When the debate for legalizing casinos comes up, the general public typically assumes that “casino” is a well-defined and unambiguous term, a place where bets and wagers are made at traditional table games and electronic gaming devices. Casino legalization is a decision that will result in a mix of social and economic benefits and costs, and variations in the details of the law are often viewed as relatively unimportant except for determining who the major benefactors from legalization might be.
When the casino legalization issue becomes active, proponents, opponents and the media actively engage in debating the benefits and costs, as well as other implications, of casinos. The various parties argue that casinos will either substantially benefit the jurisdiction authorizing them and the customers who will frequent them, or alternatively, that the outcomes will be substantially deleterious to exactly the same groups.
More moderate analysts suggest that the impacts will be mixed among the many stakeholders, with legalization creating some winners and some losers, and with some impacts too difficult to evaluate. Such debates can become extremely contentious and emotional, with advocates of whatever position grasping for and presenting whatever evidence that supports the positions that, in their hearts, they know to be correct, regardless of underlying evidence to the contrary.
In such debates, far too little attention is paid to the differences among different types of casinos and different structures to the legislation and how well-or how poorly-the broad objectives of the legislation will be fulfilled. Advocates typically champion the economic gains to be had from casinos, in terms of jobs, direct foreign investment, tax revenues to be generated, and the catalytic effects such casinos can have on tourism, economic development or redevelopment, or even the image of the jurisdiction as perceived by outsiders.
Opponents, on the other hand, cite the increased incidence of crime, family difficulties created by excessive gambling, traffic congestion, the dislocation of existing businesses, the immorality of gambling, and other horrors that may or may not be realistic in light of the proposals.
Arguments are typically formulated in an advocacy manner rather than a scientific approach; there are few, if any, disinterested observers seeking objective and valid evidence that will paint a realistic picture of what will transpire after casinos are legalized. In all the flurry over the “yes” or “no” decision to be made on casinos, the nuances of differences in approach to the casino question can easily be shuffled aside.
Finding the Framework
The book Integrated Resort Casinos provides a conceptual framework for making such differentiations, and also points out the difficulties, deceptions and challenges that arise in the heat of the debate.
The book is a collection of learned papers that examine a variety of impacts of casinos, based on the attempt by the American company Harrah’s and the Slovenian company Hit d.d. to develop a €1 billion integrated resort casino (IRC) in western Slovenia, close to the Italian border. From 2005 until 2008, Harrah’s and Hit jointly explored developing a project in Slovenia that does not have an equivalent anywhere in Europe: a destination integrated resort casino.
The Slovenian IRC project would have had a number of favorable characteristics relative to existing Slovenian and other regional casinos. It would have been a substantial project, in terms of capital outlay, in the provision of non-gaming amenities such as high-quality hotel rooms, convention facilities, golf courses, retail outlets, restaurants and showroom entertainment, and it would have targeted a largely international clientele-many from Italy, but with the hope and expectation of becoming a continent-wide tourist attraction.
For a variety of reasons, the deal fell through. Both companies considered themselves to be highly competent, and Harrah’s-which was expected to put up the majority of financial capital-would also need to be able to have a larger ownership stake than the prevailing laws permitted. (This necessitated changes in the Slovenian gaming law.)
As a government-owned company, Hit would have had difficulty justifying the kind of capital investment the project would require. However, there was clearly reluctance within Slovenia to allow a foreign company to own more than 50 percent of a major integrated resort casino operation, and it was unclear that Hit could be transformed from a government-owned company to a private-sector company quickly or easily.
There were also economic and political interests in Slovenia and in the region that were threatened in one way or another by this project. Management at the existing casinos, and the labor unions that represented their workers, may have feared that the new integrated resort casino would take customers away from their facilities, and damage their economic and employment prospects in the immediate future.
Operators of gambling saloons, especially those in western Slovenia, probably viewed the potential competition from an integrated resort casino as particularly threatening. It would not be surprising that such entities would use their knowledge of local politics to shift sentiment away from such a proposal based on whatever means of persuasion that would work.
