Ireland’s Justice Minister Brian Lenihan has recommended new legislation be passed that would legalize casinos in the EU nation for the first time and create a gaming commission to license and regulate them.

The ministry was expected last month to present a bill for debate in the Dail, the lower house of the parliament, reflecting the views of a government working group that has been studying the casino question for months.

The legislation would meet some of the desires of the country’s substantial gambling industry, but not all of them. For example, its provisions are expected to include an extension of casino licenses to racecourses, which is not endorsed by everyone with a stake. It may differ as well in other key respects from a legislative model offered by the Gaming and Leisure Association of Ireland — an influential trade group representing the dozens of casinos that operate ostensibly as private members clubs within a loophole in existing law — although government and industry leaders agree on the need to balance commercial interests with a recognition that social responsibility is important in a country where casinos have long been illegal, at least technically, and the history has been one of moral and political hostility.

The GLAI has proposed that regulation be vested in existing ministries with no separate gaming commission. There would be no statutory limit on the number of casinos. Instead, authorities would consider market conditions in issuing licenses and avoid residential areas in favor of locations that would be attractive to tourist gamblers.

Among the association’s other recommendations:

• Casinos would be limited in size to 15,000 square feet, with less than half that space for gaming.

• They would be freestanding, unattached to hotels and without amenities.

• Betting limits and hours of play would be left up to each property. But the association wants casinos to emphasize social responsibility by limiting the number of gaming machines to three per table game.

• Licenses would be granted for a one-year probationary period after which they would be perpetual. All personnel would be licensed following receipt of a certificate of personal fitness from the Garda Siochana, the national police force. Providers of equipment for gaming also would have to qualify for licensing.

• The association does not want the government to become financially dependent upon casino tax revenues so it has proposed a rate (in addition to normal business taxes) of only 1 percent of revenues, the same rate paid by the country’s betting shops. It has recommended that the Value Added Tax not be applied to casino wagering. (There is some controversy currently over whether it does or not.)

• European Union money laundering rules would be followed (another strong argument for legislation, as those rules have no effect currently on casino club activity in Ireland).

The association also has developed a Code of Practice, which it has incorporated into its proposed legislation. It calls for financial transparency, video surveillance and recording of all names and accounts of players, and a ban on credit, with players permitted to use only a single credit card to obtain funds to gamble. Casinos would be required to publicize the dangers of gambling addiction. They would maintain a registry of voluntary exclusions and would intervene when players show signs of problem behavior.

Web gambling operations are not permitted in Ireland, but citizens may legally access and bet on foreign-based sites. The association believes the legislation should bring Internet gambling into the mainstream so that Irish players won’t have to patronize untaxed and unregulated offshore providers. However, not all GLAI supporters subscribe to this view. J. J. Woods, operator of one of the largest and most popular of the private clubs, Silks, located in the heart of Dublin, has stated: “I think Internet gambling is dangerous because if you’ve got isolated gambling, it’s secretive gambling, and people can do it in their back office or even at work. It’s just too easy. I think that’s wrong. If people want to gamble, they should leave the family home and go out among other people.”

The ‘gray edge’ of the law

Ireland is one of only two countries in the EU, the other being Cyprus, that does not have legal, regulated casinos.

The applicable law, the Gaming and Lotteries Act of 1956, states: “No person shall promote or assist in promoting or provide facilities for any kind of gaming: a) in which by reason of the nature of the game the chances of all the players, including the banker, are not equal; or b) in which any portion of the stakes is retained by the promoter or is retained by the banker otherwise than as winnings on the result of play.”

There were carve-outs for private lotteries and bingo and small-stakes machine gaming in amusement centers. But the wording seemed to be definitive against the legalization of casinos, although this was not totally clear. There were a few loopholes: there could be games with “equal” chances, for example; moreover, games could be conducted, according to one provision, if minor “seat” charges were assessed to players and if the operator “derives no personal profit from the promotion of the game.”

For decades, the spirit of the law was followed closely with only a few card clubs operating on its margins. (Operators claimed that games were “among friends”.) Some amusement centers offered slots with larger-than-permitted prizes. But then the law on prize limits was never altered to fully account for changes in Irish currency from pounds to a decimal system to euros.

