of gaming machines in Latvia has established by the Cabinet of Ministers. department, which carries out the licensing process. dramatically declined over the past few years, dropping from 16,327 slot machines in 2007 to 8,135 in December 2013. Compliance certificates for gaming machines are issued on The 2006 act also created an advisory body, the Council of the basis of a test report of a sample from a group of gaming Lotteries and Gambling Supervision Inspection, which supports In Latvia, the key licensing requirements for a company seeking machines, and certification bodies which are accredited and compliance with public interest concerns, development and the to do business in the gambling sector are: recognised in this field may issue compliance certificates in stability of the industry. accordance with the Regulations of Cabinet of Ministers. 1. A paid stock capitalisation, or statutory fund, of no less than The Council of Lotteries and Gambling Supervision Inspection €1.4m. Poker operates under the supervision of the Ministry of Finance, and its 2. At least half of the directors of the company should be director is appointed by a decision of the Cabinet of Ministers. domestic taxpayers or residents with an unblemished Poker tournaments may only be organised by licensed operators reputation. in licensed gaming venues. Each poker room must have a video The inspection is managed by the director of inspection, and 3. An annual report and statement must be provided by a monitoring system installed. subordinated under the director’s control are the assistant certified auditor. director, deputy director, control department and the law 4. Adequate information about the credit liabilities of the Player Protection Taxation department. company must be provided. 5. Information on the capitalisation of the company and The key requirements for player protection are laid out in Section All casino companies are required to pay all state duties and the origin of its assets must be supported by transaction 41 of the Gambling and Lotteries Law. gambling taxes that may be levied, along with the corporate documents. taxes that are payable by all companies. 6. The inspection is entitled to demand additional information The granting of any type of loans or credits to players by from prospective licensees. organisers is forbidden. The Law on Lotteries and Gambling Tax and Fees defines all fees and taxes applicable to gambling businesses and, in 2014, was The fee for a casino gambling licence is €427,000 and the Any loan granted at the venue for gambling arrangement shall amended to convert the amounts prescribed from lats to euros. annual re-registration fee is €35,580. An annual casino licence be deemed to be a loan deliberately granted for gambling for fee is €28,460. the purpose of Section 2284 of the Civil Law. Amendments to the Law on Lotteries and Gambling Tax and Fees were adopted on September 19, 2013 and entered into force Lottery Gambling advertisements are forbidden outside gambling on January 1, 2014, the same day Latvia joined the eurozone. venues and only an indication of the name of the gambling Lottery games are mainly controlled by the state-owned venue and the registered trademark of the gambling operator is State duties must be paid once each year. Gaming taxes must be monopoly Latvijas Loto, even though other forms of lottery are permitted. paid once a month as 1/12 of the year’s tax stake. also available at local level. Remote gambling and telephone gambling are also regulated, although on a smaller scale. Gambling games may not be offered free of charge, nor may they be offered as a present or prize or a compensation for purchase of any goods or services.

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Under the online licensing regime, the server holding financial and personal data must be located in Latvia and inspection staff State Duties must be granted unimpeded access to the game server program and accounting records. • Fees for the issuance of the special licence for LITHUANIA organisation and operation of slot machines, Each online licence applicant must fulfil the following bingo, roulette, cards and dice games – €427,000 requirements: There are 17 casinos in five different locations in (once). • Registration of the special licence – €35,580 A gambling licence will only be issued to a company with a paid Lithuania: Kaunas, Klaipėda, Panevėžys, Šiauliai • Permission to operate a casino – €28,460 stock capital of at least €1.4m. and in the capital, Vilnius. • Permission to operate a gaming hall or bingo hall – €4,270 Foreign shareholders in the company must not exceed 49 • Permission for organisation and operation of percent. However, this restriction does not apply to investors Šiauliai betting – €42,690 from EU member states, or from countries which might be Panevėžys • Permission for organisation of games of chance proscribed by other international treaties. Klaipėda over the phone – €14,230 • Slot machines – €3,141.70 At least half of the members of the council and board of • Roulette tables – €17,279.36 directors must be domestic taxpayers (residents). • Card and dice tables – €17,279.36 • Bingo – 10 percent of GGR All members of the council and board of directors and auditors Kaunas • Betting – 15 percent of GGR of the gambling company must have an “unblemished Vilnius • Games of chance conducted over the telephone – reputation” and not have been deprived of the right to engage in 15 percent of GGR. business activities.

Online revenues are taxed at 10 percent of gross gaming Remote Gambling revenues. A game of chance by telephone licence fee is €14,230 and the re-registration fee is €14,230. Remote gambling has been regulated by law in Latvia since 2006. Four online gambling licences were issued in 2013, and There is no specific licence fee applicable for remote gambling. three more applications are pending, all from Latvian operators, but the activities of unlicensed operators have also expanded.

Consequently, in 2014 there has been a widening of responsibilities and powers of the inspection, and financial and ISP blocking measures are being adopted in 2014. Two new casinos were opened in Lithuania in 2013, bringing the total to 17 properties operated by four ISP Blocking licensees. Five hundred new jobs were created as a result.

Amendments to the Electronic Communications Law entered Casino revenues continued to rebound in the Baltic state, up 7.4 percent in 2013 to €29m. Slot revenues rose 8 into force on June 1, 2014, which permit the Lotteries and percent, while table revenues grew 7.3 percent. Gambling Supervisory Inspection to restrict access to the website of any unlicensed gambling operator. Spend on table games, the most popular type of gaming in the country’s licensed properties, rose 5.9 percent over the same period to reach €18m. Accordingly, any internet service provider may be obliged to restrict access to an unlicensed online operator’s website. The The Lithuanian government also profited from a rebounding economy as its gaming tax take grew nearly 10 restriction shall be implemented based on a list of unlicensed percent from €11m in 2012 to €12m in 2013. sites issued by the Lotteries and Gambling Supervision Inspection. In November 2013, Lithuania became one of a group of countries, including Sweden, Belgium, Cyprus, Payment Blocking the Czech Republic, Poland and Romania, which were served infringement proceedings by the European Commission, as part of Internal Market tsar Michel Barnier’s online gambling action plan. Amendments to the Credit Institution Law and the Payment Services and Electronic Money Law entered into force on June 1, Draft gambling laws to regulate online gambling were notified to the European Commission in February 2014 2014 and place new restrictions on financial services providers in but were met with a critical detailed opinion in June 2014. their dealings with unlicensed gambling sites. The draft laws proposed to limit the number of casinos to 20 and to require online operators applying for a As a result, the commencement of continuation of business licence to hold a land-based licence for at least one casino, five horse race betting locations, ten slot machine relations with a blacklisted interactive gambling operator or its parlours or 20 betting or totalisator parlours. intermediaries is forbidden.

Credit transfers or payments to the accounts of unlicensed gambling operators are also forbidden.

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A smoking ban is in place in Lithuanian casinos. An advertising ban on most gambling services is in place, Remote Gambling THE LITHUANIAN CASINO MARKET although unlicensed operators have been known to advertise Full-time jobs at Lithuania’s casinos swelled from 2,286 in 2012 in the country, with some of them having to face legal In February 2014, Lithuania notified a draft gambling law to the to 2,578 in 2013. proceedings. European Commission that would require online companies MARKET DATA to set up a presence in the country and give the regulator the Poker was branded a sport in 2010 and a commercial poker bill The regulator can hand out fines of up to LTL25,000 (€7,240) if power to block unlicensed operators. Population 2.98m in 2012 (World Bank Data) was drawn up and registered in parliament in September of the the advertising ban is broken. Currency Litas (LTL) (LTL1 = €0.28) same year, but the law has not yet been implemented. The bill sought to regulate online gambling in the country for the Sponsorships are allowed as it is deemed different to first time after several failed attempts to introduce legislation GNI (Gross National US$13,820 in 2012 (World Bank advertising. in the last four years, but the notified legislation was met with a Income) Data) detailed opinion from the European Commission four months Online Player Protection later. Internet Users Per 65.1 in 2012 (World Bank Data) 100 People As online gambling is prohibited in the country, there are no The detailed opinion, a critique of notified legislation, is Mobile Phone 151 in 2012 (World Bank Data) such measures in place yet. typically not made public but it is thought that the commission Subscribers Per 100 disapproved of the requirement that meant foreign operators People Taxation would still be required to set up a PLC, or a “branch”, in Lithuania under Lithuanian Company Law. Doing Business 17 out of 189 in 2014 (Doing Business Taxation in Lithuania is based on a monthly fee per machine or Ranking 2014, World Bank) table in casinos. The requirement for online gambling operators to establish Credit Rating BBB+ with a stable outcome, Fitch, a physical presence has also proved to be a sticking point for affirmed in May 2013 • Category A machines: LTL800 (€230) per machine per the commission elsewhere in Belgium, Cyprus, and the Czech month. Republic. After years of decline the recovery continued for Lithuania’s • Category B machines: LTL300 (€87) per machine per month. land-based casinos in 2013. Gross gaming revenues (GGR) grew • Roulette, card or dice tables: LTL6,000 (€1,740) per table/ Most online gambling is not regulated under Lithuania’s current 7.4 percent in 2013, topping an 8 percent increase in 2012, but per machine. gambling legislation, and only lottery licensees such as Oliféja casinos did not grow as fast as the rest of the gambling sector. Regulator can use the internet as a distribution channel. In 2013, licensed operators paid a total of €12m in gaming tax, up The total GGR for the 13 licensed operators in Lithuania offering The Gaming Control Authority (previously called the State from €11m a year before. The share capital of any company wishing to provide all types of casino, gaming machines and sports betting, but excluding Gaming Control Commission) regulates all types of gambling remote gambling services in Lithuania would be at least LTL4m lottery, was LTL234.9m (€68m) in 2013, a figure that represents under the Ministry of Finance and is responsible for the (€1.1m), according to the notification. growth of 12.7 percent year-on-year. The 2013 market size was supervision and control of all gambling activity in the country. still shy of the market peak in 2007 when market-wide GGR In October 2013, the Lithuanian Gaming Control Authority stood at LTL245.9m. Contributions to Society, Good Causes confirmed that it had discussed the possibility of blocking payments from unlicensed operators with the Association of Casinos are the only premises that can offer Category A There are no requirements for gambling operators to contribute Lithuanian Banks. gambling machines which have unlimited winnings. to good causes.

Estonia-listed operator Olympic Casino Group had the biggest However, lotteries in the country have to allocate 8 percent of market share in the country, with GGR amounting to LTL69m the face value of tickets to sponsorships or charity. (€20m) in 2013. The company has 12 venues in Lithuania. In December 2013, Olympic Casino Group Baltija UAB, a subsidiary of the Olympic Entertainment Group (OEG), was issued a licence to offer sports-betting games in Lithuania. In a letter to the European Commission in October 2013, Lithuania’s finance ministry As well as a licence from the government, operators need noted that the Gambling Act 2001 had permission from the relevant municipal council to set up a casino become “obsolete and no longer reflected in the district. today’s gambling market”. VLTs and Slot Machines

“Due to this situation, companies operating There are around 3,500 gambling machines in Lithuania. in Lithuania and complying with the There are around 525 Category A machines which offer provisions of the law find themselves in a unlimited winnings and are only permitted in casinos. A minimum of 30 machines are required in casinos. disadvantageous competitive position.” Category B machines have limited winnings and stakes and are not permitted in casinos but in gaming halls around the country. Player Protection A minimum of ten machines must be installed in the halls. There The general age limit to gamble in Lithuania is 18, but to enter a is an age limit of 18 years to gamble on the machines. casino players have to be 21 years old. The Lithuanian gambling market is, however, strongly skewed There is a self-exclusion programme in place, which was towards Category B machines, which collectively generated introduced in 2004, and, by 2012, 2,668 people had added their GGR of LTL84m (€24.32m) in 2013, according to the Lithuanian name to the list. Gaming Control Authority. Category B machines are not permitted in casinos and are only allowed in gaming halls. 72 European Casino Industry Report European Casino Industry Report 73 ECA’S EUROPEAN CASINO INDUSTRY REPORT

LUXEMBOURG

Casino 2000 Casino 2000 (in Mondorf-les-Bains)

Revenues at the sole casino in Luxembourg, Casino 2000, in the municipality of Mondorf-les-Bains, contracted by 4.3 percent in 2013 to €45m from €47m a year before, but player numbers remained the same with 435,000 recorded visits.

A new Luxembourg government, formed in 2013 comprising a coalition of Socialists, Liberals and the Green party.

Tax revenues from gambling shrank to €21m in 2013, down from €22m a year before and from €24m in 2011, adding to pressures for a shake-up in the licensed gambling market, and the new administration may choose to introduce additional casino licences.

Luxembourg has an outright ban on slot machines or any other type of gaming machines, and consequently machines at the sole licensed casino make up a vast majority of its revenues. In 2013 slot machine gambling accounted for €41m of the casino’s €45m revenues.

In March 2012, six betting shops opened in Luxembourg under an agreement between the national lottery, acting as a de facto regulator, and the French horse race betting monopoly PMU.

PMU has so far limited its online activities to betting on terminals installed in betting shops.

The Loterie Nationale enjoys a monopoly over lotteries in Luxembourg and is the only company currently offering online gambling officially.

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THE LUXEMBOURG CASINO MARKET A coalition of Socialists, Liberals and Greens were promoted age to participate in casino gambling in Luxembourg. At present, there is only one casino, so only the Municipality of to power as a result of the country’s election in October 2013, Mondorf-les-Bains, a commune of 4,500 people, receives this ousting Jean-Claude Juncker’s Christian Social People from Player protection measures demand that players must be able to revenue. MARKET DATA power for the first time since 1979. self-exclude, or to place a limit on the number of casino visits. Should more casinos be licensed it is unclear whether this would Population 531,000 in 2012 (World Bank Data) It is currently unclear whether the new coalition will choose to In 2002, Casino 2000 installed a pro-active player protection create additional tax revenues or merely dilute the existing tax overturn the rather conservative gaming policy in Luxembourg. programme, with regular education of all involved employees. A gain. Luxembourg is a very small country surrounded by many Currency Euro team of seven floor managers is in charge of this programme. gaming halls and casinos in neighbouring countries. GNI (Gross National US$71,810 in 2012 (World Bank Data) Rumours have begun to suggest that more land-based casinos Income) (Atlas could be licensed under the new government. Casino customers showing signs of problem gambling Remote Gambling Method) behaviour are approached by casino staff. A short self-test is offered and general information on gambling addiction may be Currently the only officially licensed entity able to provide online Internet Users Per 92 in 2012 (World Bank Data) given. Depending on the outcome, a limitation or a ban may be games in Luxembourg is the Loterie Nationale, and no other 100 People recommended to the customer. authorisation has been issued to any private online gaming Mobile Phone 145 in 2012 (World Bank Data) operator. Subscribers Per 100 People According to the Ministry of Justice, a licence may be issued to private operators that offer online games to Luxembourg Doing Business 60 out of 189, from 56 in 2013 (Doing residents. However, the ministry has indicated that online Ranking Business 2014, World Bank) gaming supply should be demand-based and not based on Credit Rating AAA, Fitch, 2013 possible revenues.

With the new government, it is possible that a law amending Regulation restrictions on online gambling could be adopted but the issue has been under discussion since 2012. Gambling in Luxembourg comes under the supervision of the Casino 2000 Ministry of Justice and the Ministry of Finance, and gaming police officers and officers of the Tax Administration supervise the casino property. Luxembourg’s Licensed Casino Market

Casinos, along with sports betting and lottery, are the only forms Gaming Machines of gambling exempt from Luxembourg’s broadly prohibitive 1977 Gaming Act. The same Gaming Act requires that casinos Luxembourg has a clear and absolute ban on slot machines or Taxation are land-based and are established with the intent of promoting any other type of gaming machines, save for casinos. tourism. Luxembourg’s sole casino paid gaming taxes of €21m in 2013, According to Article 3 of the Gaming Law of April 20, 1977, down from €22m a year before and from €24m in 2011. gaming machines can only be operated in casinos. The base tax rate for casino profits is 10 percent, although the rates Poker fluctuate depending on profits.

A “gentleman’s agreement” was signed in 2007 between poker The tax regime stipulates that the direct recipient of organisers and the Ministry of Justice enabling poker events to gaming taxes is the Grand Duchy of Luxembourg, although be organised if the stakes paid by players remain low (€20-50). municipalities where a casino is located receive 20 percent of all gaming taxes. According to Article 6 of the 1977 Gaming Law, stud poker can be provided in casinos.

