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Developing new Casinos by Chris Moore

Recollections – Developing New Casinos by Chris Moore

When I began my casino career in 1974, most of the casinos in London were owned by individuals. One or two owners had slightly disreputable backgrounds and a few were actually ex-croupiers. The casino business has changed since then, becoming much more regulated and far more corporate. At the same time it has become slightly less vibrant and a little less stimulating. That is of course only an opinion, many accountant-types would argue that the industry has improved beyond recognition with no core damage whatever. What seems undeniable is that the casino industry has a dynamic future, as it continues to adapt and expand around the globe.

I spent the first fifteen years of my career travelling the world, working in various casinos, enjoying an unbridled lifestyle. In the late eighties I moved somewhat reluctantly into the casino consultancy and development business. For the next twenty years I travelled even more extensively as I consulted on, reviewed, or developed casino projects in 40 different countries. My new career path took me to places that I would not have otherwise visited. I opened casinos in countries that I would never have considered working in. I met and negotiated with Government Ministers, Corporate Executives, Indian Chiefs, Billionaires and all kinds of Would-Be Casino Owners.

I made numerous mistakes in my new job, but I also learned some very important lessons. I grew to understand that the basics of casino development where fairly consistent wherever you ventured. The three basic tick-boxes were to establish a legal foundation, create an entirely viable business and to ensure a sustainable, long-term future. One very important litmus test for any new casino project, was its location, both when it opened and when the competition inevitably arrived and the market matured. Over the years I have come to learn that many investors, with no experience of the casino industry, presume that it is a license to print money. Anyone in the casino development business knows that this is not the case. They understand that there is a myriad of factors that need to come together to make any new project a potential long-term success.

It is an irritating fact that the casino industry is still viewed in a negative light by much of the outside world. The corporate and regulatory changes have certainly lessened the attached stigma, but casinos still rank behind the banking and insurance business and only just in front of the new loan-shark industry. I remember sitting next to the CEO of a big corporate insurance company at a dinner party in London. When I told him what I did for a living he commented, in an arrogant stage whisper, on how disreputable he thought the casino industry actually was. As the table fell silent, I responded, in the same stage whisper, that our businesses were actually very similar. The only major difference between insurance companies and casinos was that casinos offered much better odds and always paid out to their customers.

The first casino development project that I undertook was in Poland. It was not long after the wall had come down and the rules were being hurriedly rewritten. I was in sole charge of taking the project from gaining its license to opening it’s doors. The owners were an unforgettable pair, one was Israeli the other Polish. The Israeli was an audacious character that had just launched his own version of the Miss World contest. The Pole was a volatile alcoholic that carried a licensed 347 magnum handgun. The opening night was a huge success, with the casino full of eager customers and Miss World contestants. When it closed and the count was complete I went to my hotel room and slept for the first time in seventy two hours. I was awoken in the morning by the Israeli who had just arrived to find that his Polish partner had removed the entire casino cash float. For the next few years, Eastern Europe proved to be a very steep and slippery learning curve.

I moved on to spend five years developing casinos for a wealthy, venturesome Swiss corporation as they grew from Europe into the US.  I spent the next five years doing the same job for an American corporation as they expanded from the US into Europe. I spent over twenty years reviewing casino projects in new and existing jurisdictions. I approached every opportunity, wherever it was, with the same raw enthusiasm and open minded attitude. As a casino developer you know that the law of averages tells you that less than five percent of the projects that you take on, ever arrive at the green-light stage. To be successful you need to maintain an enthusiasm and belief that will carry you through every door. It is a bit like kissing frogs, you never know which one is going to turn into a prince, so you have to keep kissing them.

Throughout my development career I would always be conducting a number of explorations into new jurisdictions that I believed had the potential to emerge in the future. I remember sitting with the Minister of the Interior in his home in Goa, long before gaming was approved in the Indian Province. He was a pleasant, intelligent man with a very refreshing outlook on politics. He had no knowledge of casinos whatever, it felt like I was explaining how a nuclear reactor worked to a tribal elder. Fortunately he grasped the concept very quickly and finally asked what we would do if given a free hand to open a casino in Goa. I told him that it would probably be a tasteful, medium sized casino exclusively targeting the wealthy players from Bombay and Delhi. I talked about creating local employment and even paying realistic taxes. He took it all in as he drank tea and chain-smoked. He then told me that he liked the idea of creating more employment and income for Goa and he truly believed that we would create the perfect casino. However he knew from bitter experience what the connection with India’s major cities would result in. He believed that the casino would attract loan-sharks, protectionists, prostitutes and thieves from the big cities. He very politely came to the conclusion that Goa would be better off without a casino. Although disappointed, I had to concede that he had probably made the right decision at the right time.

Expanding casinos into new jurisdictions or established markets remains a huge industry challenge. Staying ahead of the curve becomes ever more difficult as more companies crowd the market.  New jurisdictions often take the approach of creating a minimum investment package which results in the contender’s short-list being restricted to the same huge corporations. Medium and small casino businesses, with the desire to expand, are often forced to focus on smaller markets. In my experience, if you are arriving in a new casino jurisdiction that has just published its draft gaming laws, you are about two years too late. Doing the research and ground work in areas that may become regulated in the future should be part of any casino company’s development strategy. I always worked with a short list of places that I spent time trying to nurture. Being in at the beginning does not always result in success, but it does give you the opportunity to develop contacts and relationships ahead of your competitor’s arrival.

I often wonder why more iconic casino brands have not emerged over the years. Casino development is ultimately about selling yourself and your company. If you represent yet another generic casino business you will often just merge into the background. In the right circumstances, a unique selling point or an iconic casino brand can take you to the front of the queue in a competitive tender situation. Brands like Hard Rock and Wynn can create an interest that a generic casino brand cannot. It is important to remember that licensing decisions are so often made by bureaucrats, politicians or committees, so standing out from the crowd can be a very effective marketing tool.  Casino brands can still be created, but ironically it may be the increase in regulatory control and corporate governance that has restricted their emergence. Disappointingly most casino companies seem committed to adhering to the industry norms and staying below the radar, rather than creating their own unique marketable brand.

Casino development projects do not always go to plan, they can often require thinking outside the box. In 1990 we were opening a casino in Turkey in a new five star hotel on behalf of a charming Cypriot billionaire. A team of lawyers worked on securing the casino license, as I undertook the opening of the casino. The owner was so confident that his lawyers would deliver, that he had already scheduled the opening night. As the dignitaries and celebrities arrived the day before the opening, we became increasingly nervous that the license still had not been granted. Then, the morning of the opening, we received a call from the Ministry informing us that it had. A few hours before the opening we received a second call informing us that we could not open the casino until we had physical possession of our license, which was sitting on a desk six hours drive away. I headed straight into town and ran around like a maniac buying all kinds of goods, from handheld TV’s and video cameras to cases of vintage champagne, glitzy watches and stunning fake jewelry in velvet display boxes. When I got back to the hotel the head cashier, who had once been a window dresser at Harrods, grabbed all the trinkets and started working her magic. Within the hour the casino doors burst open and the guests flooded in, accompanied by TV camera crews and the owner in a white dinner jacket with a huge smile on his face. As they all flooded towards the gaming tables, we made the announcement that the opening night was to be a charity event. Everyone would be given free chips and at the end of the night those with the most chips would have their choice of the prizes on offer. They all looked over at the impressive display and started clapping. Champagne and cocktails flowed all night and the event became a roaring success. In the small hours the owner, who had learned why we had not opened as planed, put his arm round me and handed me a large personal cheque made out to a charity.