The first full-scale attack on the law came in the 1990s with an effort to establish a large casino as the centerpiece of a tourism-convention complex in Dublin’s Phoenix Park. The project collapsed amid allegations of official corruption and conflicts of interest, but it ignited a discussion at the national level of gambling industry reform.

In 2000, a “Review of the Gaming and Lotteries Acts of 1956-1986” was issued by the Department of Justice, Equality and Law Reform. The report urged that casinos remain illegal. The report was considered to be definitive. Interestingly, though, it was soon followed by the opening of several card clubs and amusement machine centers that were clearly operating on the gray edge of the law. Serious entrepreneurs soon appeared who sought to exploit the law’s loopholes by opening “real” casinos — that is, casino “clubs” with high betting limits but still purporting to operate within the restrictions identified above.

In October 2003, J.J. Woods launched Silks at Earls Fort Terrace in Dublin. Themed around horseracing and the colors of the famous racing stables of Ireland, Silks is located among foreign embassies and  Georgian mansions just across from the up-market Conrad Hotel. The club caters to “high-ranking figures from the world of business, media and the horseracing fraternity”. Its opening was attended by celebrities, models and a former Miss World. The casino offers blackjack, baccarat, roulette, Three Card Poker and stud poker. It serves food and complimentary beverages and features large plasma screens for sporting events. A shuttle service takes players to and from major hotels throughout Dublin.

The same year, 18 Dublin businessmen sought to establish a “suitable” place where interested businessmen could play poker. The result was Fitzwilliam Casino Club a few blocks away from Silks at Clifton Hall, a structure that used to be a church and convent.

Marketing Manager David Hickson hinted that statesman Eamon de Valera just might be rolling in his grave, as the very strict (and anti-gambling) Catholic leader used to come to the building to say morning prayers before going to the Dail to lead  debates.

Fitzwilliam has no slot machines but instead offers tables for several types of poker — Texas Hold ‘Em, Omaha and Three Card Poker — mahjong, kalooki, blackjack, punto banco and roulette. At full capacity there are 21 tables operating on two floors. Each night there is a poker tournament.

Hickson said the club abides by the 1956 law by requiring strict membership rules, photo identifications and background checks. Members must be 21. A subsidiary called Golden Horseshoe, owned by the same 18 men, operates the games. At the non-poker games one player volunteers to be the “bank,” assuring that even odds are given. The casino enforces rules pertaining to money laundering and follows the GLAI’s Code of Practice. The casino does not give credit, but it allows the use of debit and credit cards limited to €5,000 a day. Food and drink are complimentary for players and are served in areas separate from the gaming floor.

These operations were too high-profile for government to ignore, according to both governmental and private sources close to the casino scene. In 2003, Minister of Justice Michael McDowell suggested that these and other clubs in Dublin were indeed illegal. However, because of the vagueness of the 1956 law it was decided that criminal convictions would be difficult to win, and McDowell indicated he would not seek them pending changes in the law. His position was an invitation for a proliferation in the numbers of clubs, which also coincided with the boom in the popularity of poker.

Soon a gray-area casino appeared that would play an even more substantial role in the Irish gaming scene.

The threat beaten back

In October 2005, the €5.5 million Sporting Emporium was opened with fanfare by billionaire financier Dermot Desmond, former part-owner of Manchester United football club and London City Airport and reputedly the third-richest man in Ireland.

The three-story, 12,000-square-foot Sporting Emporium is located in Dublin’s Grafton Street, a major thoroughfare near Trinity College and Stephens Green, and is designed with a “golf” theme, featuring displays of 18th hole flags signed by winners of major tournaments such as the Masters and the British Open. Its debut was attended by movie stars, the ubiquitous Miss World and other celebrities.

The ground floor contains a betting shop of a more upscale variety (most of the betting shops of Ireland are clean but rather down-market) and managed separately by Chronicle Sports. Two upper floors feature 30 gaming tables — six roulette, eight blackjack, one each for punto banco and pai gow poker and 14 for poker. The tables have limits but these may be adjusted for players. Poker tournaments are ongoing with 12 each evening. There are no slot machines. A café serves liquor but not in gaming areas. Players must be members, must be at least 21 and must meet a modest dress code (no hooded sweatshirts, no “flip-flops”). They must register and submit to a biometric fingerprint scan each time they enter. Security cameras are linked directly to the local police. The profits are shared with charities, a prime charity being a fund for injured jockeys. Many jockeys are members. The club receives about 150 players each weeknight and 400 each night on weekends. In all, it boasts more than 33,000 members.