Contributions to Society

Casino 2000 supports a project, “Vision4Children”, which was chosen by its shareholders and employees. This organisation collects money for different projects, for example, the education for children in India. The casino’s project is staffed by casino employees. The casino helps to support their activities on The Council of Ministers can make a decision to issue additional various occasions. casino licences, but authorised casinos must restrict their operations to approved land-based games, with no online http://www.vision4children.com/ activities available. Casino 2000 is also a sponsor of local clubs and the national A very detailed list of games that may be offered by casinos, Olympic Committee, COSL and their applicable rules, was last updated and modified by regulation on July 30, 2002, the last update of the gaming Social Responsibility Measures regulations in Luxembourg. National legislation requires customers to be at least 18 years of

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NETHERLANDS

Holland Casino operates 14 casinos in Zandvoort, Amsterdam, Breda, Eindhoven, Enschede, Groningen, Leeuwarden, Nijmegen, Rotterdam, Groningen Scheveningen, Schiphol Airport (for air passengers Leeuwarden only), Utrecht, Valkenburg and Venlo.

Zandvoort

Amsterdam Scheveningen Schiphol Enschede Rotterdam Utrecht Breda Nijmegen

Eindhoven Venlo

Valkenburg

Revenues at Holland Casino’s 14 properties declined by 6.4 percent in 2013 compared with the same period a year before.

The €476m in recorded gross gaming revenues marked a worsening pattern of decline that has been unbroken since 2007 when revenues peaked at €756.7m.

Dutch slot revenues slumped by 7.9 percent in 2013 to €245m, while table games fared less badly, losing 4.2 percent of their hold to bring in €209m.

1.13m players made just over 5.4m visits to Holland Casino venues in 2013, nearly 200,000 visits fewer than the preceding year, and average spend per visitor declined from €97 in 2012 to €93 in 2013.

The state-owned monopoly operator shed in excess of 400 additional jobs across its properties, leaving 2,621 full-time employees and a total of 3,292 employees.

In July 2014 the Dutch Council of Ministers agreed draft legislation that schedules the privatisation of Holland Casino for 2017 and calls for the introduction of online licensing with a base tax rate of 20 percent. The legislation is set to go before parliament later in 2014.

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THE DUTCH CASINO MARKET The Dutch Gaming Authority was installed on April 1, 2012, of casino licences are expected to be issued. • Corporate integrity. financed through contributions and levies from the gambling • Open communication. operators. Responsibility for gambling policy lies with the • The focus on regular guests and principles of customer care • Responsible employer. MARKET DATA Ministry of Security and Justice. The watchdog is tasked with policy remain unaltered. • Involvement with society. closely cooperating with foreign regulators and acts as a • Local entrepreneurship has been supported and each casino • Sustainable procurement. Population 16.80m (2013) (World Bank Data) “knowledge centre” for the public and authorities such as is now responsible for its own performance. • Sustainable casinos. addiction care centres. The authority also maintains an updated • To create a more economically and efficiently functioning Currency Euro register of self-excluded players. organisation, the head office has been restructured, along A safe and responsible gaming offering by Holland Casino GNI (Gross National $47,440 (2013) (World Bank Data) with the casinos themselves, and the investment strategy does not stand isolated from other objectives and the firm Income) In terms of enforcement measures, the authority is able to has been rationalised. The casino group posted a record consistently reviews its efforts in relation to other areas. Groningen impose administrative fines of up to€ 760,000, or 10 percent of loss of €22.3m in 2013, in a slumping economy. Internet Users Per 94.0 (2013) (World Bank Data) the company’s turnover. Multiple fines for the same offence may • Holland Casino has been in talks with its unions about job Holland Casino is a company with its focus on people, which 100 People be given in certain circumstances. cuts and agreements on new working practices, and in April is manifest in the company’s safe and responsible game mix. Mobile Phone 114 (2013) (World Bank Data) 2014 reached an agreement with unions over voluntary Holland Casino strives to offer guests a pleasurable night out Subscribers Per 100 The Licensed Casino Market redundancies; restructuring will help the company reduce and to reduce the risks of the game in safe surroundings. People losses. On December 17, 1975 the only casino licence in the Netherlands • A plan for voluntary lay-offs agreed between management Gaming must be offered in a fair and impeccable manner, Enschede Doing Business 28 out of 189 in 2013 (Doing Business was formally awarded for an indefinite period of time to and unions would cut 150 to 200 jobs, of nearly 4,000 gaming equipment should be in order and guests should feel Ranking 2014, World Bank) De Nationale Stichting tot Exploitatie van Casinospelen in overall. safe and secure when visiting a casino. Credit Rating AA+ November 2013, Standard & Nederland, the official statutory name of Holland Casino. Nijmegen Poor’s Holland Casino opened its first casino in Zandvoort in 1976. “We have to cut our personnel to cut Open communication entails regular consultation with relevant stakeholders about their expectations regarding safe and Economic Situation Subsequently, another 13 casinos were opened in Amsterdam, losses,” said Holland Casino spokeswoman responsible gaming. Holland Casino values their views and Breda, Eindhoven, Enschede, Groningen, Leeuwarden, Isabel van Enckevort. shares relevant information and opinions to encourage further Venlo In November 2013 Holland became the latest eurozone member Nijmegen, Rotterdam, Scheveningen, Schiphol Airport (for air development of the policy. to be stripped of its triple A credit rating by Standard & Poor’s passengers only), Utrecht, Valkenburg and Venlo. (S&P), the credit rating agency, which cited weakening growth Poker prospects for its decision to downgrade the country. S&P cited Dutch gambling law is restrictive in nature, but past weaker growth prospects and a real GDP per capita trend governments have received serious setbacks to this policy. First, Casino War, Texas Hold’em Poker and 4 Card Poker have all growth rate persistently lower than that of its peers. S&P noted the European Commission instigated infringement proceedings been made available in the casinos of Holland Casino as of June that real economic output would likely not return to 2008 levels regarding the monopoly on sports betting in 2006. The Dutch 2013, following an amendment made to the Casino Games and before 2017. Senate also rejected the proposal for a new state monopoly on Game Rules 2000. online gambling in 2008. The Netherlands, which is the eurozone’s fifth-largest economy, continues to suffer from the bursting of a housing bubble, rising In October 2012 the newly-elected Dutch liberal-labour coalition unemployment and weak consumer spending. government signed an agreement to “modernise” the online gambling industry over the next four years and to restrict illegal According to the European Commission’s forecasts, the Dutch activities setting up a licensing framework. economy is expected to start growing in 2014 at 0.2 percent, following a 1 percent contraction in 2013. In July 2014 the Dutch Council of Ministers approved draft legislation that schedules the privatisation of Holland Casino for 2017, lowers mandatory contribution rates for charity lotteries and proposes the licensing of online gambling at a base tax rate of 20 percent - lower than the 29 percent rate currently applied Holland Casino employs nearly 4,000 people, both full- and to land-based gambling activities. part-time, the majority of which work under a collective agreement, and seeks to be a responsible and well-liked The legislation“We will will modernise go before the the Dutch gambling parliament policy.later in 2014. employer. Online gambling, sports betting and poker Preparations for privatising Holland Casino and for the opening Holland Casino is a major buyer of goods and services at local, of Holland’sevents land-based will be strictlygambling regulated.market have started This will and are national and European level, creating numerous direct and still in anreduce early stage. the illegal offers of gambling. Contributions to Society indirect jobs in different industries. Observance of the licensing conditions will In Octoberbe strictly 2013 Holland monitored. Casino was Offering placed in guardianshipgambling isby Holland Casino seeks to play a positive and responsible role in Holland Casino’s staff are also actively involved in the local its lendersnot a overcore debts issue of €for60m the (£50.5m), government, obliging the that company is society. environment. Using the “lost and found funds” made available to make restructuring changes at the request of the banks. by Holland Casino, they support various local and national why Holland Casino will be sold under certain Corporate social responsibility (CSR) forms an integral part of charities. conditions.” the Holland Casino policy and each department contributes to the overall CSR ambition. The procurement office deals with the suppliers whereby Regulator Coalition Agreement on Gambling sustainability is taken to heart when buying all sorts of products, Modernisation, October 29, 2012 This strategy is based on seven CSR spearheads, both with a taking into account human and environmental interests. The Dutch Gaming Authority, an independent supervisory body, short and long-term ambition. is responsible for the regulation and control of the gambling market in the Netherlands, as well as for the licensing of As a result of the pending changes, Holland Casino has adopted Main points are: Human and environmental issues are also the two focal operators. a transition strategy ahead of an expected opening of the market points when it comes to the administration of Holland Casino for games of chance between 2016-2017, when a limited number • Safe and responsible game mix. properties. 80 European Casino Industry Report European Casino Industry Report 81 ECA’S EUROPEAN CASINO INDUSTRY REPORT ECA’S EUROPEAN CASINO INDUSTRY REPORT

Holland Casino reports on the basis of the Breeam methodology In the Netherlands, an operator located in the country providing and, every year, has reduced its CO2 footprint, which fell to a offline casino games, slot machines and all online games level of just over 21 tons in 2012. is liable to a gambling tax of 29 percent of its gross gaming revenues (GGR) (difference between the stakes received and the POLAND Social Responsibility Measures prizes awarded to the participants).

2014 has brought new legislation which applies to marketing If a Dutch player plays online on a site based outside the campaigns. Under the new rules, operators have to very Netherlands, the player is liable to a 29 percent tax based on clearly inform customers about the risks of gambling in their gross earnings per month. As of 2013, there were 49 casinos operating campaigns. throughout Poland.

New legal regulations requiring training for player protection Remote Gambling have also been introduced. The changes, dating from 2013, had already been indirectly included in the licence of Holland Casino In 2009, the Dutch Ministry of Justice created and directly in its operational policy. an advisory committee, known as the “Jansen Commission”, to address the question of whether the On the basis of the gaming law statute, Holland Casino runs an Netherlands should regulate online gambling. intensive responsible gambling policy, not just as a consequence of the official rules but also because Holland Casino as a On the basis of those recommendations the Dutch company feels a social responsibility. government pushed ahead with the creation of a new regulatory structure and in 2013 the secretary The policy is aimed at monitoring Holland Casino’s guests, of justice, Fred Teeven, revealed long-awaited recognising problematic behaviour, taking preventive measures government plans for regulating online gambling. and providing active intervention and referral to addiction prevention agencies for guests showing true problematic Following notification to the European Commission’s behaviour. Council of State, the Dutch Council of Ministers approved the legislation in July 2014. The law will go To make the policy work, all staff are trained by experts from before Parliament later in 2014. gambling addiction agencies. Training courses are given at different levels. Assuming the process continues at a vigorous pace, Revenues at casinos in Poland have rebounded more than 30 percent since 2011 to levels close to their pre- Holland Casino anticipates the first licences will be recession peak. There is basic training for all staff, a training course for managers granted by mid-2015. who do the host/prevention interviews and advanced training In 2013 the country’s 49 casinos collected revenues of €91m, 18.2 percent more than the year before. for all security and legal staff. Under the proposed bill, unlimited licences would become available for a wide range of online games. National legislation in Holland requires all customers to be at The games covered by the bill are poker, casino Slot machines based outside casinos were banned in 2010 when new legislation was implemented, but some least 18 years of age. games, gaming machine games and sport bets (fixed- remaining gaming halls are still operating on long-term licences that will expire at the end of 2015. odds, exchange betting or pari-mutuel betting, live betting) while lotteries are excluded. Although the number of AWPs and slots outside casinos has begun to decline, slot hold in Poland’s casinos grew 22.6 percent during 2013 to €38m, and table games enjoyed a 15 percent revenue boost to €53m. In accordance with the government’s prioritisation of addiction prevention, the bill establishes “strict rules More than 800,000 visits were made to Poland’s casinos in 2013, 100,000 more than a year before and a 14 and conditions to prevent addiction and fraud and percent rise, but player spend grew still faster. ensure effective supervision of compliance”. Gaming taxes paid to the central government grew 16.2 percent to €43m in 2013, bolstered by a growing There will be no limit as to the number of licences issued, and each will run for a five-year period, casino sector that now employs 1,800 staff. with licence fees expected to be set in the range of €35,000-€50,000. Amendments to Poland’s Gambling Act in 2011 allowed for sports betting for the first time and, in 2012, Fortuna became the first operator to be granted an online licence to offer sports betting. There are currently A central database will be set up in which all players four licensed operators in the market. will be registered who are banned from land-based casinos, arcades or online operations, and a central Still, the legislation regarding online gambling remains controversial and in November 2013 Poland was addiction fund will be created. one of seven EU member states to have infringement proceedings initiated against them by the European Commission as part of Internal Market tsar Michel Barnier’s action plan on gambling. Taxation The government has maintained that a low level of taxation for online gambling is essential to dissuade Changes to the Dutch gaming tax regime in July 2008 effectively people from turning to illegal providers. doubled the tax rate for gaming machine income, while lowering the tax for table games. The draft legislation calls for gaming tax for land- based operations to be maintained at 29 percent while Tax revenues in Holland from casino gaming peaked in 2007 and the proposal for online is 20 percent, a differential have declined ever since. taxation proposal which has drawn strong objections from Dutch casinos and arcades.

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THE POLISH CASINO MARKET legislation, slot machine limits were increased to 70 per casino, with the table games minimum remaining the same.

MARKET DATA To operate a casino in Poland, a company is required to be a joint stock company or a limited liability company, have a registered Population 38.5m in 2012 (World Bank Data) office in the country and have minimum level of share capital of PLN4m (€985,000). Currency Polish zloty (PLN) (PLN1 = €0.24) GNI (Gross National €12,660 (World Bank 2012) A smoking ban was introduced in 2010, although casinos are Income) allowed to have designated smoking rooms on their premises. Internet Users Per 65 in 2012 (World Bank Data) Casinos are also permitted on Polish flagged ferries or 100 People passenger ships as long as the gambling starts and finishes 30 Mobile Phone 133 in 2012 (World Bank Data) minutes from the port. Subscribers Per 100 People In towns or cities with populations of fewer than 250,000 people, only one land-based casino may be permitted. Doing Business 45 of 189 from 48 in 2013 (Doing Ranking Business 2014, World Bank) With a larger population than 250,000, an extra casino is Regulator Poker Credit Rating A- with a stable outlook (Fitch, allowed for each subsequent 250,000 inhabitants. The total February 2014) number of casinos in one single province is one for each The Ministry of Finance issues licences and regulates and Draft legislation, which aims to extend the types of games that 650,000 people. supervises the gambling market in Poland. can be offered online, was submitted to the Polish parliament on January 21, 2014. Casino revenues in Poland peaked in 2007 but the economic A casino licence in Poland is valid for six years. Contributions to Society, Good Causes crisis resulted in four years of declining revenues. The draft aims to introduce both land-based and online poker There are no statutory requirements for casino operators to concessions. Since 2011 revenues have rebounded and, in 2013, the casinos contribute to good causes but usually operators are involved in in Poland saw an 18.2 percent gain, bringing their total gross supporting charitable events. Although poker tournaments are currently allowed by special gaming revenues (GGR) to €91m. permission, licences are only valid for a single tournament taking Only the state-owned lottery is required to earmark some of place within a casino with at least ten registered players. the money raised for cultural and social projects and problem gambling. “The proposed draft amendment could Player Protection put a stop to discussions about whether the current Polish legal regime, which allows only There is an age limit of 18 to participate in gambling in Poland, Poland-based operators to obtain a Polish with the exception of promotional and raffle lotteries. licence, is contrary to EU law,” said Anna Advertising or promoting casino games is prohibited and anyone Wietrzyńska-Ciołkowska, DLA Piper Warsaw caught doing so will be imposed with a fine. Casino operators are also banned from sponsoring. VLTs and Slot Machines

