November 7, 2018
by Andrew Tottenham
Managing Director, Tottenham & Co

The publication of the RFP for the new casino license in the Hellinikon project in Athens has been delayed. It was supposed to have been issued last month, but the delay is not surprising given the complexity of this RFP. The timetable always did seem ambitious to me.
You may remember that Lamda Developments won the original RFP to develop the entire site of the old Athens airport, which had been used for the 2004 Summer Olympics. Part of Lamda’s submission included a casino, but under EU procurement rules it is not possible for the Government to simply grant Lamda a license. Had the original RFP included the offer of a license that would have been different; however, no license was on offer.

by Luke Haward
CDC Gaming Reports

A minister has resigned, major bookkeepers are taking steps against gambling ads during live sports broadcasts (or at least against their proliferation), the Tories are being advised to take a leaf from Labour’s book when it comes to gambling policy, and gambling taxes are set to rise. In the new UK politics of gambling, a shake-up is clearly on the cards.
Europe is still feeling the shockwaves of Italy’s unprecedented decision to put in place a near total ban on gambling advertising, and other smaller nations are shifting positions, even banning most forms of gambling, as Albania recently opted to do. The UK is still the second-largest gambling economy in Europe, and as such it is now under a special kind of scrutiny.

The Euro News Revue
Andrew says: It was always going to get nasty. When three private equity companies got control of Codere, a Spanish gambling company founded in 1980 by the Sampedro family, it was clear that they had their own ideas about the way the business should be run. Silver Point, Contrarian, and Abrahams Capital, who gained control of Codere through a bankruptcy restructuring, have removed the two Sampedro brothers from the board of the company. The brothers appealed to the Madrid courts and lost. They are now trying a different tack, suing the private equity companies in the US courts. In my experience, this could be long and very costly.
Luke says: The latest twist in the back-and-forth in Armenia concerning the legal status of gambling in the country is that the government refuses to evaluate a proposal for a new gambling law put forward by the acting Prime Minister himself, Nikol Pashinyan. The acting PM made a major statement at the end of October to the effect that betting shops and bookmakers would be closed down “gradually”. The country currently has around 300 betting shops. While acknowledging that gambling was one of Armenia’s three biggest industries, alongside agriculture and mining, Pashinyan suggested that this must change. The government’s response thus far has suggested an impasse of sorts, despite reforms agreed upon in September to restrict the geographic location of gambling sites..
Andrew says: Olympic Gaming Group, an Estonian based casino, sports betting, and gambling arcade company, has a new CEO. Novalpina Capital, a private equity firm based in the UK, bought Olympic earlier this year in a transaction that valued the company at €288 million. Corey Plummer, the new CEO, who worked on the transaction, has held executive positions with Caesars, Rush Street, and recently with Holland Casino; he replaced Madis Jääger. Plummer will have his work cut out for him because Olympic has made a number of investments recently that have yet to return value, specifically the casino in Malta and their investment in the development of a new hotel-casino in Tallinn. The hotel in Tallinn is managed by Hilton and has only been able to show a reasonable return because of the sale of the whole building by Olympic and the subsequent leaseback of the casino portion. Another challenge for the company is the non-renewal of premises licenses for gambling businesses in the historic old town area of Riga. The city government of Riga wants to close all gambling businesses in that area, which would impact Olympics’ Voodoo casino, one of the company’s top performers.
Luke says: It seems like a modest haul in terms of cash found on premises, and in terms of the numbers of (presumably) clientele arrested (and then released), but looking more closely at the detail of the police raid, it becomes more significant. The report implies that paid employees of the illegal online casino were arrested and released, and states that over forty computers were seized. This kind of operation could involve a serious amount of money, depending on the stakes wagered. It is clear that the Cypriot police are now being proactive in prosecuting illegal gambling. It is also natural to wonder whether this new inclination might have anything to do with the arrival of international giant operator Melco on the island nation.
Luke says: Temporarily belying the old adage that the house always wins, the Barclay brothers have again been hit by high stakes players winning big. According to this Evening Standard coverage, the Casino at the Ritz Hotel in Piccadilly fell over £11 million “into the red” last year, similar to its other two worst years, 2015 and 2013. Perhaps it is simply variance, but such losses for a casino are rarely seen on an annual basis, or for several annual periods, simply due to the huge volume of gaming which takes place. Taking thousands of bets a day should level out the effect of outlier cases where jackpots are hit or someone goes on a run at roulette. It seems the Barclays have had enough of the venture, since the venue has been on the market for some time now..
Luke says: Very scant early coverage on a big story - a decree reportedly published stating that scratch cards in Italy are henceforth to carry warnings that “this game damages your health”. This, and a government campaign reportedly using the slogan “No Slot”, aiming to reduce slot machine gaming, must have the gambling industry feeling pretty shaken. And all this is after the advertising ban put in effect in August in the national Dignity Decree. The government had always warned that the ad ban was just the first of a series of reforms for the gambling industry, and now it’s starting to become clear that these warnings were anything but hot air. The question now becomes, how can the gambling industry in Italy best respond to these regulative changes?
Andrew says: This article is in Italian but Google Translate can give you a good indication of what is happening. Casino St Vincent, in Italy’s beautiful Aosta Valley, has finally hit the wall. An administrator has been appointed and has presented a plan to the bankruptcy court to restructure the company. Today the administrator told the court of his proposal not to pay October’s salaries, which will have come as a shock to the company’s employees. At its high point, Casino St Vincent had annual GGR in excess of €140 million. Last year it only took in €57 million. The company is saddled with high gaming taxes, a wage bill that exceeds 50% of net gaming revenue (GGR minus gaming tax), and large debts. The writing was on the wall, as it also is for the other three Italian casinos, because high gaming taxes combined with high wage bills are unsustainable.
Luke says: A recent report from the European Parliament suggested that Gibraltar’s economy could falter and shrink by up to 20% after Brexit. And the news that online firms 888 and bet365 both had fairly serious plans for a move to Malta won’t have reassured anyone about impending dips in the economic outlook for the British territory. So Spanish Prime Minister Pedro Sanchez is attempting to settle the waters around gambling in Gibraltar, and hopefully retain most of the firms which have settled there over the years. Business as usual is the promised approach; the question then becomes how much major firms will want to risk on the promises of politicians. Hopefully the mutual interest in continuing business as is will keep relationships smooth and progressing.
This report is edited by Andrew Tottenham and Justin Martin
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