The Sporting Emporium advertises in major media, and its high profile drew the attention of McDowell. In March 2006, the minister announced a crackdown. “All commercial clubs where unlawful gaming takes place are illegal in Ireland,” he said. “A number of places are now posing as casinos under the rubric of private members clubs, and it’s my intention to make sure the law is fully enforced against all of them.”

There are many who agree, among them barrister Constance Cassidy, who has suggested that the clubs do appear to operate for profit rather than the members’ benefit. “The control of the clubs is not vested in the members, as I understand it, nor are the committees elected on an annual basis; therefore they are not private members clubs under [the law],” she said. “If gaming, as defined by the 1956 Act, took place on such premises, prosecutions can take place, and the Garda are entitled to prosecute.”

When the issue was raised in the Dail, McDowell made his position known:

“[Current] policy as clearly expressed in those [1956] acts goes for the prohibition of casino-type operations in this state and against the notion that casinos should be permitted and regulated. I agree with that policy. Casinos, generally speaking, are not desirable. It is the general view of the great majority of people in this society that they are not desirable.”

He went on, “There are those who would argue that we should recognise that casinos are here to stay, and instead of continuing to outlaw them we should permit them to operate and set up systems for regulating their operation or perhaps extracting revenue from them. That is a course taken in many jurisdictions, but I do not share that view. We do not need this. Innocent people are sucked into such activity, and it is not desirable that they should be.”

McDowell’s views represented a serious threat that could not be overlooked by the casinos. They responded with the formation of the GLAI and exerted pressure upon the government to repudiate the Justice Minister’s stand.

There were at that point more than 40 clubs around Ireland, and they had political muscle. The Sporting Empor-ium, for instance, clearly was built with the idea that it would be permanent. It is doubtful that Desmond, a major player on the political scene and plugged in to high government circles, wishes to wallow in gray territory for any long period of time. It’s more likely he would prefer to quickly expand his casino and reach out to wider markets with legalization, which is exactly what the GLAI has proposed.

There is another influential camp represented by Ireland’s betting shops, which emerged as places for social and financial activity under laws dating back to 1926 allowing off-track betting. Currently, there are an estimated 1,100 licensed venues in the country, and they are growing in numbers. Many are owned by major companies. In the past, their voices were in the negative regarding casinos. Today is different. The bigger companies such as Paddy Power, Chronicle and UK-based Ladbrokes are not opposed to casinos. Indeed, they want to have casinos legalized so that they may participate by owning and operating them.

In the end, McDowell backed down and deferred judgment to the working group, which was authorized to conduct a study and issue a report.

In 2007, McDowell was defeated in his bid for re-election to the Dail.

A nation in flux, prosperous, less bound by tradition

The stage is set, the atmosphere for legalization is right, and proposals for casinos are being made. They will be given serious consideration in 2008.

But is Ireland ready?

An assessment of this question might follow from a review of reasons why Ireland has rejected casinos in the past and how those reasons stand up now.

The ‘all-in’ spirit

There is an ample volume of suggestions — rightly or wrongly — that there is an “all-in” spirit that defines much of what is “Irish”. Mythical heroes such as Cuchulainn fought to the death, and then kept on fighting. Rebels took to the streets on Easter Week in 1916 with the odds and the British army stacked against them. And after they won their revolution, many couldn’t or wouldn’t stop. They fought a civil war.

Within the Irish spirit some might suggest that a burning desire to fight on remains. But a major change has occurred as well. Ireland was a land of isolation, politically, economically and ethnically, until very recently. Now the land has opened its doors to world trade and to immigration. The Irish can no longer tell themselves: “We have nothing to lose.” There is now much to lose.

And with that a political need by the country’s leaders to protect the Irish people from their own foibles is blended with a realization that growing numbers of the population are Eastern Europeans and Asians. The forces of paternalism are not as strong when directed toward citizens who seem more to be outsiders than one’s own.

