Odds don’t look good for Gozitan casino

A government concession for a casino in Gozo may well whet the appetite for prospective investors and hoteliers looking for some added value for the sister island. But the men who run Malta's most successful casinos offer a word of caution: it's not an easy game.

Prime Minister Joseph Muscat has announced that Gozo will join Malta as a site for a fifth casino licence, but the feasibility of a new operation may be in question, going by observations from the directors of the Dragonara and Oracle casinos.

In Vittoriosa, where the licence for the Casinò di Venezia has been suspended after running into liquidity problems, a new operator is being sought to take over Vittoriosa Gaming Ltd's operation. It's bleak enough to suggest that the casino industry needs to be assessed, Tumas Gaming chief executive Yorgen Fenech points out.

"I don't think the presence of a casino in itself generates economic growth or activity. It serves to complement an already-thriving area, not actually create one," says Fenech, whose casino licence is split over two sites, the Oracle in Qawra and the Portomaso casino in St Julian's.

"We have no objection to any possible expansion of the industry, but one needs to acutely analyse and monitor its state to ensure the sustainability of current operations, tax revenues and most of all jobs within the industry."

Gaming in Malta has always been a highly competitive industry in a small market. The last concession, a renewal of the 10-year licence for the Dragonara Casino, was hotly contested by Tumas Gaming and the successful bidder, Pinnacle Gaming Group. Pinnacle, owners of the Fairplay franchise, had seen their string of gaming parlours shut down in 2009 in a government crackdown over their lax rules of operation. Their shuttering shifted at least 30% of business back into casinos.

Pinnacle's CEO Johann Schembri today says the nature of the casino industry in Malta makes it all the more daunting for a Gozitan operation to thrive. "The quality of the current casinos in Malta - the Dragonara, Portomaso and Oracle - is of a very high standard, and millions have been invested over the last three years on the improvement of the product, mainly on high-end gaming equipment and systems. This makes it more challenging, both for another casino in Malta as well as Gozo to compete with the current casinos."

Fenech's own suggestion that the casino gaming market is already somewhat saturated is also reflected in his observation of another concession, the one for Midi plc. The developers of the Tigné Point apartment complex and Manoel Island project across the Sliema Creek already have a concession for the operation of the casino, but even here, Fenech suggests that its raison d'etre is simply to complement the Manoel Island development.

"I don't believe the casino itself will attract economic growth for the area but instead serve as a facility to make the offer of the Manoel Island project a whole lot more attractive and complete in facilities and services to prospective clients and investors."

Schembri says that both local and international casino operators have looked at the Gozitan option since it was first mooted in 2006, but he claims that no one was actually interested in going ahead with the venture. Even Fenech says Tumas Gaming never really looked into this opportunity. "The daily operation of a gaming establishment there would be tough to sustain. Unless something is done nationally to increase foreign visitors to the island, it would be hard to base an operation on tourists and junkets alike," he says, echoing Schembri's doubts on the feasibility of a Gozitan casino.

In fact, Schembri points out the inherent problems Gozo faces, starting with the island's 'double insularity' conundrum. "As a rule of thumb, a junket player travels a maximum of three hours from home to arrive at a casino," he says, which is why Italian gamers from the south tend to come to Malta instead of travelling to the north, where Italy's five casinos are located. Would they skip the St George's Bay area with its five-star hotels and Paceville's entertainment district for the Gozitan valleys?

"Together with the fact that the general entertainment offering on Gozo is very limited, this makes it much more difficult to attract junket groups who do not travel only to gamble but also to have a good time."

Factoring in the small population of Gozo, which shrinks the local client base, and the expense of importing specialised staff like croupiers and dealers, it looks like the current tourism levels in Gozo are unable to serve a casino's running expenses.

"The misconception is that junkets are easy to find," Tumas Gaming's Fenech says. Citing the Italian market as an example, Fenech says that junket operations "have become very tough" to attract, which is why he thinks that the casino industry should be cared for well before expanding the industry.

"The Gaming Act should be revised to reflect modern casino operations. Failing to look at the current state of the industry could jeopardise its sustainability, tax revenues and jobs."