The failure of Harrah’s and Hit to consummate the deal notwithstanding, the lessons learned in Slovenia still have substantial relevance for other jurisdictions, such as Massachusetts, Ohio, Taiwan, Japan and Thailand. Key to these lessons is grasping the differences between integrated resort casinos and more generic “gambling-centric” casinos.
Back to the Basics
The essence of the integrated resort casino argument is the following. In most jurisdictions where casinos are to be found, casinos are places where one goes to participate in table games and play slot machines (or more accurately, electronic gaming devices). Such facilities typically provide limited food, beverage, entertainment, and sometimes hotel offerings, but these are usually no more than conveniences offered for the gamblers: feeding stations and rest stops to accommodate those who are there for the gambling, and who otherwise might wander off the property to fulfill these basic needs.
The non-gaming activities are clearly secondary; such facilities often generate 80 percent, 90 percent or more of all their revenues from their gaming products. As such, these casinos are clearly gambling-centric; their appeal is almost strictly to gamblers.
Integrated resort casinos are different. They offer a wide variety of leisure and entertainment products besides casino gaming. They all have iconic, sometimes “over-the-top” architecture. They require capital investments in the hundreds of millions or billions of dollars. And they have become major attractions for both domestic and international tourist markets.
Indeed, they often serve to define or substantially alter the perception of tourist or urban destinations by becoming important and sometimes dominant attractions. Think of Las Vegas, Macau, Biloxi and Atlantic City, all with multiple integrated resort casinos, and all defined as casino cities by their IRC facilities. In the case of Foxwoods and Mohegan Sun (Connecticut), Sun City (South Africa), Kangwon Land (South Korea), Crown (Melbourne), and Marina Bay Sands and Resorts World (Singapore), IRCs are important economic drivers for their metropolitan areas or regions, as well as iconic symbols for their respective jurisdictions.
More often than not, IRCs offer five-star accommodation and Michelin-quality fine dining, world-class live entertainment and Rodeo Drive-quality retail shopping. Most IRCs have leveraged their economies of scale and scope to become highly diversified and prominent in various leisure and tourist product offerings beyond gaming, including restaurants, entertainment, convention services, outdoor recreational offerings, spas, retail shopping, and sometimes aquariums, museums, theme parks, movie theaters, live theater and sports arenas.
Integrated resort casinos compete for the high-end leisure dollar far more effectively than gambling-centric casinos. By providing such a variety of activities, they appeal to many who have little desire to gamble, but who enjoy the other attractions. IRCs have become increasingly preferred venues in the convention and meetings business, and they compete head-on with traditional destination resort industries such as those found in Hawaii, the Caribbean, Florida, the south of France, in Bali, and on cruise ships.
IRCs employ thousands in their round-the-clock operations, and-because of the diversity of offerings and the related specialized services required-they hire substantially more highly skilled and professionally trained employees than do gaming-centric casinos.
In many respects, IRCs are major mutations from “gaming-centric” casinos and gambling saloons that have become commonplace in many parts of the world. IRCs are “one-stop” entertainment centers that also have casinos, and as a result they attract many segments of the leisure market that have little or no interest in gaming.
It is important to note that potential economic benefits-and social costs-generated by IRCs are radically different from those created by gambling-centric casinos. The lead article in Integrated Resort Casinos by William Eadington and Eugene Christiansen provides a historic, global overview of this differentiation. A later article by Eadington and Peter Collins further delineates and defines various grades of casino gaming options.
They argue that a high-capital-investment, multi-faceted integrated resort casino inherently will have a much higher benefit/cost ratio than a gaming-centric urban casino, and a staggeringly higher ratio than convenience gambling (such as gaming machines in bars and taverns). When gambling is legalized, however, due to the visibility and symbolism of IRCs, political pressures often encourage legislative bodies to authorize less visible, but certainly less desirable, casino alternatives. If this book’s findings are taken seriously by decision-makers, such outcomes will be far less prevalent.
Understanding the historic, political, economic and social environment of a jurisdiction is an important first step in any campaign to legalize casinos. The article by Dusan Luin presents how the changes to gaming regulation are reflected in the economic and social environments of Slovenia, how the public has reacted to the introduction and expansion of gaming offerings over the years, and how casinos and politicians have responded to changes in public opinion.
