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Germany, Austria, Switzerland: Saturation or Malaise?

A three-part series on middle Europe's vastly different casino jurisdictions

In the April issue of GGB we saw the multiple problems facing operators in the mature market of Germany. In May, an overview of Switzerland revealed the meticulous planning that went into creating a new casino jurisdiction from scratch. Now, in this third and final installment, we’ll look at how one of modern Europe’s oldest-and most monopolist-jurisdictions is evolving with the times.


Part III: Austria

Say the word “monopoly” when speaking about a service business and visions of poorly maintained premises, surly staff and a general take-it-or-leave-it presentation come to mind. But down through the years, management at Casinos Austria seems to have missed the memo that they could slack off in the absence of domestic competition.

Whatever the reason, the ability to provide a high-quality, consistent product all these years is paying dividends now, in the face of increasing pressure from casinos in neighboring countries, online gaming and European Union treaties.

Casinos Austria took over a group of existing casinos in 1967, and has been the sole legal provider of full casino gaming in Austria ever since. The company operates a dozen casinos spread around this alpine nation of 8.2 million inhabitants. The 12 casinos offer a total of 238 gaming tables and 1,814 slots. Together, these produced gross gaming revenue of ?193.5 million in 2007. That figure was up 6.5 percent over 2006 results.

The leading earner of the 12 is the Casino Wien, located in downtown Vienna’s tourism center on the car-free Karntnerstrasse. The main casino, which has a dress code, has 19 tables, 100 slots and one automated roulette table. The less formal “Jackpot Casino” has 88 slots, 12 automated roulette stations, and two each of regular blackjack and roulette tables. The modest (by mega-standards) property generated almost ?41.7 million in 2007.

With many of the casinos situated in winter ski/summer hiking resorts, the company has done well with cooperative arrangements with four- and five-star hotels. At Innsbruck, the casino is located right in the Hilton, and in several other resorts the casinos are connected to hotels. The Casinos Austria website lets potential visitors book rooms online with partner hotels.

In 2007, the company invested ?22.8 million in its properties, much of which went to redoing interiors, including restaurant and bar areas, at the casinos in Baden, Innsbruck and Linz. This year will see a second phase of refurbishment at Innsbruck, and Casino Bregenz is currently the subject of a call for architectural tenders.


Slots and Poker

As in Germany, and in fact most European countries, there exists alongside traditional casinos a much less formal, low-stakes slot market. In Austria, the maximum stake is 50 euro cents, and the maximum payout is ?20. The machines can be found everywhere, including sports betting shops and poker clubs, and revenue figures for them, while believed to be massive, are hard to come by.

By far the most impressive of all the low-stakes slot locations is the Casino Admiral Prater. A product of the ubiquitous Novomatic group of companies, the casino-any gaming facility that has been designed by a professional and cost ?20 million deserves to be called a casino-is located at the edge of the amusement park with the famous Ferris wheel.

Inside are 400 slots, taking in their 50-cent bets and paying out their ?20 jackpots and earning their owner literally untold amounts of cash. The casino also has a well-appointed Admiral betting shop section and a very good full-service restaurant.

Another segment of gaming that has managed to carve a niche outside of casinos is poker. The game did make its first appearance inside the Casinos Austria properties, when seven-card stud was introduced at Casino Baden in 1988.

And Casinos Austria still has the longest running seven-card stud tournament in Europe, the Poker EM, which started in 1990. But as Texas hold’em and Omaha began to cross the Atlantic in the early 1990s, and the limitations of casinos regarding hours of operation and rake were not well-received by the then-small but demanding group of international players, opportunities arose for new businesses, such as the Concord Card Casino in Vienna.

Copying the model of a 24-hour California card room, the Concord quickly became the focal point of Austrian and European poker-and Austrian court cases, because of the monopoly situation. Decision after decision came and went, but the Concord and its local imitators remained, although for several lean years it looked like the game might die out.

But then came the online and televised tournament poker boom. Now, the game is flourishing more than ever, and Concord recently opened an additional 25-table card room in Salzburg, with plans for a total of 10 new rooms around the country.

Concord isn’t the only company looking to cash in on the new wave. In the ski/hiking resort of Hinterglemm, the five-star Alpine Palace Hotel will open a poker room with eight-10 tables this July. And Casinos Austria has not been standing still all this time. In fact, the company has made a huge about-face in recent years with respect to poker, and is now reaping the rewards of its policy.

Of the 2.44 million Casinos Austria visitors last year, 200,000 of them participated at the poker table, either in cash games or tournaments. That was an increase in poker players of 300 percent over 2006. The game is bringing in an entirely new crowd of young, urban men and women. To accommodate them, the casino is offering Texas hold’em at the previously unheard-of low limits of ?2-?4. Plus, for the online poker crowd, there are ?25 euro sit ‘n’ goes.

One big barrier to offering lower-limit games in the past was the high cost of dealers. Management has gotten around the problem by using more part-time dealers and dealers who are trained in only poker and blackjack, as opposed to those who are qualified on all games. And in a truly radical change from the past, for the last two years young women have been dealing poker.

Monopoly Status

The monopoly status of Casinos Austria has caught the attention of the E.U. in recent years. To fend off action by Brussels, the Austrian Gaming Act has been modified recently in two meaningful ways. Foreign providers of gaming services will no longer be banned from advertising inside Austria. Also, Austrian citizens will no longer be treated differently than European Economic Area citizens. E.U. Commissioner Charlie McCreevy reportedly has no problems with the revised legislation.

Casinos Austria has taken steps to compete for the online spend of Austrians. The company previously owned 34 percent of the Austrian national lottery. It has recently increased that holding to 68 percent. One big reason for the move is to assume a stronger position in the online world. The lottery operates its own online gaming site at www.win2day.at. Last year the site registered 50,000 new users, bringing the total to 330,000 at the end of 2007. One draw for poker fans is that players can qualify for seats in the physical Casinos Austria major tournaments. The site’s strict registration requirements seek to keep out players from outside Austria.

Another lottery product is WinWin, a system of video lottery terminals now operating in 10 locations. Each has between 50 and 150 terminals. With stakes as low as one cent, the product is designed to compete with the low-stakes slot market.

The online site accounted for 39 percent of the lottery’s almost ?2.1 billion revenue last year. The VLTs contributed over 10 percent.

Austria seems determined to make the monopoly system work for casinos, and the government seems willing to overlook just enough of the grey gaming market to make it possible. One surprisingly un-monopolistic move: No one is talking yet about banning smoking in the casino.

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