The legalisation of electronic gaming machines and casinos is now on the cards - but when and how will the new controls take effect,? asks Paul Cullen
IRELAND STANDS ON the threshold of a massive liberalisation in gambling, to include the legalisation of casinos, increased maximum stakes and payouts, and the widespread availability of electronic gaming machines.
At the centre of the liberalisation is a proposal to place gaming machines known as Fixed Odds Betting Terminals (FOBTs) in betting shops.
A cross-party committee to agree the detail of these changes is expected to be up and running before the end of the year, but without the involvement of the Labour party, which objects to any move to place FOBTs in bookies premises.
Latest indications are that the committee will proceed without Labour, and is likely to produce detailed proposals by the end of next year. It will then be up to Minister for Justice Dermot Ahern to decide if he will proceed with legislation. Up to now politicians have run a mile from the issue because of massive public opposition to liberalisation of gambling.
However at a time of plummeting Exchequer revenues, the industry is dangling the carrot of new income for the Government in the form of gambling taxes as a payback for updating the law.
Earlier this month, the casino sector published a report which claimed that land-based and online casino gaming could create 13,000 new jobs and deliver annual returns to the Exchequer of €280 million by 2020. Traditional bookmakers say they could raise over €20 million a year for the Exchequer if allowed to place FOBTs in their premises.
No one has calculated the social cost of liberalising gambling, or the social cost of our existing gambling habit in the form of addiction, financial misery, money laundering and other forms of crime.
Gambling is variously seen as the next big lure for overseas investors wishing to create a hub for their global activities, the saviour of a becalmed tourism industry and the means of making up current shortfall in funding for horseracing and dog racing.
BIG OVERSEAS INVESTORS are watching the Irish market closely to see which way the wind will blow. Last week a two-day conference on gambling held in Dublin attracted UK-based lawyers representing some of the main players in gambling globally, as well as Andrew Tottenham, European MD of Harrah's. That mightn't be a name you've heard of before, but Harrah's is the world's largest casino operator, active on four continents. It employs 100,000 staff, has a turnover of $10 billion (€7.57 billion) and its most famous casino is Caesar's Palace in Las Vegas.
Tottenham explained that Harrah's doesn't go into jurisdictions where casinos are illegal, but he left no-one in doubt that the company would be extremely interested in investing here were the law to change.
Casinos are illegal in the Republic, but up to 50 private members' clubs have sprung up offering casino-type games. In the absence of regulation, the clubs vary in their degree of compliance with the law; some serve alcohol and some don't. It's a grey area of the law, likely to be tested soon when a recent Garda raid on a club in Clonmel comes before the courts.
There appears to be broad agreement on the legalisation of casinos; this route was favoured in the report of the Government's Casino Review Group published earlier this year. Even Labour says it is in favour of legislation to "strictly regulate" the operation of casinos. However, as former minister and the owner of Celtic Bookmakers, Ivan Yates, reminded those at the conference, politicians failed in the past to change the law. "That nettle has such a sting in it, politicians don't want to grasp it."
In contrast, there is little agreement on the issue of FOBTs, described by Labour's justice spokesman as "the crack cocaine" of gambling. FOBTs are electronic gaming machines characterised by high-play frequencies, rapid payout interval and lots of movement and bright lights.
Rabbitte cites UK research which found that one out of every nine gamblers who used the terminals develop gambling problems, while Yates puts the figure at less than 0.5 per cent of the general population. We think of poker tables and roulette wheels as being characteristic of casinos but 80 per cent of revenues tend to come from electronic gaming machines.
The Irish Bookmakers' Association, which represents most betting shops in the State, wants to be able to install two machines in each shop. The recent Budget saw the tax on betting doubled to 2 per cent, something that is likely to encourage bookmakers to lobby even harder for FOBTs and the revenue stream they promise to deliver.
Irish legislators have yet to grapple with the phenomenon of online gaming. The growth of online betting, said to be incapable of regulation, is often cited as a reason for keeping local betting taxes low. However, the recent conference heard from several overseas experts who said the sector was, in fact, easy enough to regulate.
OVERALL, CHANGES TO gambling laws are as likely to redistribute revenues between different sectors as create some magical new pot at the end of the legal rainbow. New entrants to the casino market will probably wipe out existing operators; legal casinos will draw revenue away from horse and dog racing; and FOBTs on the high street will most likely destroy existing amusement arcades.
The traditional sectors know this. Adrian Neilan, chief executive of the Irish Greyhound Board, predicted the legalisation of casinos would "fundamentally affect" dog racing. Racetracks should be able to apply for casino licences but if unsuccessful Neilan said they should get a cut of the casinos' revenue to compensate for lost revenues.
With all this squabbling between sectors, it's no wonder the politicians are treading warily around the issue - no Government minister spoke at the gambling conference.