There“We are noregret other thatstatutory the requirements proposed for amendments player protection. The Gambling Act in 2009 was adopted swiftly and without Economic Situation notifying the European Commission in 2010, amid a corruption do not [tackle] the subjects that are crucial scandal related to the organisation of the 2012 European The Polish economy has shown a high degree of resilience and for the Polish gambling market, even a small Football Championships. Among other important provisions, stability in the past two years. The debt rating agency Fitch tax reduction or blocking sites of unlicensed the act banned slot machines outside casinos; however, existing The number of operational casinos continued to increase forecasts that real GDP growth will pick up to 3 percent in 2014 operators,” said Mateusz Juroszek, CEO of licensed slot halls are allowed to operate until their six-year throughout 2013, with another six venues added, bringing the and 3.2 percent in 2015 from 1.6 percent in 2013, above eurozone Star-Typ licences expire and will be phased out by the end of 2015. total number to 49. and regional averages. The ban was challenged by the industry before the Court Casino visitation continued to grow with 800,000 individual visits Household consumption and private investment have both Online Player Protection of Justice of the European Union (CJEU), which ruled in July made by players in 2013, 100,000 more than a year before and a shown signs of recovery and the country stands to benefit from 2012 that the act’s validity was questionable due to the lack 14 percent rise. the country’s €106bn allocation from the 2014-2020 EU budget. There is an age limit of 18 to gamble online. A player has to of notification to the commission. But the court left the final have a local bank account to register with one of the licensed decision to the national courts. Among the principal licensees are Casinos Poland, Olympic Nevertheless, Poland remains exposed to eurozone operators. Entertainment Group and Orbis Casino Group. developments via the country’s extensive trade and financial The case is still going through the courts in Poland and has now links. Taxation been referred to the Polish Constitutional Court after several Casinos in Poland have historically been adjacent or included diverse judgments from district courts in the country. Previously, in hotel developments and have, as a result, tended to be of Casino games and slot machines are taxed at 50 percent of in its judgment from July 2013, the Constitutional Court found the smaller size than the maximum permitted. GGR in Poland. In 2013, a total of €43m was paid in tax by the 49 prohibition on transferring existing gaming machine points to casino operators. another location to be in line with the constitution. Poland’s previous gambling legislation limited slot machines to a maximum of 30 and table games to a minimum of four, Online gambling is taxed at 12 percent of turnover. A great deal remains at stake as the legality of the ban is for a gambling venue to qualify as a casino. Under the 2009 debated. In 2012 slot machines generated the largest gambling 84 European Casino Industry Report European Casino Industry Report 85 ECA’S EUROPEAN CASINO INDUSTRY REPORT ECA’S EUROPEAN CASINO INDUSTRY REPORT

turnover in the country, followed by number games and casino member state, prescribing a specific legal form on the basis games. In 2012, the revenue from slot machines, including those of national law, requesting prior consent of the authorities in in arcades, amounted to €131m. relation to any changes in the shareholder structure or banning foreign capital with EU law”. Each casino is now allowed 70 slot machines, an increase from PORTUGAL 30 permitted before the Gambling Act came into force in 2010. In June 2014 the Polish government put forward further draft amendments that would allow online operators to apply for a licence without having to establish a subsidiary in Poland. The 11 casinos in operation in Portugal are: Instead, operators would have to set up a permanent establishment, or “branch”, and keep all their accounts and Casino Estoril records in Polish. The proposed changes also include an Casino Lisboa Casino Povoa de Varzim Hotel Casino Chaves obligation on bookmakers to adopt a policy of responsible Casino Povoa de Varzim Casino Espinho gambling, including introducing a warning audio signal that Casino de Espinho sounds after every hour of gambling. Casino de Vilamoura But industry observers said the proposed amendment does Casino Figueira da Foz nothing to address a current turnover tax of 12 percent, or the Casino da Madeira (Funchal) Casino Figueira da Foz restriction on legal online games in Poland to sports betting Hotel Algarve Casino only. Casino de Monte Gordo The government believes the changes will generate additional Hotel Casino Chaves Casino Estoril income of PLN23m (€5.6m) a year as a result of more tax Casino de Troia Casino Lisboa Casino de Troia revenue. A public consultation is now ongoing, after which the Remote Gambling bill will possibly be re-drafted and then notified to the European Commission and submitted to the Polish parliament. The Polish Gambling Act was amended in July 2011 to allow online sports betting and totalisator betting for the first time. Hotel Algarve Casino All other types of online gambling are prohibited and casino Casino de Monte Gordo operators are not allowed to offer their games online, although Casino de Vilamoura unlicensed operations remain widely available across the country. Casino da Madeira In January 2012, Fortuna became the first operator to get a licence to legally offer sports betting online. Two further licences Total revenues at Portugal’s casinos shrank again in 2013 by 6.2 percent to €272m. Since 2011 the country’s were granted in 2012 to Milenium and Star-Typ Sport and, in casino revenues have contracted by nearly a fifth from €326m, as the effects of the European economic crisis 2013, Intralot’s subsidiary, Totolotek, received a six-year online continue to be felt across Portugal. gambling licence from the Polish authorities.

Draft gambling law amendments were submitted to the Players made 5.52m visits to Portugal’s casinos in 2013, 8 percent down on 2012 and some 19 percent fewer parliament in June 2013, which would also permit online than the 9m that came in 2010. lotteries. Although casino gaming tax payments fell nearly 7 percent in 2012 to €140m, the relative taxation burden on Plans to introduce blocking of illegal websites were dropped operators has continued to increase. Some operators are faced with tax bills that rise in percentage as their after the draft law received a detailed opinion from the European revenues go down. Commission and Malta. The financial assistance programme from the Troika of international lenders, including the European There is, however, a payment ban in place that blocks payments Commission, the International Monetary Fund (IMF) and the European Central Bank, concluded in 2014. to unlicensed websites. Measures to raise revenues, including issuing new regulation for online gambling, are foreseen for this year. In October 2013 Poland was one of seven EU member states that received a letter of formal notice from the European Commission The government presented a draft law on online gaming to the parliament on June 20, 2014. as part of its latest move on gambling infringement proceedings. According to a progress report from the IMF, Portugal has improved its economy since the bailout, but in 2013 A letter of formal notice is the first stage of infringement Portugal’s GDP still decreased by 1.8 percent, while for 2014 the economy is expected to grow by 0.8 percent. proceedings and can be followed up with a reasoned opinion or, ultimately, court proceedings at the CJEU. In 2013, Portugal’s casinos announced they would stop paying as much as €10m in monthly tax in a bid to force the government to re-think the 12 year-old casino concessions that they believe have become too costly Although the commission did not reveal its specific concerns to sustain in Portugal’s deepening recession. about Poland’s gambling regulation, it noted generally about those countries against which it had initiated infringement ECA Member: Associação Portuguesa de Casinos (Portuguese Casino Association) proceedings that it “has concerns about the compatibility of national provisions subjecting the provision of online gambling services to establishing a physical presence in the recipient

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Portugal’s Licensed Casino Market The funds are allocated to tourism funding, a fundamental Player protection training is performed by several casino THE PORTUGUESE CASINO MARKET economic activity which represents 10 percent of Portuguese operators, although, again, this is not mandatory. Casinos are regulated in Portugal and are restricted to gambling GDP, 7.2 percent of employment and 19.6 percent of exports. zones defined by the government. The designated gambling Portugal’s casinos have voluntarily adopted player protection MARKET DATA areas are: Açores, Algarve, Espinho, Estoril, Figueira da Foz, As a part of their remit to develop and encourage tourism, measures which include the provision of information booklets Funchal, Porto Santo, Póvoa de Varzim, Troia and Vidago-Pedras casinos in Portugal have to spend at least 3 percent of their on problem gambling, and the assessment of potential problem Population 10.5m in 2012 (World Bank Data) Salgadas. gross gaming revenues on cultural activities, tourism promotion gamblers by casino managers and supervisors. Currency Euro and entertainment within their respective gaming zone. Currently, there are 11 casinos in Portugal, with four operators Taxation GNI (Gross National US$20,620 in 2011 (World Bank (Estoril, Solverde, Amorim and Pestana) dominating the casino Available data suggests that more than 60 percent of the annual Income) Data) market. New casino projects include a casino on the island of budget of Turismo de Portugal, for tourism financing, comes The Special Gaming Tax is set by the Gaming Law and has to be São Miguel. from revenues generated by casinos. paid each month, both for table games and slot machines. Internet Users Per 64 in 2012 (World Bank Data) 100 People Estoril-Sol, which owns Casino Estoril, Casino Povoa and Casino The beneficiaries of casino contributions to cultural activities Despite intricate methods of calculation and escalation Mobile Phone 115 in 2012 (World Bank Data) Lisboa, controlled 63.8 percent of the casino market in 2013. include: museums, sports halls, golf courses, hotels, marinas mechanisms during the period of each franchise, gaming tax is Subscribers Per 100 and concert halls. not calculated on actual revenue, but on what the law considers People Beyond the land-based casino market, Santa Casa da to be the initial capital of table games and slots. Misericordia de Lisboa dominates the gambling industry in The casinos are also bound to organise entertainment offerings Doing Business 31 out of 189 in 2013 (Doing Business Portugal. and programmes with high artistic values. What defines the final amounts to be paid to the government are Ranking 2013, World Bank) the annual fees established in the franchise agreements. Credit Rating Standard & Poor’s: BB with a The charitable organisation was granted a monopoly for the sale Social Responsibility Measures negative outlook, as of January 2014. of lottery and sports-betting products, as well as being the only These are equal to 50 percent of gross gaming revenues in the Moody’s: Ba3, with negative stable, entity authorised to provide remote gambling in Portugal. Gambling in Portugal is considered an “atypical and sensitive franchises of Estoril (Casinos Estoril and Lisboa), Póvoa and as of February 2014. economic activity”, which must be closely monitored to prevent Espinho, 35 percent for the three casinos in the Algarve and 30 Portugal has licensed casinos and bingo operators. Land-based organised crime and money laundering. percent for Figueira. Regulator casino revenues have fallen during recent years as a result of the country’s economic downturn and competition from offshore Under national legislation persons under 18 years of age are In all cases the franchise agreements allow for the gaming tax to The supervisory agency for gambling and games of chance online operators. prohibited from entering casinos. be offset against the annual fee. in Portugal is the Inspectorate-General for Gaming, known as Serviço de Inspecção de Jogos – Turismo de Portugal, and is a Casinos can be open to the public for up to 12 hours per day. The other franchises, Madeira, Vidago (Chaves) and Tróia, are public body under the surveillance of the Ministry of Economy, subject to fees in which the contractual obligations add up to Secretary of State of Tourism. Any customer can ask to be barred from entering casinos, for up Gaming Tax. to five years. The activities of the lottery operator Santa Casa are separately The overall tax burden in these casinos can range from 17 to 25 reviewed by the member of government in charge of social The Inspectorate-General for Gaming can prohibit any percent of GGR. welfare. individual’s access to gambling venues. The registration of such prohibition can be carried out by the operator, the Inspectorate- Portuguese casinos whose franchises date from 2001 are Land-based casinos are allowed through specific concessions General or by the player. If an exclusion is deemed to be subject to a minimum annual fee set for the first year, which granted by the state, as well as bingo, which can be operated preventive it will remain in operation for a maximum period of increases over the lifetime of the concession, at annual real rates within a casino or outside. Slot machines are authorised only two years. (additional to the inflation rate) ranging from 2.0 to 2.6 percent, within casino venues or specific gambling venues. regardless of revenues. Smoking Ban Two studies by different inter-ministerial commissions, conducted in 2010 and 2012, have proposed legislation and Portugal established a smoking ban in 2007, under which measures to restructure casino regulation and introduce online casinos have to establish a non-smoking area of no less than licensing but no changes have so far been adopted. one third of the entire casino floor area and one third of all gaming equipment (tables and slots). Poker However, in early January 2012 the health secretary, Fernando Poker is considered a game of chance and, therefore, it can Leal da Costa, announced that the government aims to only be operated at casinos. This includes both cash games strengthen the smoking ban even further. and tournaments. Poker is increasingly popular in Portugal and Portuguese casinos have staged several international According to the secretary, the government plans to diminish tournaments. smoking in public and enclosed places to restrict the exposure that bar, restaurant and casino employees have to cigar smoke. However, these are increasingly difficult to organise as the gaming authorities enforce legislation that forbids filming or Problem Gambling Prevention Policies the photographing of players. The lack of regulation for online gaming also prevents casinos from running online tournament Currently, no player protection training is required by law in qualifiers. Portugal. Players can be barred from entering casinos, at their own request, for up to five years, at which point casinos become As Portugal’s economy has sunk into a double-dip recession Contributions to Society obliged to limit access to anyone on the self-exclusion list. and consumer spending has been squeezed, some casinos have been faced with tax bills that rise in percentage terms as The tax levied on Portuguese casinos, which can be up to 66 Casino operators voluntarily provide information on problem their revenues go down, tending to exceed their entire gaming percent of gross gaming revenues (GGR), is the main source of gaming, although this is not mandatory. revenues for some years. The tax bill for 2013 was 66 percent of financing of “Tourism of Portugal IP” (TP), a public entity. GGR for Casino da Povoa, instead of 50 percent; 42 percent of 88 European Casino Industry Report European Casino Industry Report 89 ECA’S EUROPEAN CASINO INDUSTRY REPORT ECA’S EUROPEAN CASINO INDUSTRY REPORT

GGR for Casino Figueira, instead of 30 percent; and 56 percent A new inter-ministerial study on land-based and online gambling of GGR for the three casinos in the Algarve (Vilamoura, Hotel regulation was concluded in April 2012 and delivered to the Algarve Casino and Monte Gordo), instead of 35 percent. Prime Minister. ROMANIA This taxation system has been the subject of complaints from According to this report, three regulatory models were casino operators. proposed, and the study recommended the semi-liberal model under which Santa Casa would maintain the right to run pool Aiming to rebalance the concession contracts, operators initiated sports betting and lottery games online. However, fixed-odds There are now just seven casinos in Romania down legal claims against the Portuguese government in early 2013. betting, as well as racing, would be open to private operators. from a high of 22 in 2009. Concessionaires also announced that they would stop tax The inter-ministerial study suggested remote gambling should payments while the courts are assessing this case, although have a taxation system based on GGR. they indicated they would provide guarantees for the missed payments which could be as high as €10m a month. On June 20, 2014, the government presented a bill to parliament for the government to be granted the authority to legislate Subsequent to the complaint, the casinos made all outstanding online gambling and betting. payments and resumed regular fulfilment of subsequent bills, as conversations with the government started. This bill aims to authorise the government to grant online gambling concessions, define taxes and fees. Great emphasis The legal claim against the government was also suspended was also given to criminal responsibilities and sanctions. and it has been reported that a provisional agreement has been The concession regime that will be applicable is left for the Bucharest reached. government to decide.

VLTs and Slots A number of amendments are expected to be made to this bill while it is assessed by the parliament. Gaming machines can be operated only in casinos and in gambling venues. As of 2011, there were around 6,000 slot The government bill aims to set the tax rate at between 15 and machines in Portugal in legal casinos. 30 percent of GGR for online casino gaming and between 8 and 16 percent on bets for online fixed-odds sports betting. Santa There are now just seven active casinos in Romania, compared with the 20 that operated in 2010, following a The Special Gaming Tax is also applicable to gaming machines. Casa is expected to maintain the right to offer pool betting, as spate of closures. In 2011 some minor changes to the Gaming Law amended well as the right to organise and supervise this activity. administrative requirements for amusement games. The revenues at Romania’s remaining casinos stabilised in 2013, with a total of €43m, a 5.1 percent With the approval of this bill, legislative powers will be given to improvement on 2012, but the headline number still stands at less than half of the 2010 figure of €100m. Remote Gambling the government to legislate on online gambling. A combination of onerous new regulations, increased taxes and economic turmoil has battered Romania’s There is currently no licensing system for online gambling in Although the assistance programme with the Troika has come Portugal, and Santa Casa, the monopoly lottery operator, is the to an end, pressure remains on the government to raise more land-based gaming market since 2009. only entity authorised to provide remote gambling in Portugal. revenues through many measures, including online gambling licences. At Casino Bucharest, the only casino for which finalised 2013 numbers are available, table revenues fell 6.7 In a landmark decision handed down in September 2009 percent and visits declined 1.6 percent. the Court of Justice of the European Union (CJEU) ruled that In a European Commission report published in February 2014 Santa Casa’s monopoly ran contrary to some elements of EU it was conceded that some small measures to raise revenues, In March 2013, the legislature drafted changes and set up a new regulator, the National Office for Gaming, in competition law, but that contradiction “may be justified by over- including online gambling, “might not yield the budgeted preparation for licensing of the online market; however, although online gambling is regulated in Romania, riding reasons relating to the public interest”. savings”. no operators have yet applied for licences because of prohibitively high rates of taxation and the absence of a certification body. The case was the result of a challenge by the Austrian online bookmaker Bwin which signed a €10m four-year sponsorship In November 2013, Romania became one of a group of countries, including Sweden, Cyprus, the Czech deal with the Portuguese Professional Football League in 2005, but the so-called Santa Casa decision strongly endorsed the Republic, Lithuania, Poland and Belgium, which were served infringement proceedings by the European government’s restrictive gambling policy. Commission as a part of Internal Market commissioner Michel Barnier’s online gambling action plan.

Still, unlicensed operators continue to explore the Portuguese A change in gambling law is again on the horizon following the EU criticism of the current system but online market and, as a result of practical and economic Romania’s parliament has so far been unwilling to expedite the process. considerations, Portugal may be encouraged to open its remote gambling market to obtain more revenues.

Currently, there is no specific regulation regarding ISP blocking.

Nevertheless, in a court proceeding Santa Casa initiated against the online operator Betclic, the Lisbon court held, among other things, that the company’s websites should be blocked. This is the first decision of this kind in Portugal.

