Casinos Austria is at the heart of a growing corruption scandal which extends to the upper reaches of the country’s political powers.

Austria’s parliament launched proceedings to form a committee to investigate charges of corruption in what’s become known as the Casino Affair. The affair centers on accusations that government officials plotted with gambling operator Novomatic Group to open up Austria’s online gambling market in exchange for political insiders receiving prestigious executive posts.

Novomatic holds a 17% share in Casinos Austria, while the government owns 33% and the Czech Republic’s Sazka Group holds the biggest slice at 38%. Currently Casinos Austria’s Win2Day brand is the only operator legalized to take online bets from Austrian punters.

This spring the scandal began when Casinos Austria named Peter Sidlo, a key supporter of Freedom Party of Austria (FPÖ) leader and Austria’s ex vice-chancellor Heinz-Christian Strache, as its new chief financial officer. Sidlo was appointed with the consent of both the government’s representatives on Casinos Austria’s board and Novomatic’s directors.

As mentioned on the website, Sidlo’s appointment got immediate criticism, as he had no apparent qualifications for such a high position. His appointment to Casinos Austria’s board, together with another politically-connected person, also made Casinos Austria ditch other board members whose terms lasted until 2020, forcing the company to spend €7.5m in compensation payments.

The accusations are that Novomatic’s support for Sidlo’s appointment would be compensated with the government opening up Austria’s online gambling market to other operators, such as Novomatic, which operates online via its Malta-licensed Beatya Online Entertainment subsidiary’s StarVegas brand.

Novomatic was also reported to be looking for the restoration of its land-based slots licenses which were cancelled in 2015 by Vienna’s municipal authorities. Novomatic collaborated with Vienna’s Chamber of Commerce to push for the right to resume its operations in the capital in May.

CEO of Sazka, Robert Chvatal told local media that his company “felt a great deal of pressure to vote for a person who clearly and undoubtedly has inadequate work experience for a CFO position in such a big gambling company. Now we know why…”
German media outlet Der Spiegel published sting videos in May secretly taped in July 2017 which revealed the FPÖ’s Strache discussing how to arrange illegal campaign contributions from a supposed Russian billionaire. In the video Novomatic’s name was mentioned as an FPÖ contributor; however, Strache admitted that the company contributes to all Austrian parties.

Austrian authorities raided the homes of senior FPÖ and Novomatic officials in August, confiscating phones and files. Subsequently Sidlo took a leave of absence from Casinos Austria. All the politicians concerned along with Novomatic’s owner Johann Graff and CEO Harald Neumann have strongly denied any offence.

Other gaming operators aren’t about to let a good crisis pass them by. The Austrian Association for Betting and Gambling (ÖVWG), whose members include online stalwarts like Kindred Group, Mr Green and Bet-at-home, released a statement saying the scandal proved that “Austria urgently needs to rethink its gambling monopoly.”