WINNING, LOSING HANDS

The Straits Times - World
3 October 2005

South Africa and Russia legalised gambling in the early 1990s. One became a model of regulation that other countries tried to emulate, the other became a gambling hell. The BBC World Service looks at the experiences of the two.

In South Africa : Revenue and jobs bonanza

LONDON - A LATE 19th century Italian village with streets full of pizza parlours, wine shops and fake canals plied by gondolas has sprouted in modern South Africa .

Not surprisingly for those who know Las Vegas , the quaint-looking village is actually a gambling resort called Monte Casino.

It was opened at a cost of US$260 million (S$440 million) north of Johannesburg five years ago.

Since gambling was legalised in South Africa a decade ago, it has become a highly regulated industry which has resulted in a revenue and jobs bonanza.

Indeed, Monte Casino alone employs 2,000 people directly and turns over more than 1.2 billion rand (S$320 million) a year.

The industry as a whole has created more than 100,000 jobs and annually pays more than US$265 million to the government in revenue.

Any company that wanted to bid for one of the new casino licences had to sign a written contract guaranteeing how much they would invest in public interest projects.

Mr Peter Collins, executive director of The National Responsible Gambling Programme, told the BBC the policy had made an important impact and the industry creates significant employment for people who would otherwise be jobless.

'Now, that is a huge public benefit and it was done by really tapping into the creativity of the private sector in working out how casinos can maximise public benefits,' he said.

Other countries so envy South Africa as a model of regulation that they are attempting to copy it.

Still, critics say the legalisation of gambling has turned the country into a nation of gamblers and created an epidemic of social problems, the BBC reported.

More than 70 per cent of adult South Africans now gamble. That compares to about 60 per cent in the United States .

Research has also revealed that more than 70 per cent of those who gambled said they would have spent the money they lost on household essentials, the station said.

But Mr Derek Auret, chief executive of the Casino Association of South Africa, said: 'We find that the majority of gamblers who gamble at casinos in South Africa are in the middle- to upper-income group. The poor simply do not gamble.'

He said gambling in South Africa is expensive as there are fees just to enter a casino and then other fees depending on whether a customer wants to play the slot machines or Blackjack or gamble at the tables.

He also challenged figures showing that South Africans spent more of their disposable household incomes on gambling than Americans, 1.9 per cent to 0.6 per cent in the US .

'People have the freedom to choose how they spend their disposable income,' he said. 'But again, we are not going to tell people that you cannot come and gamble and close our doors to them.'

More than 47,000 calls have been received by the toll-free counselling line provided by the programme headed by Mr Collins and more than 5,000 people have received treatment for gambling problems.

More than 10,000 casino employees have also been trained to spot problem gamblers, the BBC said in its report.

Asked if he was satisfied that there was not a serious gambling problem among people in townships, who are among South Africa 's poorest residents, Mr Auret said: 'Yes, I am.'    

In Russia : More like Wild West in grip of crime

The Straits Times - World
3 October 2005

LONDON - LIKE South Africa , Russia also legalised gaming in the early 1990s.

It is now growing faster there than in any place in the world other than in Macau - Moscow alone has 70,000 slot machines and one casino a month is opening there.

Ironically, one of the newest casinos in the former arch enemy of the United States is called the New York . Its centrepiece is a giant revolving Statue of Liberty.

But, unlike South Africa , gambling is a veritable Wild West, out of control and dominated by organised crime, reports the BBC.

Mr Michael Bircher, the British owner of the New York casino as well as the most successful chain of casinos in Moscow , said he battled criminal elements as he tried to enter the industry in Russia in 1992.

'You couldn't set up any business at all in Russia at that time without protection, and bearing in mind there was no real structure, it was the beginning of a new country,' he told the BBC.

'It was a very unregulated, disorganised, crazy time. Everywhere has its legislation, and in Russia there was no legislation, zero. If you wanted to open a casino, you just opened a casino. There was no control.'

Mr Bircher's casinos now employ more than 5,000 people and make more than US$300 million (S$508 million) a year. The industry as a whole is worth US$5 billion in Russia , but there is almost no regulation.

That, and its association with crime, have kept some international gaming companies away from Russia .

Mr Marc Falcone, a Wall Street investment analyst for Deutsche Bank, told the BBC: 'In Russia even if they (investors) were there, it is very difficult for them to participate without having a better controlled market environment.

'The market really needs to increase its regulation before anybody will get comfortable doing business there on a day-to-day basis.'

But there are signs that the Russians are getting the message - public opinion has turned against the availability of slot machines almost everywhere.

Moscow has drafted what could mark the beginnings of regulation, said Ms Danila Galperovich, who reports on Russian politics for the BBC World Service.

She said the government of the St Petersburg region had decided to increase the tax for slot machines by two-and-a-half times and decrease taxes on casinos and gambling tables by 30 per cent.

'It shows that Russian authorities are trying to control a rather uncontrolled area in the gambling business, but they don't try to threaten the control of the gambling business in general,' she said.