Prosperity and immigration

Time and again it has been said, “The Irish do not have money, hence there are no casinos.” A government official offered that the laws against casino gambling were in place to “protect the poor.” Others say the same.

Ireland was engulfed in poverty for much of its history. But steps toward economic development took hold when Ireland joined the European Union in 1973 and international investment began to produce positive economic results.

In the 21st century the country has witnessed prosperity and with it, a new phenomenon: more immigrants coming to Ireland than people leaving. Professor Tom Graham of New York University’s Dublin Program has indicated that 300,000 Polish and 80,000 Chinese immigrants have come to Ireland in the past 10 years. According to Irish scholar and author David McWilliams, Ireland now has more immigrants per capita than “almost any other state in the Western World”.

With prosperity, the Irish are becoming heavy consumer spenders. Only in recent years have investors seen possibilities in cultivating gambling proclivities among the Irish by offering casino games.

Waning corruption

For most of their history the political life of the Irish people did not leave much time for things other than a spirit of nationalism. An obsession in the public mind with what it is to be “Irish” caused major political interests to neglect efficiency and honest administration. Localism, nepotism and outright corruption left a mark on the body politic. Officeholders were auctioneers, traders and bargain-makers whose purpose was to win elections and serve a variety of commercial interests.

In the 1990s, the misuse of office was revealed with national tribunals focusing upon several scandals. Deep down in their minds, leaders must have asked: Would this perceived atmosphere of corruption be exacerbated with the establishment of casinos?

But as prosperity replaced poverty, attention shifted, and citizens have come to expect leaders to deliver services worth the tax monies they give the government. Leaders are on notice that corrupt acts may result in exposure and ballot repudiations or more serious consequences.

Moreover, Irish participation in the European Union requires that political officials spend public funds responsibly. Grants from the EU are monitored and audited by persons beyond the control of Irish public officials. An evolution has occurred over the last 30 years, and casino gambling no longer poses a major threat to proper government.

Waning violence

In 1987, I visited the casino in San Sebastian, Spain, located in the Londres Hotel. The casino was empty except for a few machine players. The manager indicated that the casino was failing although it was the only casino in a region of more than 2 million people. It was in Basque country, and Basque separatists had initiated an active campaign of guerilla warfare rife with bombings, assassinations and kidnappings. People with wealth carefully hid their resources from public view less they become victims. If they had desires to participate in casino gambling, they ventured elsewhere. The local casino was to be avoided.

This model, unfortunately, has marked parallels with the Irish political milieu of the 20th century. But Ireland has entered a new era. Violence is waning with prosperity and with the influx of new ethnic groups. As mentioned above, now people have something to lose aside from their ethnic dignity. Moreover, the force of religion on peoples’ lives has abated, making internecine conflict less relevant. The peace negotiated in Northern Ireland in 1998 has taken hold.

It could be that a signal has been given out that casino gambling can exist without fear of surrounding violence either in the North or the South.

The competition factor

High on the list of reasons promoters use to win legalization of casino gambling is the cry that neighboring venues have casinos and are taking “our” money away from us. But Ireland was not driven to accept casinos because the republic had no casinos on its borders, and economic hardship precluded casual recreational travel to other lands that did. Mediterranean beaches filled with Germans and English have until recent years been devoid of a major Irish presence.

Moreover, the closest casinos, those in Scotland, Wales and provincial England, generally are small facilities that cater to local populations, and they project a “British” personality not welcoming for many Irish. These casinos have little appeal even for affluent Irish.

In the 21st century this situation has been altered. Two new factors are in play. First, Internet gambling has invaded Ireland as it has every other country of the globe. Second, the recent affluence has resulted in many more overseas trips for the Irish. These trips abroad are for all kinds of recreational purposes and are likely to include casino gambling forays. Appeals to “bring the gambling dollars home” now have a resonance they never had before.

Waning of religion

The Catholic Church has been a major force in Irish politics for centuries and has long been an influence dampening efforts to legalize

casinos. Church views were not openly challenged as political leaders of all major parties did its bidding unasked.

Things began to change as Ireland emerged from economic isolation in the 1970s and Europe and the world came knocking — and it was a secular world. Also, the numbers of clergy have been reduced considerably in recent decades. Attendance at weekly mass, which was once universal, has fallen to about half the population. The Church no longer has a direct presence in the daily activity of the people and so it is not as pervasive a political force as it was. Political leaders can debate casino legalization without fear of losing votes.

