Worsening economic conditions in the Baltics and throughout Eastern Europe are forcing Olympic Entertainment Group to change its previous policy of continual expansion.
For the first quarter of 2009, the group announced plans to close 15 casinos that had negative cash flows, closely monitor several others and reduce payroll by 356 employees, around 9 percent. Salaries were also cut by 20 percent.
Because of shrinking demand in slot play, plans are under way to modify the casinos into gaming lounges, with increased food-and-beverage service and fewer slot machines per location. The change will result in savings due to lower per-machine fees. Some casinos will no longer be 24-hour operations. The first of the revamped properties will debut in early Q2.
While revenue compared to 2007 increased in five markets-Belarus, Poland, Romania, Slovakia and Ukraine-the Baltic countries all showed declines. Revenue was down 14.3 percent in Estonia, 5.2 percent in Latvia and 11.7 percent in Lithuania.
OEG ended the year with 133 casinos, up from 122 the year before. In 2008 the company opened 21 new casinos and closed 10. Renovations were performed at 15 casinos acquired from other companies.
In Estonia, the number of slots has decreased 31 percent during the first quarter and dropped 40 percent year-on-year, according to Andri Avila, CEO. There are considerably fewer casinos, and the rate at which the smaller slot casinos are closing is increasing. Avila expects this trend to continue for the next two or three quarters and then-hopefully-stabilize.
Finally, in a move that recalls the glory days of just six months ago, last month OEG announced the opening of a new casino in Lithuania, in the city of Siauliai. The tropic-themed casino has a bar, 31 slots and four tables, and is the second casino in the city of 130,000 to have table games. Total investment was €1 million.