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Romania has one of the most extensive gambling markets in All casinos must be equipped with a digital video surveillance Social Responsibility Measures THE ROMANIAN CASINO MARKET south-eastern Europe, but the sector has contracted sharply and recording system, and recordings need to be maintained for since 2009 as the government seeks to consolidate, tax, and a minimum of 30 calendar days. Operators must also maintain Romanian gaming laws do not provide for specific player regulate the market in the midst of an unprecedented economic customer identification records for at least five years. protection measures; however, national legislation requires that MARKET DATA downturn. all visitors to casinos are aged 18 or over. Each casino operator must hold both a licence to organise Population 21.33m in 2012 (World Bank Data) The number of casinos fell from 22 in 2009 to just seven in gambling and an authorisation to operate casino-style games, Each visitor must be registered in a computerised database and Currency Romanian leu (RON) (RON1 = €0.23) 2013, while the number of sports-betting outlets also declined, with a separate authorisation required for each casino premises. must present a valid ID document. according to the Romanian Gaming Association of Organisers GNI (Gross National US$9,060 in 2013 (World Bank Data) and Producers. Licences are valid for a period of five years and are subject to an Every visitor to a casino must pay a RON20 entrance tax that is Income) annual fee of RON400,000 (approximately €92,000), more than put toward the state budget. In November 2013, Romania was one of a group of seven double their pre-2010 cost. Internet Users Per 50 in 2012 (World Bank Data) countries which the European Commission served with Smoking Ban 100 People infringement proceedings. Mobile Phone 106 in 2013 (World Bank Data) Romania has a partial ban on smoking, with total bans only Subscribers Per 100 Infringement proceedings are launched when the commission in place on public transport and at healthcare facilities. For People believes that countries have not complied with EU law and can hospitality venues, which are smaller than 100 square metres, lead to the commission suing that country in the Court of Justice smoking may be permitted. In larger hospitality venues, among Doing Business 73 out of 189 in 2014 (Doing Business of the European Union. other places, enclosed ventilated smoking rooms are permitted. Ranking 2013, World Bank) Credit Rating BBB- (Standard & Poor’s May 2014) Michel Barnier’s Internal Market directorate expressed its Taxation concerns about laws that force online operators to set up Economic Situation “a physical presence”, and had specific questions about the New gambling tax rates came into effect on July 1, 2010, Belgian, Romanian and Cypriot regimes. introducing a tax of 25 percent on all player winnings in excess Romania has suffered severely from the economic downturn of RON600 (€135) per day. across the eurozone since 2008. The country also embarked on Romania’s Licensed Casino Market one of the European Union’s toughest austerity programmes in The annual tax for each gaming table in Bucharest is now 2010 by cutting state wages by 25 percent and raising the value As a part of the introduction of regulation in 2009, Romania RON250,000 (€56,000) and RON120,000 (€27,000) for tables added tax by 5 percentage points. tightened its licensing requirements, introducing a dual licensing outside the capital. framework consisting of both licences and authorisations for In 2012, the country accepted a €500m instalment of a €3.4bn every gambling activity. The rules extended probity requirements Taxes on slot machines and bingo games more than doubled precautionary loan offered to it by the International Monetary to include background checks on key individuals; increased fees Poker from their pre-2010 levels of RON3,500 (€790) per machine to Fund (IMF) in March 2011. and required share capital; and introduced additional technical RON8,000 (€1,800) standards. In April 2011, poker was officially recognised as a sport in A review of the stand-by loan arrangement was completed on Romania. Additionally, the standard corporate income tax or “profits tax” June 26, 2013, which determined that Romania’s economy has Each casino operator within the city of Bucharest is now required which applies to casino operators in Romania is 16 percent. stabilised but growth is still weak. to have a minimum of 12 gaming tables, of which at least two The Romanian Poker Federation was created to organise the must be roulette tables. Outside the capital the minimum sector in the country. Operators holding a licence and an VLTs and Slots In May 2014, Romania regained its investment credit rating with number of gaming tables is ten, of which at least two must be authorisation to organise gambling and operate casino-style credit rating agency Standard & Poor’s, which cited the country’s roulette tables. games can organise poker tournaments. If used in casinos, slot machines require a licence separate from success in reducing its external debt and keeping its budget the casino licence, and each organiser must intend to operate at under control. Contributions to Society least 50 slot machines in either a single or multiple venues.

Regulator The dire financial situation of many operators and the The Romanian national lottery, Loteria Romana, holds a excessively high taxation levels facing casino operators in monopoly on video lottery terminals (VLTs) and signed an The Gambling Authorisation Commission was removed from the Romania makes sponsorship of good causes unfeasible at the agreement with Intralot, Intracom and Lotrom to supply the control of the Ministry of Finance in March 2013, following the present time. machines from 2003 to 2013. publication of a draft emergency ordinance, and a new National Office for Gaming (NOG) was set up under direct government The combination of taxes and licensing fees In 2013, that agreement attracted the attention of Romania’s control, beginning operations on April 15, 2013. makes Romania “an uncompetitive tourist Competition Council, which said that the contract included an destination for gambling, and discourages illegal “non-compete obligation” preventing the lottery from The government appointed Cristinela Odeta Nestor as president seeking other VLT partners for those ten years. of the newly-established regulator, with Gheorghe Gabriel investment in the gambling sector”, said Gheorghe appointed as vice president. Cristian Pascu, executive president of the The competition watchdog fined the partners€ 3.76m, a decision Romanian Gaming Association of Organisers which Athens-listed Intralot is contesting. Although the new NOG has increased powers to regulate, and Producers. monitor, control and authorise all forms of gaming in Romania, Approximately 400 other operators also hold licences for little progress has so far been made, largely because of Nevertheless, the Slots Association has established a problem smaller-scale machine operations. parliamentary inaction. gambling helpline which is funded by sponsorship fees from Each gaming floor must be equipped with emergency lighting individual operators, and a free helpline number is advertised at Slot machine licence applicants must have a minimum capital of Still, the NOG has set up a Consultative Council where and emergency exit doors, and a fire extinguishing system, the premises of each participating operator. RON30,000 (approximately €6,900) on the date of application representatives of private gaming operators can discuss along with adequate staff rooms and back of house services. All to be eligible for a licence. improvements to legislation and procedure. gambling equipment, such as dice and cards, must comply with The Romanian Austrian Casino Corp. is a sponsor/participating internationally accepted standards. operator.

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An authorisation to operate slot machines is subject to an annual fee of €1,950 per slot machine.

Slot machine operators must hold both a licence to organise gambling games and an authorisation to operate slot machine SERBIA games.

A licence to organise slot machines is subject to an annual fee of RON25,000 (approximately €5,750) and is valid for a period of Grand Casino Beograd is one five years. of two licensed casinos in In October 2013, Loteria Romana announced it would partner Serbia. with Austrian slot producer Novomatic to provide 10,000 gaming terminals in the country, with a 50/50 spilt on revenues.

Remote Gambling Grand Casino Beograd Online gambling legislation, first approved in 2010, set a 1.5 percent tax on turnover and a 25 percent tax on player wins over €140, but no licence applicants have applied. The rules also called for partnerships with land-based operators.

The 2013 establishment of the National Office for Gambling was widely viewed as an opportunity for the online market to open, but delays in appointing and licensing a certification and monitoring company, needed to implement regulation, have caused progress to stall again.

Some efforts are underway to remove the tax on customer winnings, which would clear the way for licensed online gaming in Romania. Total revenues at Serbia’s two licensed casinos fell 3.5 percent to €8.3m in 2013 (revenue data is only available for Grand Casino Beograd). Still, following the publication of the European Commission’s Communication on the European online gambling market in Table games, where hold grew 7 percent, fared better than slot machines where revenues slumped 9.8 October 2012, it is likely there will be further scrutiny applied to Romania’s online gambling framework from Brussels. percent and the number of jobs created fell 5.1 percent to 338.

In 2013, Romania’s National Audiovisual Council, which regulates Despite experiencing falling revenues, Serbia’s casinos paid more gaming taxes in 2013 than in 2012, with radio and television stations, barred three commercials aired €1.3m going to the treasury, 13 percent more than a year before due to a slot tax change in the middle of 2013. by PokerStars and its sister company, Full Tilt Poker, as the companies did not have an online gambling licence. In May 2014 the new Serbian government gave the green light to online gambling operators seeking to become certified, with the first licences expected to be issued before the end of the year, under laws first The online poker commercials, which included the Spanish passed in late 2011. tennis player and PokerStars ambassador Rafael Nadal, aired hundreds of times, the audiovisual agency said.

“You cannot get a licence, and yet nobody is allowed to advertise,” said Dragos Buriu, a member of the Romanian Gaming Association of Organisers and Producers

In 2014, a European Lotteries study identified Romania as being among the European Union countries most damaged by illegal online gambling.

The study said that Loteria Romana’s share of the national gambling market dropped by more than 20 percent over five years.

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The SerbianTHE Casino SERBIAN Market CASINO MARKET Serbia’s government called a snap election in March 2014 after Although Grand Casino Beograd opened in June 2007, another the dominant pro-European SNS party said it needed a stronger operator, HIT International, won a further tender for a second “In order to have a properly regulated mandate to carry out reforms, less than two years after the casino licence in December 2006, permitting the operation market, except the necessary legal MARKET DATA Balkan country’s last vote. of a casino between 30km and 50km of Belgrade City Hall. framework, the state must exercise the proper However, the project was delayed several times. As a result, the controls to ensure that the law is applied. Population 7.164m in 2013 (World Bank Data) The SNS, with designated Premier Aleksandar Vučić, won by a government has terminated the concession. It is the state’s responsibility to ensure that landslide and became the first party to take an absolute majority Currency Serbian dinar (RSD) (RSD1 = €0.01) in Serbia’s parliament since the ousting of Slobodan Milošević in On July 1, 2014 Queenco, the Israeli owners of a 90 percent the law is applied by everybody and fair GNI (Gross National US$5,730 in 2013 (World Bank Data) 2000. holding in Grand Casino Beograd, announced that it would put competition rules govern the market,” said Income) up for sale a number of its assets, including its stake in Grand Christos Tsemperas, Grand Casino Beograd. Casino Beograd and in the Greek Casino Club Hotel Loutraki. Internet Users Per 51.5 in 2013 (World Bank Data) 100 People The announcement set a deadline of 15 months from the date law. Operators of games of chance are obligated to enforce the Mobile Phone 119 in 2013 (World Bank Data) of the agreement for a sale to the best bidder in a process to be prohibition of participation of juvenile persons in the games of Subscribers Per 100 overseen by an administrator serving as a sale trustee. chance in the most effective way. People Contributions to Society, Good Causes All staff working for the casino operators who have customer- Doing Business 93 out of 189 (Doing Business 2014, facing roles are required to be fully trained in the recognition of Ranking World Bank) Gaming taxation provides budgetary revenues to the Republic problem gambling behaviour and the prevention of gambling Credit Rating BB-/B, with a negative outlook, of Serbia and some 40 percent of the tax revenues are used to addiction. in April 2014 (Standard & Poor’s provide finances for the Red Cross of Serbia, and associations ratings). for the disabled. A range of associations established for the Leaflets addressing issues of gaming addiction, and featuring improvement of the welfare of people with disabilities, and other the contact data of an institution certified by the Ministry of Regulator social welfare institutions and sport organisations also benefit. Health for treating addiction, must be made available at each counter or window where games of chance are played, and a The Republic of Serbia’s Ministry of Finance oversees the Grand Casino Beograd has established its reputation as a poster containing the same information must be displayed in the country’s gambling sector and determines whether a gaming respectable member of the community in which it operates vicinity of the entrance door. * Data available only for Grand Casino Beograd activity should be designated as a game of chance. through many donations to children’s charities, culture and sport. The management of the company actively encourages its National legislation also requires customers to be a minimum A new law on games of chance came into force on December Serbia’s Licensed Casino Market employees to undertake humanitarian work. of 18 years of age, with minors prohibited from entering any 2, 2011, and in October 2012 the Tax Administration took gambling facility. over the supervision of games of chance, as the former The Grand Casino Beograd is currently one of two licensed In May 2014 Serbia was affected by severe floods. Grand Casino supervisory authority, the Games of Chance Administration, was casinos in Serbia, with 238 electronic gaming positions and 35 Beograd reacted immediately and donated around €14,000 to a Operators are required to maintain a permanent database of discontinued. table games. flood relief fund. Furthermore, Grand Casino Beograd took the prohibited players and no publicity relating to gambling or initiative to organise the THM tournaments and prompted the special games of chance is permitted without the provision of a The Ministry of Finance renders a decision on whether a game is Grand Casino Beograd formerly held an exclusive contract for players to donate part of their winning prizes. All participating clear notice that the participation of minors is prohibited. Notices to be deemed a game of chance. operational exclusivity within 30km of central Belgrade until players embraced the idea and gladly donated around €13,500 making clear that minors are prohibited from gaming must be 2015. in total. displayed alongside all games. Games of chance, which are provided for the purpose of amusement and for cash winnings, also contribute taxes to the In 2010 the Serbian government breached its contract with budgetary revenues of the Republic of Serbia. Grand Casino Beograd by issuing another licence, within the perimeter of 30km of central Belgrade, to a small operation By-laws and regulations for online gambling were passed known as Fair Play Casino. in August 2013 but, during 2014, their implementation has been delayed by the late arrival of technical and certification Casino gambling is licensed on the basis of a ten-year licence standards. term. The number of available casino licences was limited to ten for the entire country. Only two licences were ever awarded, both in the Belgrade area, although only one was provided for this area in the original act and tender.

A licence can be renewed for a further period of ten years, upon request of the organiser and payment of a €500,000 fee.

The act stipulates that a corporate entity will need to be based in Serbia to be eligible for a licence, have capital stock of €1m, have a minimum deposit/bank guarantee of €300,000 in a Serbian bank for each casino and have to ensure a risk deposit of a * Data available only for Grand Casino Beograd * Data available only for Grand Casino Beograd minimum of €50,000 in the cash desk of the casino. Social Responsibility Measures Smoking Ban The Act on Games of Chance 2011 also required a three-year business plan and documents relating to the probity of officials, Serbian legislation requires the organisation of games of chance The Law on the Protection from the Exposure from Tobacco proof of at least five years’ experience in operating casinos, and to be socially responsible and organised in a manner that Smoke entered into force on May 10, 2010 but smoking in all a schedule for the licence tax payments. ensures the protection of minors and the prevention of addiction parts of casinos is allowed. Operators have to ensure that * Serbia data available only for Grand Casino Beograd for players. Additionally, all player personal data is protected by players have registered themselves before entering the casino.

