Greece’s casino market experienced a significant drop in the final quarter of 2019 owing to new smoking laws, while Hard Rock International’s CEO clarifies why he thinks they were deliberately disqualified for the Hellinikon integrated resort casino.
According to official figures from Greece’s Hellenic Gaming Commission (HGC), in the final three months of 2019, the land-based casino market generated revenue of €54.5m, a decrease of 17.2% from the same period in 2018. The speed of decline enhanced each month, from -2.6% in October to -19.3% in November and -27.7% in December.
The reason is the country’s new regulations on smoking in public indoor areas, which were imposed on October 16th. Since 2009, similar rules have been on the books; however, enforcement only became possible after the new government — led by a forceful anti-smoking advocate — took control.
Importantly, the new rules disregard the exemption for large entertainment venues which had put in a lot of effort to erect dedicated smoking areas. Now smokers are sent off to areas off the gaming floor where there are two open sides at least but Greek casinos aren’t permitted to put gaming options in these outdoor spaces unlike casinos in some US states.
Among the countries in the European Union, Greece has the highest smoking rate and research in other markets have clearly revealed a pattern of declining casino revenue when smokers couldn’t smoke at their slots or gaming table. So most of the Greek casino operators who are struggling financially already, are up for a rough ride in 2020.
HARD ROCK INT’L CEO EXPLAINS
Meanwhile, Hard Rock International (HRI) is preparing for a fight over the company’s ineligibility from the tender for the sole casino license at the €8b Hellinikon integrated resort project. Last month the HGC informed HRI and its competing bidder Mohegan Gaming & Entertainment(MGE) of its decision, which caused HRI to submit a formal objection last week.
As reported by calvinayre.com, HRI CEO Jim Allen in an interview with Global Gaming Business, talked about the HGC’s decision in detail, including the claim that HRI didn’t have the financial viability for such a big project. Allen said that HRI had “the strongest financial balance sheet in the industry,” an opinion HRI supported with a “highly confident letter” from Bank of America “supporting our ability to finance this project.”
One of the supposed issues with HRI’s bid included a bank guarantee, and Allen informed the National Bank of Greece issued the guarantee “with a date that was four days short of the requirement.” Allen said the HGC was “inconsistent” in specifying the requirements of the bank guarantee dates but that HRI asked the bank to extend their guarantee and HRI had notified the HGC of this fact, in vain.
Allen openly expresses his view that the tender “was not fair right from the start” and he accused MGE’s Greek construction partner GEK Terna and its law firm KLC, which “is the same law firm advising” the Committee and the HGC about HRI’s disqualification. “They claim there is no conflict. Come on.”
Allen added that GEK Terna’s application did not disclose its “participation in a price-fixing cartel” while MGE’s paperwork didn’t mention that its Pennsylvania casino Mohegan Sun Pocono has been the subject of many regulatory penalties, an oversight which Allen said should have caused MGE’s “automatic disqualification.”
Allen criticized certain Greek government ministers who even before the appeal was filed, supposedly claimed that HRI’s appeal “won’t matter.” “If you’ve already made up your mind that you’re not going to listen to any of our issues before you’ve even read them, then how is that a fair process?”
The timeframe for Greek officials to consider HRI’s appeal is a month but the government has openly stated that it wants the Hellinikon project to get started as soon as possible to ensure the first cash payments from the chief developer goes into the public funds.