Not incidentally, the part of Slovenia that now houses Europe’s largest casino (Casino Perla in Nova Gorica) has a tradition of gaming that dates back over two centuries, and as such has been subject to dramatic political shifts, changing social perceptions and differing levels of legality.
An article by Anton Gosar notes that the integrated resort casino, had it gone forward, would have complemented the many under-appreciated tourism assets within Slovenia. Such tourist attractions, largely undiscovered and relatively unknown in the West, include the spectacular Julian Alps, medieval villages along the Adriatic Sea, the fantasy setting of the medieval town of Bled, the charming capital city of Ljubljana, the spectacular Postojna caves, the historic Soca River
valley, the hilly vineyard regions, and vestiges of the Austro-Hungarian Empire, including the Lipizzaner horse stud farms to be found in Lipica.
Most potential tourists are also unaware that Slovenia is so close to Venice and to the remarkable Dolomite Alps in northeastern Italy. Arguably, the IRC project might have served as a major and important catalyst to better integrate Slovenia into mainstream European tourism.
Other articles address some of the social science impacts that can be anticipated with casino development and the casino debate. Hugo Zagoršek and Marko Jaklic, in their contribution, provide a broad analysis of the economic effects of gambling-and tourist gambling-within the context of existing Slovenian casinos.
The contribution by Matej Makarovic, Borut Roncevic, and Klavdija Zorec notes that during the public debate, a frequent criticism of the project was a lack of information about social costs of gambling (quantifiable costs generated by problem gambling, such as unemployment, divorce, bad debts and cost of treatment). Such criticism was initially justified; fortunately, these researchers rectified the situation by conducting the first in-depth survey in Slovenia of the social costs related to gambling.
They also estimated the effect of responsible gaming education programs on the social costs of gambling created by the proposed integrated resort casino, and they drew the conclusion that such programs are essential to any type of gambling development; in the case of Slovenia, with existing gambling (and problem gambling), such educational programs could even reduce the social costs from their present levels.
As in other jurisdictions, the Catholic Church had difficulty in allowing such a visible project with casino gaming at its core to move forward unchallenged. Allowing a globally visible integrated resort casino within the shadow of the patriarch of Venice-a likely contender for the Papacy-may not go down well with those who consider such symbols of propriety as important in the broader scheme of things. This is also perhaps one reason why opposition to this project arose from the archbishop of Ljubljana.
Thus, ironically, Slovenia experienced a substantial expansion of gambling saloons and so-called convenience gambling since 2000 without any significant opposition by the church, whereas the Harrah’s/Hit joint venture project-which would have arguably been far more benevolent than the existing alternatives-became a target for ecclesiastical opposition.
Articles by Peter Collins and Bogdan Vidmar highlight the ethical dimensions of authorizing casinos by citing arguments from philosophers and theologians that have been around for centuries, with Collins making the case that government’s role should not be prohibitive, and that people should be allowed to make their own decisions, even if they may turn out badly. Vidmar, on the other hand, attempts to summarize the Catholic Church’s historic opposition to gambling and place it into a context of how Slovenia, as a predominantly Catholic country, should adapt its policies to the positions of the church.
In summary, in its contributions from a wide variety of researchers, Integrated Resort Casinos captures much of the essence of the public policy debates that center around legalization or liberalization of casinos. Though many of the articles address issues in Slovenia, the issues are easily applicable elsewhere. The experience of the entire world with respect to casino legalization can be drawn upon to make better public policy decisions, but as this book readily points out, the difficulties of achieving good public policy are many and substantial.
Whatever the actual dynamic that led to the demise of the Slovenian integrated resort project, it did create an environment where the local and national community participated in a vociferous debate on the merits and risks of permitting the project to go forward. The research papers in this book provide excellent insights and perspectives on the scientific, social scientific, political and ethical issues that were raised in Slovenia, and are usually raised when a jurisdiction is given the opportunity to choose to permit such a project.
When evaluating whether to permit casino gaming within their borders, jurisdictions should be careful to distinguish among the various types of casino gaming they could introduce, and be sensitive to the benefits, costs and ethical implications such alternative choices imply. Integrated Resort Casinos provides a particularly good roadmap for such an endeavor.