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requirements. Through the use of server virtualisation The tax rate for online betting has been set at 15 percent of gross Problem Gambling Prevention Policies technology, power consumption needed to keep servers and IT “Seven or eight operators have already gaming revenue (GGR), while all other types of games will be infrastructure running, and the electricity needed to maintain the started applying but now they have the last taxed at 5 percent of GGR, one of the lowest rates in Europe. The The organisation of games of chance has to be socially temperature of the data centre, has been reduced by 50 percent. bit of instructions how to certify equipment minimum amount of the payable tax will be €7,500 per month, responsible and organised in a manner that ensures the and verify that all operations are fully in line and an additional €2,500 per month for the approval. protection of minors, prevention of addiction disease, as well as Grand Casino Beograd also respects the environment through with requirements and regulation,” said Dusan the protection of personal data of participants. controlled waste storage and the recycling of used cooking oil, Mihajlovic, a director at compliance advisory However, the act has also retained provisions that mean the glass, and paper-cardboard and toner cartridges. firm Scott Mihajlovic Associates. regulated Serbian market will only be accessible to international In September 2013 Grand Casino Beograd adopted the Code operators that are willing to set up a company in Serbia, of Practice for Responsible Gaming in accordance with the In the Grand Casino Beograd’s bars and restaurants, food a stipulation that has drawn criticism from the European European Casino Association’s Code of Practice for Responsible quality, hygiene and safety standards are certified to HACCP Commission, when implemented in other jurisdictions. Gaming in the Casino Environment. levels. Remote Gambling In July 2014 Grand Casino Beograd started the certification Taxation The operator must have IT equipment in the territory of the process for the ECA responsible gaming certification. The After more than two years, Serbia this year gave the green light Republic of Serbia, i.e., hardware and software via which players auditors from SGS Belgrade company were highly impressed For house-banked games, the taxable rate is set at 25 percent for online gambling operators to become certified, with the take part in games of chance. with Grand Casino Beograd employees’ professionalism and of gross gaming revenues (GGR), while for non-house banked government hoping the first licences will be issued before the superior engagement with the topic of social responsibility. The games such as poker the tax rate is 3 percent of GGR. end of the year. The act stipulates that a company will need to have capital stock audit was passed with impressive performance. of €250,000 and have a minimum deposit/bank guarantee The fee for approval for organising slot games is paid on a In May 2014 the Serbian Ministry of Finance published long- of €150,000 in a Serbian bank for the purpose of securing the Personal Data Protection monthly basis for each slot machine in a fixed amount of€ 25. awaited instructions for operators to be approved to offer online payment of winnings to the players and the settlement of The fee for organising slot games is paid on a monthly basis for gambling under laws first passed in late 2011. liabilities arising from public revenues. The operator has to have Gaming operators are required to comply with all applicable each slot machine, which is 5 percent of GGR per slot machine, a minimum of €10,000 at its cash desk as the deposit. laws governing the protection of personal data regarding the no less than €35 per slot machine. If GGR of a slot machine at At the same time, the ministry authorised Serbia’s state-owned storage and sharing of player information. the end of year exceeds €18,000, the organiser is obliged to pay military facility Vojno-Tehnički Institut (VTI) to start accepting for the amount of the realised GGR exceeding €18,000 at the fee applications for certifying software and hardware to be used for According to the provisions of Article 54 of the Serbian Law on of 10 percent. online gambling. Games of Chance, casino operators must ensure continuous audio and video surveillance of all tables and slot machines, and Would-be operators have been waiting for the application the entrance and exit of the property. process to open since August 2013 when secondary legislation was originally published, but the licensing process slowed down The video recording must be stored for a period of at least ten amid political tensions in the ruling coalition and changes within days at the request of the administration. The data may only be the Ministry of Finance. shared in specific cases sanctioned by law. Serbia’s land-based operators are well placed to receive Responsible Gaming Project licences first, and some have already submitted preliminary applications. In 2010, Grand Casino Beograd signed a Responsible Gambling Protocol with the Belgrade City Assembly, establishing its role as The Ministry of Finance appointed VTI to certify online gambling a socially responsible organisation addressing issues of problem operators before the March 2014 election, but it was not until gambling. May 12, 2014 that the strengthened government authorised the testing lab to start accepting applications. On the basis of the agreement, call centre-based hotlines were established for individuals with pathological gambling VTI has six months to approve software after all the necessary issues. Grand Casino Beograd also supported the research of * Data available only for Grand Casino Beograd documents have been submitted by an applicant, although the the Masmi agency on player behaviour in games of chance, laboratory will accept certificates from other labs around the and on the emergence of indicators of pathological gambling. VLTs and Slot Machines world which could hasten the licensing process. The gambling research showed that 3.6 percent of the adult population is gambling addicts, while another 2.5 percent Although slot hall operators are required to have a minimum In recent years online gambling has remained the exclusive right belong in a high-risk group. of 100 slot machines, holding a casino licence removes any of the country’s state lottery, Državna Lutrija Srbije, but non- minimum machine number requirements. Serbian online gambling companies have continued to target In 2013, a project titled “Gambling with life is not a game” was the country, particularly the online sports wagering sector. launched to deal with the prevention of pathological gambling, Serbia’s new regulatory structure has been relatively successful specifically aimed at high school children. The programme in diverting gambling funds to the regulated sphere, but The new act seeks to encourage investment by dismantling was supported by Belgrade City Assembly, the secretariat for delays in the issuance of secondary legislation has meant the the state lottery’s online monopoly, prohibiting participation in education and childcare and the municipality of New Belgrade. connection of slot machines to a national central server system games of chance organised abroad, while potentially defending Research on Belgrade youth gambling and life habits was has not yet taken place. newly-licensed online operators with the possibility of ISP conducted as a part of the project. In April 2014, Grand Casino blocking. Beograd extended its cooperation agreement with the Belgrade 2013 figures have put the number of legal slot machines In February 2012 the Games of Chance Administration drafted a City Assembly to conduct further educational workshops. This operating in Serbia at about 21,500, while estimates suggest the blacklist of illegal online operators and sent it to internet service project will be continued across other Belgrade municipalities black market has reached a size approximately 30-40 percent as providers requiring them to block sites, including those of Bwin. to inform young people about issues of problem gambling, its big as the legal slot machine industry. Party, Betfair, William Hill, Skybet, 888 poker and Bet-at-Home. causes, symptoms and treatment. The new Serbian regulation will likely prove attractive to both In keeping with good citizenship practices, Grand Casino local and international operators, allowing them to offer online Beograd has also minimised its energy consumption sports betting, slot games as well as online casino games.

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SLOVAKIA

Olympic Casino Trnava Olympic Casino Žilina Olympic Casino Košice Olympic Casino Eurovea Gallery Bratislava Olympic Casino Carlton Bratislava Casino Nitra Casino Piešťany Regency Casinos Bratislava Olympic Casino Žilina Admiral Casino Bratislava Casino Piešťany Olympic Casino Trnava Olympic Casino Košice Casino Nitra

Admiral Casino Bratislava Olympic Casino Carlton Bratislava Regency Casinos Olympic Casino Eurovea Gallery Bratislava

In 2013, revenues at Slovakia’s casinos rebounded for the third year in a row, adding 10 percent to reach €21m, a figure that has risen by more than a quarter since 2010.

Gamblers returned to the properties more frequently, with 30,000 more visits in 2013 than in 2012, but in doing so they spent more readily at slot machines than on table games.

Spend on slots in Slovakia grew by more than half in 2013, adding 57.1 percent to €11m; however, table game revenues contracted by more than a quarter to €8m, a 27.3 percent decline on their hold levels a year before.

Grand Casino Admiral opened its doors in Bratislava on November 4, 2013, helping the sector to add 60 new jobs. As of April 2014, the Grand Casino Admiral had 12 tables and 420 slots on two floors.

Government revenues from the gambling sector grew but not nearly as much as total casino revenues. Despite several tax increases in 2011, the state took in €5.5m in taxes in 2013, just 5.4 percent more than a year before.

Online gaming is currently not permitted for land-based casino operators and lottery operator Tipos, whose only shareholder is the Ministry of Finance, has a legal monopoly over the remote gambling market.

ECA Member: Olympic Casino Slovakia

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Regulator Casinos Slovakia opened its first casino in Slovakia in 1991 and Taxation EconomicTHE and PoliticalSLOVAK Situation CASINO MARKET currently manages active casino venues in Nitra and Piešťany. The Ministry of Finance, which is the only body authorised to Betting games in a casino are taxed at a rate of 29 percent of the award gaming licences, provides regulatory oversight of the Regency Casinos International also manages one casino in financial guarantee provided by each casino, of which 26 percent MARKET DATA gambling industry. Bratislava. goes to the state budget and 3 percent goes to the municipality in which the casino is located. Population 5.408m in 2012 (World Bank Data) The Tax Directorate maintains and operates a tax information Poker Currency Euro system regarding games of chance, and a keeps a central register of gambling operators. In January 2010 a legislative amendment to the gambling act GNI (Gross National US$17,200 in 2012 (World Bank regulating card games, such as poker played outside licensed Income) Data) The Tax Office is instructed to oversee compliance with casino premises, came into effect. regulations and licence conditions. The Tax Office manages the Internet Users Per 80 in 2012 (World Bank Data) levies which are administered in the state budget, and is also the Card games outside casinos have gained increasing popularity 100 People second tier body of appeal for municipalities for matters relating both in casinos and in card clubs, and have accounted for much Mobile Phone 111 in 2012 (World Bank Data) to the licensing of gambling machine operators. of the new licences in Slovakia. As of July 2013, about 108 general Subscribers Per 100 licences, predominantly for card games outside casinos and People The main legal instrument which governs the gambling sector in raffles, had been awarded. Slovakia is Act No. 171 on Gambling Games and an Amendment. Doing Business 49 out of 189 in 2014 (Doing Business Additional amendments to the Gambling Act were approved in Tables are taxed at €200 per calendar month or €1,500 per Ranking 2014, World Bank) mid-July 2011 and in 2012. calendar year. Credit Rating A+ with stable outlook from Fitch Ratings, November 2013 The Ministry of Finance issues each individual casino licence for Card room venues have a minimum age of 18. a maximum of ten years. The global economic downturn has hit the Slovakian economy Contributions to Society hard, although the country rebounded faster than some of its Each casino must post a minimum financial guarantee of neighbours following its adoption of the euro as its currency in €500,000 and tax is calculated on the basis of the guarantee. Olympic Casinos currently sponsors sport clubs, including youth In December 2012 the government’s plan to increase taxation 2009. hockey clubs, and canoe clubs. The group also donated to the income for the state resulted in the tax rate which applies to Share capital of €1,659,600 is also required. “Drop of Hope” Foundation that helps children with leukaemia. betting, with the exception of horseracing, increasing from 5.5 Membership of the eurozone continues to benefit Slovakia’s percent to 6 percent. economic development, and Slovakia’s real GDP growth Slovakia’s Licensed Casino Market Gambling operators, including Olympic Casinos, also support a remains one of the strongest in the eurozone and among central free telephone helpline that has been operated since February A tax increase from €1,900 to €2,100 per machine per annum and eastern European peers. Olympic Entertainment operates two casinos in Bratislava and 2013 by the Centre for the Treatment of Drug Addictions was implemented on gambling machines, while the tax rate three further casino properties in Trnava, Žilina and Košice. (CPLDZ), based in the capital Bratislava. applying to machines operated directly by players rose from Still, the climate with regard to gambling has not warmed €3,600 to €3,900 and the taxation rate of machines operated significantly. A centre-right coalition government elected in Olympic Entertainment had 219 slot machines and 43 gaming Social Responsibility Measures remotely by telecommunication equipment increased from 2010 sought to reverse earlier changes that liberalised the tables in operation in Slovakia at the end of 2012. €3,900 to €4,200 per machine per annum. country’s gambling landscape, and effectively stamped out any Casino operators must display a telephone number for a medical plans to push forward a politically controversial mega-casino in institution dealing with the prevention and treatment of problem VLTs and Slot Machines Bratislava. gambling published on the ministry’s website on each gaming device. According to the Ministry of Finance’s 2012 annual report, there More recently, elections in March 2012 resulted in the left-wing were 11,765 gaming machines in Slovakia in 2012, a sharp drop party SMER – Social Democracy returning to power, with Robert National legislation requires that gamblers must be at least 18 from the 17,373 gaming machines recorded in 2010. Fico again as its head. years of age and gambling establishments must display signs that only players who are over the age of 18 can participate in a The gaming machine market consists of a number of small Further tax hikes were introduced in December 2012 and came gambling activity. domestic companies such as Slov-matic, Program spol and Vix. into effect on January 1, 2013. On the same day, amendments, which enable municipalities to ban gambling on their territory, The advertising of jackpots or prizes outside a casino property Remote Gambling were introduced. or the display of advertising that can be seen from outside is forbidden. Online gaming is currently not permitted for land-based casino operators and lottery operator Tipos, whose only shareholder is Operators are required to take all necessary measures to the Ministry of Finance, has a legal monopoly over the remote prevent anyone under the age of 18 taking part in gambling and, gambling market. as such, can request proof of identification. Private operators in possession of a domestic licence are Opening hours and self-exclusion measures are not legislated. allowed to offer online sports betting, but only those activities In 2012, Slovakia’s national lottery operator, Tipos, that do not qualify as “gambling games operated by means of controversially sold off its 51 percent majority stake in Casinos For gaming machines, the maximum deposit amounts are set as the internet”. Slovakia to the private firm and minority shareholder Merk SKK1,000 (€10) per position. Reality for just €150,000. Foreign online operators without a domestic licence are The act sets out no other limits on wagers. prohibited from offering their services in Slovakia, but in 2011 Merk Reality, which already had a 48 percent share in Casinos Slovakia’s Ministry of Finance jettisoned plans to block online Slovakia, is run by the daughter of prominent MP and long- Amendments to the gambling act that came into effect from gambling sites in the country after the move sparked fierce serving member of Prime Minister Robert Fico’s SMER-SD party January 1, 2013 empower municipalities to ban gambling criticism from internet service providers (ISPs), among others, Dusan Munko. activities taking place in their territory, provided a petition is anxious to avoid additional liabilities. signed by at least 30 percent of the municipality’s population over the age of 18. 102 European Casino Industry Report European Casino Industry Report 103 ECA’S EUROPEAN CASINO INDUSTRY REPORT ECA’S EUROPEAN CASINO INDUSTRY REPORT

Proposals that would have amended Slovakian gambling legislation to force ISPs and banks to block unlicensed online operators were widely viewed as taking a step closer to state censorship of the internet. SLOVENIA The proposals called for a blacklist of sites to be maintained by the central tax office in Bratislava and updated twice monthly, in an unprecedented effort by the Slovak government to crack There are nine casinos in Slovenia. down on illegal online gambling.

“Given the diversity of views within the Casino Name Casino Operator European Union, as well as a wide range of Casino Portorož Casino Portorož d.d. dissenting opinions, we propose to stop the legislative process,” said Ministry of Finance Casino Lipica Casino Portorož d.d. Casino Mond Casino Korona spokesman Martin Jaros. Casino Perla Hit d.d. Casino Bled Casino Park Hit d.d. Casino Aurora However, following fierce criticism from the chief justice Casino Fontana minister, the banking and ISP sectors and the government Casino Perla Casino Korona Hit d.d. Casino Park requested advice from the European Commission. The commission backed the concerns of the Slovak justice minister, Casino Fontana Hit d.d. Lucia Žitňanská, who warned that the amendment “introduces Casino Lipica elements of censorship” and may result in “unjustified Casino Mond Hit d.d. criminalisation” of third-party service providers. Casino Bled Casino Bled d.d. Casino Portorož For Tipos, online gambling is currently taxed at 27 percent of Casino Aurora Casino Kobarid d.d. gross gaming revenue.

The taxation rate for betting is 5.5 percent of the financial guarantee stipulated for betting operations. Players made more than 1.66m visits to Slovenia’s casinos in 2013, barely changed from 2012, but continued economic pressures still meant they spent less money.

Slovenia’s casinos made revenues of €142.4m in 2013, nearly 7 percent less than the year before when revenues exceeded €153m.

As in the preceding year, table games fared worse than slots, with revenues from house-banked games contracting by 10.3 percent. Slots, by contrast, shed 5.4 percent of their previous year’s total win.

A new draft gaming bill published in September 2013 proposed the removal of current restrictions on casino ownership structures; however, larger business shares in gambling operators would still be subject to approval from the regulator.

The Slovenian online gambling market is ring-fenced and only existing casino and lottery licensees are eligible to apply for an online gambling licence. That restriction would not change under the new draft gambling bill put forward in September 2013.

Slovenia’s Tax Administration and its Ministry of Finance regulate gaming activities in the country, following the closure of the State Office for Gaming Supervision (UNPIS) on January 1, 2013.

Employment at Slovenia’s casinos, which had stood as high as 1,700 jobs in 2010, fell again in 2013 by 2.7 percent. The loss of another 35 jobs means that approximately 1,270 full-time employees now work in Slovenia’s casinos.

Slovenia’s casinos paid €43m in gaming tax in 2013, a small decrease from the €45m paid over the same period a year before.