William N. Thompson is a professor in the Department of Public Administration of the University of Nevada, Las Vegas. He has taught and written extensively on politics, governmental policy and gaming and gaming regulation. He can be contacted at: wthompson@ccmail.nevada.edu.

Regulation’s tough road: Operators say it must be taken

By Simon Banks
Special to IGWB

In November 2006, when Ireland’s former Justice Minister Michael McDowell announced a crackdown on the country’s gray market casinos, he was responding to a report by the international Financial Action Task Force on money laundering, which identified the clubs as a “matter of concern” and noting that they were not included in the government’s anti-money laundering legislation.

McDowell was under pressure at the time because of other issues, and the perception was that the clubs/casinos were an easy target for him to demonstrate his law-and-order credentials. However, Finance Minister Brian Cowen had other ideas and was aware of events in the UK, where a reform of restrictive decades-old gambling regulations had resulted in a massive increase in tax revenues. Cowen announced a review of casino regulation and ordered the Ministry of Justice to set up a Casino Review Committee for that purpose.

The CRC was established in December 2006, but the following April, a general election was called for May, and any movement on the issue was suspended. That election saw McDowell, a Progressive Democrat, lose his seat in the Dail. He was succeeded in the new government by Fianna Fail’s Brian Lenihan. The CRC presented its report to Lenihan last June. He has been considering it ever since. In January of this year it was revealed that he was ready to present a bill to his cabinet colleagues in April with legislation possibly being put before the Dail in May or June.

In the interim, events have unfolded that have made the option of Lenihan doing nothing or very little untenable. Since the announcement of the CRC’s review, the number of casino/clubs has grown from around 20 to more than 50. Interest groups such as the Association of Irish Bookmakers have made submissions to the committee while anti-gambling groups have been calling for the regulation of slot machines.

Although nobody is sure what will or won’t be included in any legislation at this stage, it would seem that it will cover much more than originally intended.

Research by Merrion Landsbanki estimates that the total value of the Irish betting and gaming markets has increased from €521 million in 2002 to €924 million in 2006, placing it 10th in size in Europe. However, with a population of just over 4 million, the average loss per person in 2006 was €292, the third-highest in Europe behind only the UK and Sweden.

Even with the increase in casino clubs, the vast majority of Irish gamble through three main channels: the lottery, betting shops and slot machines. The lottery and attendant scratch cards have been around since 1987. In 2006, the Irish spent €679.1 million on tickets and received €362.1 million in prizes. The Irish have a strong tradition of gambling on sports, particularly horse and greyhound racing, and both enjoy substantial government support. Gross win for the retail betting industry was €362 million from stakes of around €3 billion.

Many established casinos are in favor of regulation.

“We have lobbied for regulation, and we think that the current minister for justice has a unique opportunity to regulate the entire sector,” said David Hickson, a manager of Dublin’s Fitzwilliam Card Club and director of the Gaming and Leisure Association of Ireland.

“This is about regulation, obviously, but it is also about consumer protection and public safety, and we would welcome that,” he said.

J.J. Woods of Atlantic Casino Consultants, operator of Silks, one of the capital’s largest and most popular clubs, has overseen the opening of four new casinos in the last two years, and he made a submission to the CRC which concluded: “It is relatively easy to obtain access to these clubs, and the public are often admitted as guests or else signed up as members on the spot when they arrive at the club. It is clear that, in the long term, Ireland cannot afford to allow this type of casino to continue to grow without any form of regulation, as eventually they will present opportunities for criminal involvement and money laundering. The majority of those involved in the industry do not want this and would therefore welcome sensible regulation of the market.”

Woods believes many of the clubs that have opened since the review was announced in late 2006 have done so in the hope of being granted licenses when they become available.

“If there are strict enough criteria, then a few will be disappointed, but at least it will give the new regulations some credibility,” he said. “The current ambiguous position is not sustainable and is deterring inward investment in the country.”

Added Hickson, “We’re the last of 27 countries in Europe to introduce regulation and are in danger of losing a great opportunity if we don’t do it soon.”



Simon Banks is a freelance writer based in London who specializes in covering the sports and gambling industries.