ECA Member: HIT d.d. Nova Gorica, Delpinova 7A, 5000 Nova Gorica, Slovenia

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Other tasks (issue and renewal of the concessions, amendments In December 2010, Slovenia’s government adopted a strategy Casino THE SLOVENIAN CASINO MARKET legislation) were transferred to the Ministry of Finance. This for the gambling sector that would have allowed for private • A public limited company (PLC) with its registered office in represents an additional administrative obstacle for licensed developers to own a majority share of each casino project. the Republic of Slovenia or a member state of the European gaming entities in Slovenia because, in certain procedures, it Economic Area. MARKET DATA must be coordinated with the two bodies. Following on from the strategy discussions, a new draft • A concession period of ten years. gambling law was published in September 2013. The new law • No limitation regarding the number of slots and tables. Population 2m in 2012 (World Bank Data) A new draft gambling law published in September 2013 calls for the liberalisation of ownership structures, eliminating proposed a revision of the 1995 Gaming Act which would include percentage ownership quotas; however, substantial shares in Gaming and entertainment centre Currency Euro a liberalisation of casino ownership structures, but that proposal gambling operators would still be subject to approval from the • A public limited company (PLC) with its registered office in GNI (Gross National US$23,610 in 2011 (World Bank Data) is still in coalition discussions. regulator. the Republic of Slovenia or a member state of the European Income) Economic Area. Due to elections in 2014 the proposed new gaming bill will likely Potentially, the draft measures, if approved, could open the door • A minimum of 2,000 slots, 100 tables and a hotel with 1,000 Internet Users Per 71.4 in 2011 (World Bank Data) be delayed or a new draft will be prepared, but it is clear that for the return of a mega-casino development in Slovenia by rooms. 100 People all state-owned casinos are excluded from the list of strategic adding economic incentives and tax reductions for new projects. • A concession period of 15 years. Mobile Phone 107 in 2011 (World Bank Data) government investments and may be subject to sales in the Subscribers Per 100 future. Currently, the Slovenian government grants gaming concessions Online gaming People on the basis of a number of different circumstances, including: • Each type of concessionaire (lottery, betting and casinos) Slovenia escaped further scrutiny from the European can operate via the internet only those games for which it Doing Business 35 out of 189 in 2012 (Doing Business Commission, which asked the country for details of EU law • Impact of gaming on social, cultural and natural holds the concession. Ranking 2012, World Bank) compliance of its gambling regulations as part of the action environment. Credit Rating BBB+ with a negative outlook from plan on gambling regulation launched in October 2012. It was • Development of gaming activity. The new act has raised a number of concerns among industry Fitch Ratings, May 2013 not included in a list of seven countries targeted for further • The extent of gaming in a certain area. stakeholders: infringement proceedings in October 2013. • Gaming experiences of the applicant. Economic Situation • It does not follow the 2010 development strategy of gaming Slovenia’s Licensed Casino Market Concessions are granted for a period of ten years but may be in the Republic of Slovenia. The Republic of Slovenia converted its national currency to the extended several times for a period of five years. • It contains an unchanged and indeterminate tax policy. euro on January 1, 2007, shortly before the economic crisis of HIT (Hoteli, Igralnice, Turizem, which translates to Hotels, • It contains an indeterminate concession policy. 2008 began to make its impact felt across the European gaming Casinos and Tourism) owns five of the country’s nine casinos. As the state-owned casinos do not feature on a list of key • It sets high requirements regarding the provision of socially industry. HIT is a publicly listed company, with government bodies strategic government investments, they may be subject to sales responsible gaming activities. owning 60 percent of its shares. Of these, 20 percent are owned in the future. In the wake of budget cuts from January 1, 2013, the Office for by the municipalities, 20 percent by a government-owned entity Contributions to Society Gaming Supervision was terminated and its responsibilities and 20 percent by public employee pension funds. 2013 Gaming Act Revisions were transferred to the Tax Administration and to the Ministry of A proportion of the revenues from each concession, between 5 Finance. Slovenia’s other two casino operators are Casino Portorož Proposals in the new legislation and 20 percent of gross gaming revenues, are put toward local Company, which operates two properties in the seaside towns of • New classification of gaming: lottery games, betting and tourist infrastructure development. A 2013 report by the Office for Gaming Supervision indicated Portorož and Lipica, and Casino Bled Company, which operates casino games. that by 2013 the number of casinos had dropped to nine from Casino Bled in the well-known tourist town of Bled. Casino • Introduction of a public tender for granting and renewal of There is close collaboration between the casinos and their 12 in 2008. In the same period the number of gaming tables Portorož celebrated its 100th anniversary in 2013. existing concessions. local communities in terms of assistance with local community dropped from 282 to 266 and the number of slot machines from • Abolition of restrictions on the ownership structure and events, sponsorship and donations. 4,236 to 3,582. share. • Abolition of licences for employees in the gaming industry. Social Responsibility Measures • Abolition of permits for the use of gaming devices. The new gambling legislation sets high requirements regarding Lottery games the provision of socially responsible gaming activities. • There would be one concession: the lottery of Slovenia, to be owned outright by the Republic of Slovenia. No one under the age of 18 years may play slot machines, casinos games or participate in online gambling. Betting • There would be one concession: a public limited company Self-Exclusion with its registered office in the Republic of Slovenia or a member state of the European Economic Area. The Slovenian Gaming Act provides that players can submit a written statement that they would like to be excluded from Casino games special games of chance in a casino or gaming hall, as well They would be operated under a total of 30 concessions. as online gambling. A self-exclusion request must be signed personally by the player. The self-exclusion lasts for a maximum Slot Hall of three years and a minimum of six months. • Each slot operator would be required to be a public limited Under the existing Gaming Act, the Slovenian government company (PLC) or a limited liability company (LLC) with its The exclusion applies throughout the territory of Slovenia. can award a maximum of 15 concessions for casinos and 45 registered office in the Republic of Slovenia or a member Regulator concessions for gaming halls. state of the European Economic Area. Casinos and gaming halls have the same legislation regarding • A concession period of five years would apply. their responsible gaming regimes, including age limits and self- On January 1, 2013 the State Office for Gaming Supervision Under current laws companies are limited to having a 49 • Each location would be allowed a range of between 50 and exclusion practices. (UNPIS) was abolished. The tasks related to the supervision of percent stake in any casino, while the rest must be retained in 200 slots. the gaming sector in Slovenia were transferred to the Special government ownership. The supervisory authority is responsible for maintaining a central Tax Office (PDU) of the Tax Administration of the Republic of register of excluded players. Slovenia. 106 European Casino Industry Report European Casino Industry Report 107 ECA’S EUROPEAN CASINO INDUSTRY REPORT ECA’S EUROPEAN CASINO INDUSTRY REPORT

Smoking Ban Remote Gambling A smoking ban in public places came into force on August 5, 2007 in Slovenia. The exceptions to the ban, however, include The Slovenian online gambling market is ring-fenced and only special indoor smoking cabins, which are subject to strict existing casino and lottery licensees are eligible to apply for SPAIN technical requirements and are for smoking purposes only with an online gambling licence to offer gambling products that are no gaming activities. already granted to them under their respective concession.

Problem Gambling Prevention Policies That restriction does not change under the new draft gambling There are 42 licensed casinos in Spain. bill put forward in September 2013, although the new bill follows Slovenia’s casino operators provide warnings about risk of recommendations from an EU Resolution from September 2013 gambling for each gambler in casinos both on the entrance urging stricter control over on-licensed online providers. ticket and in brochures (pamphlets). The maximum number of online casino licences available is Taxation 11 and two online lottery licences are allocated. Non-licensed operators will not be able to legally operate in Slovenia or take Under the Law on Tax on Gambling, gross gaming revenues in play from Slovenian players under the new draft law. casinos and gaming halls are subject to an across the board 18 percent tax. In 2007, Loterija Slovenije started to develop a new sales platform for all its games on the internet. The operator now In addition, concession fees apply. offers its online products on a separate website, www.eloterija. si. Table games: 5 percent concession fee on GGR. Slot machines: 5 to 20 percent progressive concession fee on Športna Loterija offers online sports betting through its website GGR. www.e-stave.com (“e-stave” translates as “e-betting”).

HIT Casinos offers online gambling including card games, poker, roulette and online slots on its website www.hitcasinos.si. A plunge in revenues at Spain’s casinos came to an end in 2013 as a slump in consumer spend eased. Casino Online operators are obliged to ensure that the player can set a revenues were essentially flat at €302m, and although table games revenues fell 4.7 percent, spend on slots maximum limit for each game or game session, or a maximum grew by 5.7 percent. spending limit within a specified period of time. The number of visits made by players to Spain’s casinos grew by 1.6 percent to nearly 4.2m.

US-listed operator Las Vegas Sands (LVS) abandoned its controversial plans for a multi-billion euro casino-

resort in Madrid late in 2013. The company had been considering the Madrid suburb of Alcorcón for what would have been Europe’s largest ever casino-resort, but instead chose to turn its attentions to opportunities in Japan and Korea.

In June 2014, the Catalonian parliament in Spain passed amendments to slash casino tax rates and to allow for the construction of up to six casinos near Barcelona. The new gambling act leaves taxation unchanged and includes an indeterminate concession policy. The changes would lower the casino tax rate to 10 percent from 55 percent and call for a bidding process for “up to six casino licences” in the Vila Seca and Salou municipalities. Spanish property tycoon Enrique Bañuelos VLTs and Slot Machines has already partnered with Macau casino operator Melco International to build a resort called BCN World.

Gaming halls in Slovenia were introduced with the 2001 amendment to the Gaming Act. The state-owned national lottery (LAE) and slot machines found in bars, arcades and gaming halls are by far the most popular gambling products in Spain. Between the two they accounted for 75 percent of the total According to 2013 figures published by the Office for Gaming market’s gross gaming revenues of €8.67bn in 2012. Supervision, 2013 was the first year when the number of slot machines in gaming halls dropped from 4,813 to 4,683. In all Online gambling was licensed and formally taxed for the first time in June 2012. Fifty-four operators were previous years, the number of slot machines slightly grew. awarded almost 300 product licences, but already a second-hand market has opened up in unwanted and barely-used licences as revenues stagnate. The existing Gaming Act does not limit the number of concessions awarded to one company and, in practice, one No Spanish casino is in the top five online gambling operators as the regulated market has quickly been taken company usually has more than one concession for conducting over by internet-only operators PokerStars, 888 and bet365, which were accepting Spanish gamblers before casino gaming in casinos or concessions for games in gaming licences were officially issued. halls. No more than 45 gaming hall licences may be awarded in total under current rules. There are now 42 licensed casinos in Spain, one fewer than in 2012, but changes in regulations, prompted by A gaming hall must have a minimum of 50 and a maximum of lobbying from LVS, have allowed two new gaming rooms from Casino Gran Madrid and the Comar casino 200 slot machines and should be located in an area with the group to open in locations closer to the centre of Madrid. infrastructure for tourism. There is no restriction on the number of slots in a casino. 109 108 European Casino Industry Report European Casino Industry Report ECA’S EUROPEAN CASINO INDUSTRY REPORT ECA’S EUROPEAN CASINO INDUSTRY REPORT

year. As in 2012 the decline was felt mostly on table games, Melco has an option to buy up to 20 percent of the first phase, to The Spanish Casino Association adopted its own code of THE SPANISH CASINO MARKET where the house’s luck ran out and hold slipped 4.7 percent be called BCN Dream, but has yet to contribute any cash to the conduct on these areas in 2007, which was implemented by to €163m. Slots, by contrast, made a 5.7 percent gain in hold, project. Melco’s management agreement would give it 3 percent all its members. Many operators also have player protection adding €6m to a total of €111m. of GGR per year, and up to 10 percent of gambling EBITDA if programmes that include problem gambling leaflets, hotlines MARKET DATA certain thresholds are met. and information inside the casino.

Population 46.76m in 2012 (World Bank Data) Although developers have expressed hopes BCN World will In October 2012, the Spanish Association of Private Psychiatry Currency Euro open its first phase in 2017, the schedule is far from certain, estimated that 5 percent of the Spanish population was affected not least with an environmental impact analysis and an overall by some form of gambling problem. GNI (Gross National US$30,110 in 2012 (World Bank Data) urban development master plan still needed. Income) Online Player Protection Law 6/2014, paving the way for the resort, came into force in Internet Users Per 72 in 2012 (World Bank Data) Catalonia on June 12, 2014 and was followed a day later by the Licensed remote gambling operators are required to establish 100 People start of the first casino tender. The Catalan legislation contains systems and mechanisms which facilitate player identification. Mobile Phone 108 in 2012 (World Bank Data) several sweeteners also passed by the Madrid region to woo Subscribers Per 100 LVS, including a 10 percent casino tax rate and an end to Spain’s Online players must be aged 18 or over. People traditional ban on casinos extending credit to players. The identification of players can be done through a unique Doing Business 52 out of 189 in 2014 (Doing Business Under current plans, the first phase of BCN World would include register which must record at least: the player’s identification Ranking 2014, World Bank) one or more hotels with about 1,800 rooms, conference facilities details and confirmation that he or she has not been banned or Credit Rating BBB+, Fitch Ratings, April 2014 and a casino of up to 35,000 square metres, according to Melco excluded from accessing gambling services. filings. Regulator Social Responsibility, Contributions to Good Causes As Spain’s tourism industry rebounded from recession, the The project, which cannot use the name “Barcelona” after being Casino operations in Spain are regulated at regional level. country’s casinos stemmed their decline in visitation, counting blocked by the city’s council, still faces some opposition before Unclaimed chips or prizes are given to the municipality where the Each autonomous community designates its own gambling 67,000 additional visits in 2013, a 1.6 percent boost and a it is built and, with an open vote on additional casino licences in casino is located. Casino operators have their own contribution regulator, which, in most cases, is associated with local tax or welcome reversal of fortune from the year before when the prospect, there is no certainty that the project will gain approval. agreements with institutions and charitable groups. administrative authorities. number of visitors declined by 5.6 percent to 4.13m. Opponents of the project on the Republican Left claim the Taxation All casino concessions are awarded through public tenders and government has generated “excessive expectations” on their duration varies from one region to another. The average employment, with the aim of giving preferential treatment to the Each Spanish region is responsible for its own tax on casino licence is granted for approximately ten years, although in project’s backers. Catalan unemployment at the end of last year gambling. Tax is charged on the income from tables and slots, certain regions it can last for 30 years. was 23 percent, better than the 26 percent registered by Spain and is calculated on a sliding scale whereby casinos move into a as a whole. higher tax band if they surpass certain revenue levels. At national level, the Dirección General de Ordenación del Juego (DGoJ) is responsible for regulating online gambling. The DGoJ, In addition to Hong Kong-listed Melco and the Veremonte The autonomous community of Madrid charges a tax of 22 which is led by Carlos Hernández Rivera, is part of the Ministry of group, run by Bañuelos, the resort’s other partners include percent if annual GGR is below €2m and 45 percent if above Finance and was empowered by the 2011 Gambling Act. Spain’s Melia Hotels and the Value Retail shopping chain. €5m. Madrid’s regional parliament passed a law at the end of 2012 which would lower the tax rate to 10 percent for all casinos Player Protection and Problem Gambling when the region’s integrated resort (CID) opens. Although LVS abandoned its plans to open a Vegas-type resort outside Madrid Spanish casinos check before a player enters whether they are in December 2013 the consequences of its lobbying efforts on underage or an excluded problem gambler. It is forbidden for casino taxation have continued to have far-reaching effects. people under 18 years of age to enter casinos. With the mooted “BCN World” integrated project still under The regional governments manage a register of non-authorised discussion, in June 2014 the Catalonian parliament in Spain persons to which casinos must refer, and those players included passed amendments to slash casino tax rates and to allow for Casino employment once again remained flat at approximately on the register are not allowed to enter casinos. the construction of up to six casinos near Barcelona. 6,000 in 2013. The changes would lower the casino tax rate to 10 percent from Smoking Ban 55 percent and call for a bidding process for “up to six casino licences” in the Vila Seca and Salou municipalities. Smoking was banned in most enclosed public spaces, including casinos, bingo halls and gaming parlours, from January 2011. Asturias, Castilla y Leon, La Rioja and Murcia have also introduced a discounted tax rate for casinos that maintain a BCN World minimum number of employees, as the regional governments The Spanish Licensed Casino Market look to safeguard jobs. Tax in Asturias and Murcia starts as low With the prospect of a Madrid casino mega-resort now faded, as 15 percent for those casinos. The country, laden with debt since the 2008 banking and real real estate billionaire Enrique Bañuelos is continuing to pursue estate crash, has emerged from a two-year recession, but still controversial plans to build the BCN World project, which In Spain, casinos also have to pay taxes to municipalities, which suffers from an unemployment rate of 26 percent and its casinos would include casinos, hotels, golf courses, cinemas, shopping are charged on the existing number of tables and slots in a have been beset by the country’s economic woes, the ongoing and convention centres an hour’s drive away from Barcelona. casino. effects of a smoking ban and online competition. Bañuelos has obtained backing from Asian casino operator Melco International to provide an operational management Online casino games are taxed at 25 percent of GGR, lower than The 42 casinos open at the end of 2013 made total gross gaming partnership for the gaming elements of the resort. the rate charged on most land-based casinos. revenues (GGR) of €302m, 1 percent less than in the previous 110 European Casino Industry Report European Casino Industry Report 111 ECA’S EUROPEAN CASINO INDUSTRY REPORT ECA’S EUROPEAN CASINO INDUSTRY REPORT

VLTs and Slot Machines DGoJ. However, the regulator has conceded that revenues since “stagnated” in 2013. Spain makes a legal distinction between slot machines, split into categories A, B and C. Category B are amusements with prizes Companies have blamed the ban on online slots, betting limits SWEDEN (AWPs) and are by far the most popular. The reason is that they and a tax rate of 25 percent for the underwhelming start to are operated in bars and gaming halls and, in most cases, there Spain’s regulated market. is no access control or other restriction. Roulette, blackjack, punto banco and poker were all permitted, In 2012, GGR from Category B machines found in bars, arcades but not online slot games. At the end of October 2014 the and bingo halls was €2.75bn, 32 percent of the total revenue Ministry of Finance opened applications for online slots and re- raised by Spain’s gambling market (€8.67bn). opened the licensing window for new entrants.

VLTs are not currently regulated in Spain, and slot machine The most recent market share estimates show that offshore operators have lobbied for reforms to the land-based gaming operators control most of Spain’s regulated online market. 888, market before online slots are liberalised. bet365 and Bwin, all licensed in Gibraltar, held more than half of the online casino market in the first quarter of 2014, while Some Spanish regions have recently increased the maximum PokerStars and 888 accounted for more than 75 percent of the Casino Cosmopol Sundsvall stakes and prizes on Class B slot machines to make them closer online poker sector. to casino machines. Several regions also have online gambling regulatory Spain’s government passed the Law on Market Unity in July 2013, frameworks in place. Madrid, Castilla y Leon and the Basque which seeks to remove duplicate regulations across Spanish have approved legislation regulating remote gambling services. regions. In the gambling sector, slot machine manufacturers In September 2013, Catalonia also sent draft legislation to the Casino Cosmopol Stockholm stand to gain most from more standardisation between regions, European Commission to regulate online betting. Casino Cosmopol Gothenburg which have small but significant variations in technical standards Casino Cosmopol Gothenburg – down to the size of the machines’ joysticks. Casino Cosmopol Malmo Casino Cosmopol Stockholm Remote Gambling Casino Cosmopol Sundsvall Casino Cosmopol Malmo In 2011, Spain’s parliament passed a new Gambling Act in just three months under emergency proceedings as the then- State-owned Svenska Spel is the only operator authorised to operate casinos in Sweden and it does so Socialist government looked to raise extra funds amid a under the Casino Cosmopol brand. There are currently four casinos in the country, located in Stockholm, mounting sovereign debt crisis. Gothenburg, Malmö and Sundsvall. The new law sought to tax and license online gambling for the first time, bringing to an end years of legal uncertainty. Sweden’s regulatory model is a monopoly system where two state-owned companies, Svenska Spel and The regulated online gambling market launched in June the Swedish Horse Racing Totalisator Board (ATG), are the only licensed operators to offer gambling in the 2012 when the DGoJ issued online licences to 54 operators, country except for a number of non-profit organisations licensed to organise lotteries. including 21 companies that specialise in online casino games. The licensing procedure was open to all companies, with no Sweden was one of the most high-profile of a group of countries, including Belgium, Cyprus, the Czech requirement to have a land-based licence or a server located in Republic, Lithuania, Poland and Romania, which were served infringement proceedings by the European Spain. Commission in November 2013 as part of the online gambling action plan. The commission questioned the state oversight of Svenska Spel’s monopoly on online sports betting and poker. In the first 12 months since the market’s launch in June 2012, online gambling GGR was around €218m, according to the While table revenues at Sweden’s casinos remained relatively flat in 2013 at €53m, slot machine revenues fell 6 percent to €78m as competition from online slot play took hold. Svenska Spel offers sports betting, poker, lotteries, land-based slot machines and casinos but does not offer online casino games.

Unlicensed operators have established a significant presence in the Swedish online market helped by extensive television advertising. Since 2007, Svenska Spel’s market share has declined from 56 percent to 45 percent.

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The number of visitors to the four casinos declined by 4.6 Sweden received its first reasoned opinion, but not enough for Stockholm Marathon Group threatening the race organiser with THE SWEDISH CASINO MARKET percent in 2013 to 1.146m visitors, adding to a 2.5 percent decline the commission to be “satisfied”. fines of SEK2m; however, the sponsorship went ahead. the year before. Contributions to Society, Good Causes The government has said it will try to strengthen the Lotteries MARKET DATA “Our priority for the gambling policy is to Act and the ban on promoting unlicensed operators while limit gambling addiction but we are of the Svenska Spel and Casino Cosmopol are exempt from taxes examining whether it will make any changes to the gambling Population 9.5m (World Bank Data 2012) as they are state-owned. All the profits from the casinos are policy. Thefirm number opinion of visitors that to thethe four Swedish casinos declinedgambling by 4.6 policy transferred to the state and are used to fund good causes. Currency Swedish krona (SEK) (SEK1 = €0.11) percentis in in line 2013 withto 1.146,000m EU rules,” visitors, said adding Peter to a Norman,2.5 percent In 2013, gambling operators invested SEK1.7bn (€187m) in TV GNI (Gross National US$56.210 (World Bank 2012) declineSweden’s the year before. minister for financial markets. Svenska Spel sponsors national and local sport associations. advertising in the country, with more than SEK1bn (€110m) Income) January 2014. coming from unlicensed operators. Svenska Spel contributed SEK5.2bn (€580m) to the state in Internet Users Per 94 in 2012 (World Bank Data) 2013. Since 2004, Svenska Spel’s share of total advertising investment 100 People Casino Cosmopol employed 1,500 in its four casinos in 2013, a in the known gaming market decreased from 47 percent to 18 Mobile Phone 125 in 2012 (World Bank Data) small decline on the 2012 headcount of 934. Player Protection percent. Subscribers Per 100 People According to the Swedish Gaming Board, Swedes spent an The age limit for casinos is 20 years of age and registration is (Source: Estimated gross investment according to TNS SIFO average of €670 per resident on gambling in 2013. The figure has needed to enter a casino. Market Research’s advertising surveys.) Doing Business 14 out of 189 in 2013 (Doing Business remained relatively stable in the last few years. Online Player Protection Ranking 2013, World Bank) The Swedish government places considerable emphasis on Credit Rating AAA (Fitch 2013) Live poker tournaments are held at Casino Cosmopol daily with addiction prevention and player protection. The age limit for all forms of gambling apart from land-based some major events throughout the year. casinos is 18 years of age. Casino Cosmopol holds mandatory training programmes in responsible gambling for its employees. The staff also have dialogues with guests aged 20 to 24 who visit the casino more than once a week during a three-month period, as they represent a high risk group.

Guests can sign voluntary agreements to limit their casino visits or to completely exclude themselves from the casino (different options available).

The marketing of casino games is restricted; for example, TV, radio and outdoor advertising is not allowed.

Casino Cosmopol has also launched “Let’s Play”, where guests can get an introduction to and understanding of the most common games with lower stakes. Responsible gaming advice is provided in the Let’s Play area. To open up an account with Svenska Spel, customers have to: Regulator In 2013, Casino Cosmopol made 305 suspicious activity reports Net gaming revenue for Casino Cosmopol has fluctuated in the to the Swedish Financial Police with regard to the anti-money • Be at least 18 years of age. past three years, and between 2012 and 2013 fell by 3.6 percent Only the Swedish government can grant licences to operate a laundering programme. The number has remained relatively • Have a Swedish bank account. to €132m. land-based casino in Sweden. stable in the last few years. • Have a permanent address in Sweden. • Have a Swedish social security number. However, the Swedish Gaming Authority (Lotteriinspektionen) The Casino Act 1999 includes a prohibition on granting credits, regulates and supervises the entire gambling market in Sweden. prohibition on employees participating in casino gaming, socially Svenska Spel requires its customers to set a weekly budget responsible marketing that is not aggressive, responsibility to on how much money they are willing to spend. Lowering the In 1999, the Swedish government granted Svenska Spel a licence actively work against problematic gambling and maximum bet budget can be done straight away, but if the customer wants to to operate four casinos. The first one was opened in Sundsvall in size and minimum re-pay percentage. raise their maximum spend they have to wait a week before the July 2001 and the other three were completed by March 2003. change gets adopted. A smoking ban is in place in Sweden. In November 2013, the European Commission gave Sweden Playscan is a subsidiary of Svenska Spel and offers tools for two months to take action regarding the state’s oversight of Advertising the customer to control and analyse their gambling habits and Svenska Spel’s monopoly on online sports betting and poker or provides information on how to deal with problem gambling. risk being referred to the Court of Justice of the European Union Although the advertising of unlicensed websites is technically (CJEU). illegal in Sweden, a Supreme Court ruling in 2012 left the From June 2 this year, Svenska Spel’s player card is compulsory country’s gambling regulator powerless to punish media on all products apart from lotteries and Casino Cosmopol. The commission issued two reasoned opinions to Sweden companies that run adverts for online gambling operators. Customers can exclude themselves by blocking the card for as after it concluded the country’s restrictive gambling policy was long as they require. “not applied in a systematic and consistent manner and that Unlicensed gambling operators targeting Sweden now advertise the holder of the exclusive right was not subject to strict state on billboards and newspapers in the country, as well as foreign- Taxation Svenska Spel generated net gaming revenues of SEK9.7bn control”. based TV and Swedish-based radio channels. (€1bn) in 2013, of which SEK1.1bn (€127m) came from Casino Svenska Spel and ATG are exempt from tax. Any profit is Cosmopol and SEK1.8bn (€200m) from Vegas machines. A European Commission official said that Swedish regulations In April 2014 Sweden’s gambling regulator, Lotteriinspektionen, distributed to the government and the horse industry. and the CJEU case law had changed in the six years since sought to block a sponsorship deal between Unibet and the 114 European Casino Industry Report European Casino Industry Report 115 ECA’S EUROPEAN CASINO INDUSTRY REPORT ECA’S EUROPEAN CASINO INDUSTRY REPORT

VLTs and Slot Machines competition and declining revenue due to responsible gaming measures aimed at protecting customers. Svenska Spel’s Vegas machines are the only gaming machines authorised to be placed outside casinos in Sweden. The gaming market is growing in absolute values in parallel with SWITZERLAND the player base shrinking as fewer individuals play for larger There are around 6,700 Vegas machines in Sweden located in amounts. bars and restaurants with a permit to serve alcohol and in bingo Switzerland has now allocated 21 casino licences, halls around the country. In 2013, Svenska Spel’s market share was 48 percent, down from eight have a Class A licence and 13 operate with a 49 percent in 2012, ATG accounted for 18 percent (19 percent in Class B licence. The maximum stake for Vegas machines is SEK5 (€0.5) and the 2012) and other regulated gaming companies increased their maximum jackpot is SEK500 (€50). market share to 19 percent from 18 percent in 2012. The large Class A casinos are in urban areas: Svenska Spel’s Vegas machines, the most popular game in the The foreign-based online operators increased their market share Zurich, Baden, Basel, Berne, Lugano, Lucerne, country, saw their revenues fall almost 19 percent in the final to about 15 percent from 14 percent the previous year, according Montreux and St. Gallen. quarter of 2013 and decline 10.8 percent to SEK1.8bn (€204m) to Svenska Spel’s estimates. for the full year, mostly due to the introduction of new player protection tools. In the online and mobile markets, Svenska Spel has a net market The Class B casinos are in resort towns or smaller share of 23 percent (24 percent in 2012), ATG 24 percent (26 communities: Bad Ragaz, Courrendlin, Crans- Svenska Spel does not advertise its Vegas brand as it regards percent), NGO games and lotteries 2 percent (1 percent) and Montana, Davos, Granges-Paccot, Interlaken, it is a more risky game than lotteries, scratch cards and sports foreign-based online operators 50 percent (49 percent). Locarno, Mendrisio, Meyrin, Schaffhausen, St. betting. Moritz, Pfäffikon-Zürichsee and Neuenburg. At the end of May, Swedish bars and restaurants criticised the launch of Svenska Spel’s sports bars in its casinos. Svenska Spel was reported to the Swedish Competition Authority, as it was claimed that the company’s monopoly on gambling gives it an Revenues at Switzerland’s casinos levelled out in 2013 following a sharp drop the year before, but growth unfair competitive advantage. remained elusive and overall gross gaming revenue (GGR) contracted 1.5 percent to CHF746m (€635m) even though the two new casinos in Neuchâtel and Zurich operated for the first time throughout the whole Remote Gambling reporting year.

Online gaming – regulation for land-based casinos and their Revenues grew at only one casino, in Davos, in 2013, by 2.3 percent to CHF2.8m (€1.88m). Revenues at all other activities casinos declined by between 1.5 percent in St Moritz to 27.7 percent in Baden. Both Svenska Spel and ATG (Horse Racing) offer their games Although the number of visits made by players to Switzerland’s casinos remained the same at approximately online, but Casino Cosmopol is not licensed to go online with its games. Svenska Spel said 22 percent of its net gaming revenues 5m, gaming taxes paid to the Swiss government contracted 4.6 percent to €290m. came from online in 2013. Highly-regulated Swiss casinos are tending to lose market share to less regulated competition while their Commercial rivals claim that Svenska Spel’s monopoly is customers spend online or travel to foreign casinos close to the border. Since 2007 the GGR and tax paid by inconsistent under EU law because it advertises excessively and Swiss casinos have fallen by 25 percent, and they are now at a level equal to that of 2004. is under pressure from the government to be profitable. Consultation on a draft law creating a new legal framework for gambling in Switzerland closed in August Svenska Spel does not currently offer online casino games, 2014. The draft gambling act, which was more than a year in the making, will replace the 1923 Federal Act which are the fastest growing game available in the market, and on lotteries and betting and the 1998 Act on all other games of chance, and would make online gambling are only being offered by unlicensed operators. licences available solely to Swiss land-based casinos.

Svenska Spel estimates that 15 percent of the entire Swedish gambling market was operated by unlicensed operators in 2013. Online casino gaming is prohibited but at the same time no blocking measurements are currently in force against foreign unlicensed operations, adding to competition for land-based casinos.

Svenska“We Spel havelaunched started online pokerstudying in 2006 how after otherthe government became concerned that a large number of Swiss law bans the operation of slot machines outside licensed casinos, although 700 electronic lottery Swedishcountries players work turned with to unlicensed liberalising websites their during markets. the terminals are operated by Loterie Romande. poker boom.We will Svenska look Spel at nowthat offers and severalsee if onlineit could poker tournamentspotentially throughout be a way the year, for including us to go the as online well, Swedish but Championship.it is a process that will take another year or two,” said Peter Norman, Sweden’s minister In 2013, online poker net gaming revenue dropped 13 percent on the year beforefor financial to SEK152m (markets.€16.6m). January 2014.

Intense competition squeezes market share

Since 2007, Svenska Spel’s market share has declined from 56 percent to 48 percent. The decline is attributable to unregulated

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THE SWISS CASINO MARKET giving casinos an effective monopoly on the organisation of An estimated CHF350m (€246m) is lost to internet competition, No blocking measures are currently in force against foreign poker tournaments, including the annual Swiss Open Poker cross-border competition, including slots venues in Germany unlicensed operations. Championship. and Italy, and illegal clubs. MARKET DATA The council, which constitutes the federal government of The Swiss Casino Federation welcomed the decision of Regulator Switzerland, said that online gambling should be conducted Population 7.997m in 2012 (World Bank Data) the Supreme Court, claiming that up to 100 Texas Hold‘em with the same rules and criteria as offline games. It added that tournaments had been taking place each week outside casinos The Swiss Gaming Board is responsible for regulatory the focus should be on safety and the protection of minors and Currency Swiss franc (CHF) (CHF1 = €0.8) as a result of the Swiss Gaming Board’s prior consideration. oversight over casinos and holds a general mandate to enforce problem gamblers. GNI (Gross National US$82,730 in 2012 (World Bank Switzerland’s gaming laws. COMLOT regulates lotteries and Income) Data) Economic Situation betting. Advertising illegal gambling is prohibited.

Internet Users Per 85.2 in 2012 (World Bank Data) The Swiss economy managed to pull through the financial crisis In May 2014 the Swiss justice minister, Simonetta Sommaruga, The Swiss Gaming Board is empowered to launch criminal 100 People without great harm and with continuing low unemployment launched a consultation on a bill that is designed to modernise actions against advertising and marketing activities that promote Mobile Phone 135 in 2012 (World Bank Data) levels. Visitor numbers and revenues at casinos close to the Swiss gambling laws. online gambling (including hyperlinks on a website), but in Subscribers Per 100 border, and with a high number of foreign customers, are practice no enforcement takes place. People continuing to decrease. The government’s long-awaited draft is seeking to address all sectors of the gambling industry in a single law for the first time Contributions to Society Doing Business 29 out of 189 in 2014 (Doing Business In neighbouring France, Germany and Italy, new opportunities and introduce significant changes to how companies deal with Ranking 2014, World Bank) to gamble have crowded their respective gambling markets. gambling addiction, money laundering and match-fixing. In 2013 Swiss casinos made contributions to the Old Age Credit Rating AAA, Standard & Poor’s, 2011 Foreign visitors are, therefore, coming less often and have, as Insurance totalling CHF356m (€292.6m). the economic situation in their countries is strained, less money One of the biggest changes would be to lift the ban on online to spend. casino games for Switzerland’s 21 land-based casinos while at Social Responsibility Measures Switzerland’s Licensed Casino Market the same time strengthening the blocks on foreign gaming sites. In addition, the strong Swiss franc has had a negative impact as In Switzerland national legislation requires customers to be at Regulatory guidelines for casinos remained virtually unchanged foreign customers get fewer Swiss francs for the same amount Although welcoming the decision to link new online licences least 18 years old, a measure enforced by the requirement that in 2013. of euros. with those of existing land-based operators, Switzerland’s all casino patrons must produce an ID card before entering a casinos have criticised the federal government’s decision casino. In 2012, the Swiss government awarded two new casino to wrap the online changes inside a wide-ranging bill that is licences: one Class A licence to Swiss Casinos for a casino in expected to take another three or four years to pass. Under the Loi sur les Maisons de Jeu, all casino operators must Zurich and one Class B licence to FBAM Neuchâtel SA to operate produce an annual report outlining their efforts in fighting a casino in the region of Neuchâtel, making a total of 21 licences “Of course we are glad that online gaming problem gambling. Each must also adopt a Social Awareness in operation. Plan describing what will be done in the future to improve is coming for Swiss casinos but it should be problem gambling resources. The Class A and B licences valid today were granted until 2023. much faster. The whole law will be in force in Swiss law bans the operation of slot machines outside licensed 2018 in the best case and for us that’s much Problem Gambling Prevention Policies casinos. too slow,” said Marc Friedrich, managing director of the Swiss Casino Federation. Players must be at least 18 years old. Gaming machines are authorised in Class A and Class B casinos. Casinos have to bar players when they know or have to assume that they are: “The range of interests is wide. What we wanted was a compromise which will bring • Heavily indebted. • Risking wagers that are disproportionate to their income or these interests as far as possible under one wealth. roof. The consultation will show how well we The two largest providers of gaming in Switzerland remain the have succeeded,” said Swiss justice minister Each casino has to ask regular guests to provide documents lotteries Swisslos and Loterie Romande, which together collect Simonetta Sommaruga (April 2014). proving their financial situation. If these documents are not GGR of about CHF900m (€738m) per year. provided or, if as a result, show that a customer is playing In the act, among other measures, will be the abolition of the beyond their financial means then the casino has to bar that Revenues at Casino Lugano declined 6.5 percent to CHF50.4m winnings tax on lottery and sports-betting players, announced customer. (€41m) in 2013, but this decline was eclipsed by the casino in initially in 2013 as a way of levelling the playing field with foreign Baden, where revenues shrank by more than 27 percent to sites that do not levy the tax, and increased funding for good At any time a customer can self-exclude and those that are CHF66.7m (€54.7m), the biggest fall experienced by any Swiss causes and sport excluded are barred from all casinos in Switzerland. They are put casino in 2013, because of the opening of the new casino in on a list which can be accessed by all casinos in Switzerland. Zürich. Online Gambling Each time a customer seeks to enter a casino, proper The casino at Pfäffikon also reported significant declines as Online casino gambling is currently prohibited in Switzerland identification is demanded and it is checked for age verification its revenues fell more than 18 percent in 2013 to CHF30.0m under the 1998 Gaming Law, apart from some games offered by and to be cross-referenced against the database of those barred Poker (€24.6m). Meanwhile, at Casino Admiral in Mendrisio, just five the duopoly of the two lottery companies Swisslos and Loterie from entering casinos. minutes from the Italian border, gaming revenues fell 10 percent Romande. Federal law distinguishes two types of games: games of skill to CHF57.1m (€46.9m) in 2013. Each casino must have responsible gaming programmes and games of chance. Games of chance can only be offered in The Swiss government in February 2013 published some (“Sozialkonzept”) to prevent people from excessive gambling. casinos. The relaxation of Italian gaming laws, including an expansion of guidelines for its future gambling legislation, including plans to Casinos have a duty to exclude patrons who gamble beyond online product offerings and the launch of online slots in Italy abolish winnings taxes on all games and to lift the current ban their means and are required to check the financial situation of On May 20, 2010, the Supreme Court of Switzerland classified in 2013, has meant that online gaming is now more available at on online gambling, with the objective to stop all revenue from frequent players. Texas Hold’em poker tournaments as a game of chance, home for many Italian players. online gambling leaving Switzerland. 118 European Casino Industry Report European Casino Industry Report 119 ECA’S EUROPEAN CASINO INDUSTRY REPORT ECA’S EUROPEAN CASINO INDUSTRY REPORT

Casinos must provide patrons with readily accessible information on the risks of gambling and the help available to problem gamblers. In addition, all client-facing casino personnel must be trained each year for two days a year on how to detect UNITED KINGDOM and approach problem gamblers, and be able to provide information on available assistance. London casinos have continued to outperform Each casino must also disclose the number of exclusion cases referred to addiction prevention services during the last year and their regional rivals, both in terms of machine how many exclusion orders were issued (or lifted) every year. and table game spend.

Taxation

Casino taxation is regulated, with Class A and B casinos paying A total of 144 casinos and two licensed card clubs now operate in the UK. the following rates on GGR:

• CHF0-10m: 40 percent The UK’s casinos grew their total revenues to £961m (€1.213bn) in 2013, a 10.2 percent jump from the previous • CHF10m-90m: for each additional million francs of GGR the year’s figure of £872m (€1.01bn). UK casino revenues have grown nearly one-fifth since 2012, although the gains taxation rate rises by 1 percent. have been enjoyed by London’s casinos far more than by the rest of the country. • More than CHF90m: 80 percent Table games grew their revenues by an impressive 11 percent to £825m (€1.04bn), while slots The Swiss Federal Council is free to change the level of taxation benefited a little less from extra player spend, growing their takings by 5.7 percent to £136m (€171.8m). at any time and set rates between 40 and 80 percent of GGR. Taxation is now based upon a model that progresses with the Two casino groups operate the majority of casinos: Genting UK and Rank Group. Rank Group completed level of revenues. its acquisition of 19 casino venues from Gala Coral in May 2013, following approval from the Competition Commission, which saw it overtake Genting as the UK’s largest casino operator.

The UK’s casinos were more popular than ever before in 2013, with visits nearing 20m for the first time. A total of 19.48m visits were made, up 8.8 percent on the 18.25m recorded admissions in 2012.

Britain’s casinos created more than 400 new jobs in 2013, employing 14,737 staff, a 2.9 percent increase on the year before.

London’s high-end casinos have continued to outperform those casinos designated as “Other London” and “Provinces” in terms of growth in table game drop, and have benefited from increased foreign play, some of which is facilitated by junket operations.

There are now two “large” casinos, in London and Milton Keynes, operating with 2005 Gambling Act licences, and a third is set to open in Birmingham in 2015. The others operate within 1968 Gaming Act limits.

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THE UK CASINO MARKET licensed operators in the UK, with many of the changes to come On January 15, 2014 an increase in machine stakes and prizes Under the scheme, which will be piloted from the fourth quarter, into effect on August 4, 2014. became effective. The maximum stake on so-called Category players wishing to self-exclude will be able to do so from any of B1 machines rose from £2 to £5 and the maximum prize rose the UK’s casinos for the first time. Another consultation is due to begin in August 2014 from the from £4,000 to £10,000 (with the option of a maximum £20,000 MARKET DATA Commission on Social Responsibility. The commission has also linked progressive jackpot on a premises basis only). Information about self-excluders will only be searchable by Population 64.10m in 2013 (World Bank Data) released the Statement of Principles consultation, which began registered users and care providers, but will be shared between in July 2014. Not all B1 machines switched over on the applicable date. casinos operated by different companies in the same area. Currency British pound (GBP) (GBP1 = €1.26) GNI (Gross National US$39,110 in 2013 (World Bank Data) The UK’s Licensed Casino Market Contributions to Society, Good Causes The NCF said that if the pilot proves successful, it would Income) introduce the database to all its members from 2015. The Gambling Act 2005 introduced a licensing regime for new All UK casino operators have their favoured charities at local Internet Users Per 89.8 in 2013 (World Bank Data) large casinos and small casinos, while permitting the continued and national level, ranging from cancer charities, Sports Aid, to Care service providers will be able to enrol people into the 100 People operation of casinos by the process of applying to convert a 1968 overseas projects. The National Casino Federation (NCF) through SENSE system and the system will circulate photographs and Mobile Phone 124 in 2013 (World Bank Data) Gaming Act licence. the membership supports CHIPS, which raises funds for bespoke biographical information, as well as making use of information Subscribers Per 100 wheelchairs for the young. from companies’ loyalty cards, vouchers and other marketing People The regional casino proposal has since been scrapped. The UK’s tools. second large casino, the Aspers-operated Casino MK, opened Doing Business 10 out of 189 (Doing Business 2014, its doors in Milton Keynes in September 2013, joining the Aspers The scheme will allow automatic checks to be made of the Ranking World Bank) Westfield Stratford City Casino, which opened in December central system to identify self-excluders who may breach the Credit Rating AA+, Fitch Ratings, April 2013 2011 ahead of the London 2012 Olympics. Genting will open a agreement. third large casino, its new Star City Club, a 55,000 square-metre Regulator mixed-use facility in Birmingham during the first half of 2015. The Gambling Commission has backed the scheme and claims No small casinos are operating to date. to be supportive of proactive new ways to protect gamblers who The United Kingdom’s gambling regulator is the UK Gambling recognise they need help. Commission. There are 186 converted 1968 Act licences in the UK. In total, 142 licences are operating, of which two are new large 2005 Act In 2014 the NCF employed a market research group, Market The Gambling Commission was brought into being when, in casinos. Two casino groups, Genting UK and Rank Group, now Force, to carry out test purchases in NCF members’ casino 2005, changes to the UK’s gaming market were introduced to hold the majority of UK casino licences. premises, under the so-called “think 21” programme. regulate new forms of gambling and associated technological changes. However, the new regulatory system has been the Rank Group agreed to buy Gala Coral in May 2012, and the UK The first phase of testing resulted in a 91.5 percent pass rate, subject of extensive inquiry and discussion regarding how Competition Commission subsequently gave its approval to the with remedial action including additional staff training and successful the Gambling Commission has been in meeting its deal subject to four casinos and three inactive licences being disciplinary actions. Subsequently, re-tests delivered a 100 licensing objectives. excluded from the deal. percent pass rate. Focal Research through NCF is working with casino operators In its submission to the UK Competition Commission regarding to look at ways to measure “potential” risk for players. The In May 2014 the UK Gambling Commission also amended the the proposed acquisition of Gala casinos, Genting noted that research will be completed in October 2014. Licensing Conditions and Codes of Practice (LCCP) that apply to more than half of the bricks and mortar gambling in the UK is all licensed operators in the UK. The LCCP’s social responsibility now controlled by two large Malaysian-controlled companies. The United Kingdom’s casinos also make voluntary levy payments code provisions must be adhered to by all licence holders. Casino licensing came under scrutiny by the Department for to the Responsible Gambling Trust (RGT) or other bodies involved Another consultation is due to begin in August 2014 from the Culture, Media and Sport (DCMS) Select Committee in its report with the research, education and treatment of problem gambling. Commission on Social Responsibility. from July 2012, “The Gambling Act 2005: A bet worth taking?”. In relation to casinos, the DCMS Select Committee Social Responsibility Measures Age Restriction recommended scrapping the two-tier system and recommended that all casinos should be harmonised on product. Offering self-exclusion is a requirement for casino operators and National legislation makes it an offence for someone who is each has their own individual scheme. under 18 years old to enter a casino. There are 2,729 gaming machines in casinos, most of them (2,682) Category B1 machines. These machines generated a In 2014, UK casinos raised their efforts on protection measures, Self-Exclusion profit of £129m in 2010-2011. There were 1,962 table games in the announcing a new national self-exclusion scheme. UK as of September 2013. According to Gambling Commission rules about self-exclusion, The National Casino Forum (NCF) signed British technology licensed operators must have procedures that “take all company Software for Data Analysis (SDA) to develop the reasonable steps to refuse service or to otherwise prevent an The Gambling (Licensing and Advertising) Act, which received Playing Safe SENSE programme. individual who has entered a self-exclusion agreement from royal assent in May 2014, is set to transform the way the online participating in gambling”. industry is regulated in the UK by requiring all companies offering online gambling to British players to be licensed by “We don’t just want this to be the casino Further, licence holders “should take steps to ensure that the the Gambling Commission and leaving them liable to pay UK industry gold standard; if we can make this self-exclusion period is a minimum of six months”. gambling tax on the play they take from the UK. The Finance Act work effectively it will be the first time 2014, which received royal assent in July 2014, will charge taxes something like this has been done by the Gambling Prevalence on remote gambling profits generated from UK customers no industry itself rather than being imposed. The matter where in the world the operator is located, with effect The latest British Gambling Prevalence Survey, from 2010, states from December 1, 2014. entire casino sector has come together behind that: this initiative; it is voluntary and nobody • 73 percent of the adult population participated in gaming in In May 2014 the commission also amended the Licensing has compelled us to do it,” said Roy Ramm, the previous year. Conditions and Codes of Practice (LCCP) that apply to all chairman of Playing Safe. • Excluding participants in the National Lottery Draw, 53

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percent of adults had participated in some other form of standard UK gambling taxes, as long as they did not have any of felt was lacking in player protection. gambling. their remote gambling equipment in Britain. • A 2013 health survey for England found that 65 percent In June 2014 a number of Gibraltar-licensed operators launched of adults gambled in 2012, of which 0.5-0.6 percent were The UK government has elected to bring an end to this model a challenge to the new act, claiming the legislation breached EU problem gamblers. and impose domestic licensing and taxation, introducing a law. 15 percent gross gambling yield (GGY) tax for all operators Taxation beginning in December 2014. The Gibraltar Betting and Gaming Association served judicial review letters to the UK government and the Gambling Casino gaming in the UK is heavily taxed. The UK Gaming Duty GGY is similar to gross gambling revenue, with the difference Commission in a bid to delay or overturn the new law. that applies to land-based casinos is calculated on the following being that in addition to stakes any other amount “that will basis (effective from April 1, 2012): otherwise accrue in connection with the activities authorised • The first £1,929,000 of gross gaming yield (GGY) — 15 under the licence” must be accounted for. percent. • The next £1,329,500 of GGY — 20 percent. In June 2014 the UK government published a statutory • The next £2,329,000 of GGY — 30 percent. instrument (2014 No. 1641), starting the process by which more • The next £4,915,500 of GGY — 40 percent. than 150 companies are expected to apply for licences in • The remainder — 50 percent. Europe’s largest online gambling market, with annual revenues of £2.3bn. As a result of the passage of the 2014 Finance Bill, the UK government will impose taxation on online gambling for the first The new licensing and advertising act came into force on time in 2014, introducing a 15 percent gross gambling yield tax November 1 after a month’s delay. for all operators from December 1, 2014. William Hill, Rank, Gala Coral and other high-street names GGY is similar to gross gambling revenue, with the difference whose online units are based offshore all went through the being that in addition to stakes any other amount “that will licensing process. otherwise accrue in connection with the activities authorised under the licence” must be accounted for. Existing remote gambling operators based in Great Britain and already licensed for remote gambling by the Gambling Slot Machines Commission generally will not need to reapply, unless they want to offer additional or increased remote gambling activities. A great deal of debate has been generated around the vexed Operators in this position may need to make an application to issue of fixed-odds betting terminals (FOBTs) in UK betting vary their existing remote licence. shops, which critics contend have introduced casino-type gaming into high-street betting shops. A number of London’s high-end casinos have now begun to provide live dealer gaming online to their clients from their UK The UK government has indicated it would prefer to take no premises. action on the issue of FOBTs (defined as B2 machines) until the study into gaming machines by the Responsible Gambling Trust Remote operators hope to have a separate self-exclusion (RGT) has been completed. programme in place by the end of 2014, to coincide with the launch of the UK’s new online gambling licensing regime after Additionally, the government has indicated it would like to calls for better protection of problem gamblers in parliament. raise the maximum stake from £2 to £5 for B1 casino gaming machines (technically defined as B1 machines). “The transitional arrangements set out in Any machine with a single stake (spin) of more than £5 will be the statutory instrument enable operators taxed at 25 percent. This does not affect B1 machines but will who are currently able to provide facilities for affect machines in the B2 category. gambling in Great Britain (because they hold Remote Gambling a licence in an EEA or white-listed jurisdiction) to continue to do so. The online provision of gambling in UK casinos is currently forbidden. NCF members continue to argue for the right to offer “Operators who meet this requirement must and provide dedicated access to online gambling from inside the have submitted an advance application with casino premises. the relevant application fee by midnight The Gambling (Licensing and Advertising) Act 2014 is set to on September 16, 2014 to be eligible for a transform the way the industry is regulated in the UK by requiring continuation licence.” The UK Gambling all companies offering online gambling to British players to Commission, June 25, 2014. be licensed by the commission and leaving them liable for UK gambling tax. In July 2014 the UK Gambling Commission rebuked online operator bet365 and, following criticism of casino chain Aspers Previously any remote gaming operator based in the European and several other high-profile operators for failings in player Economic Area (EEA), including Gibraltar, or a “white-listed” protection and know your customer requirements, said it would country, had been able to advertise in the UK without paying the take uncompromising action against any gambling company it

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