Switzerland’s Casino Renaissance

By William N. Thompson

In 2002, Switzerland began a new casino era. The Swiss turned their backs on nearly a century of history and established modern casinos.

The motivation to embark on a new course of action is the same motivation moving Detroit toward casino gambling, the same influencing policy makers in Illinois, Indiana, and New York. Swiss felt surrounded by casinos in other venues; they felt their citizens were exploited by “foreign” casinos.

Seven million Swiss were a prime casino market for Italy, France, Germany, and Austria. Italians have a casino at Campione di Italia, a village enclave encircled by the Swiss Canton of Ticino.  The French offer casino gambling at Divonne, Evian, and Annecy, all seeking patronage from Geneva. Germans have Casino Konstance, while Austrians have Bregenz going after players from northeast Switzerland. 

The Swiss have had casinos in the past—the distant past. In 1804, a wagering room was built within a café in Lugano¹. Prior to 1874, matters concerning gambling were subject to laws of the cantons (regional governments). However, only one full casino operated under the law. The casino, located in Saxon, in the Canton of Valais, and was given a 30 year concession in 1847. An unauthorized casino in Geneva was open between 1857 and 1864².

The Swiss Constitution of 1874, Article 35, banned casinos, although the term “casino” was not fully defined. A short time later, gaming halls with the game of “boule,” a nine number variation of roulette with house odds of 22 percent, were established. Other games also appeared, all operating outside of the law. Later the matter was elevated on the political agenda once again, and in 1922, the Swiss voters by a 55 to 45 percent margin decided that all such casinos were to be banned regardless of the games they played. All gaming halls did close, but not for long³.

Boule came back in 1927, as an exception that was granted if bets on single numbers did not exceed two Swiss Francs, and that the federal government received a tax of 25 percent on the profits (Today one U.S. dollar equals about 120 Swiss francs). In 1959, the betting stakes were raised to five Swiss Francs.  In 1977, slot machines with skill factors were permitted. In 1990, other slots were authorized and regulated by canton authorities. The machines became a matter of public concern as they proliferated widely in bars and restaurants. They were seen more and more to be a “social problem.” Their elimination became a secondary motivation for establishing major casinos⁴.

With a 72 percent majority vote, the Swiss amended Article 35, and gave the green light to regular casinos. The size of the vote margin notwithstanding, the referendum vote was not necessarily a rousing show of popular support for wide open gambling. The amendment included provisions banning all non-skill slot machines outside of casinos, a tax rate on casino profits that could be as high as 80 percent, and a requirement that casinos have an active program for controlling problem gambling⁵.

The notion of having full scale casinos in their midst, as opposed to just having them on their borders, was a new idea. It was not a matter to be taken lightly⁶. It was not until four years later, in 1997, that a draft of a casino law was compiled by the national parliament. This law was subject to many revisions before voters’ consideration for ratification in 2000. 

After another positive vote, applications for licenses were received and initial recommendations were made by a new seven-member federal gaming commission. The federal executive council granted licenses in 2001. In 2002, the first casinos opened⁷.

The new rules permit two types of casinos: “A casinos and B casinos.” Several guidelines are used to measure applicants’ qualifications. Among these are: experience in casino gambling, location of proposed facilities, and the contents of proposed plans to deal with problem gambling.

“A” casinos are allowed to have an unlimited number of tables and slot machines. The gaming board believes that each “A” casino should have a “catchment” area of at least one million residents. The board (while advisory on licensing is now the actual gaming control board) is a part time group that consists of three attorneys, the director of Swiss tourism, a CPA, a news editor, and a director of the Justice and Finance Department. However, as some casinos served border areas this was not a “hard and fast” rule. The winning applicants for seven  “A” casinos placed their facilities in Lugano (just 30 km north of the Italian border), Basel (on the border of both France and Germany), Baden (near the largest Swiss city of Zurich), the major central cities of Bern (the capital), and Lucerne, as well as in the tourist city of Montreaux, and the northeastern city of St. Gallen⁸.

The “A” casinos pay a basic tax rate of 40 percent of their winnings, but this rate increases 1/2 percent for each one million Swiss francs in annual winnings above 20 million Swiss francs (Sfr). In 2005, the effective tax rate for the seven casinos was 52.1 percent, as revenues ranged from about 43 million Sfr (for Lucerne and St. Gallen) to 102 million Sfr for Lugano. The Lugano casino paid the full 80 percent tax rate on its last 22 million Sfr in winnings⁹.

In 2005, the “A” casinos averaged 282 slots and 19 tables each. The largest, Lugano, had 32 tables and 360 slot machines. The “A” casinos are also allowed to have as many types of table games as they desired¹⁰.

The “A” casinos are not restricted in their wagering limits, and machines can be linked together for super jackpots which have reached over four million Sfr. The linkages can be between casino facilities¹¹.

The “B” casinos are permitted to have 150 slot machines each, with a maximum bet of nine Sfr per play. Individual machines can have progressive jackpots with prizes as high as 25,000 Sfr. 

The number of tables is subject to a formula related to machine numbers, and maximum and minimum bets are set by law. The 12 “B”casinos average 120 machines each, with five having the maximum of 150 machines. The casinos average ten tables each that offer only blackjack, roulette, poker, and punto banco. The smallest casino (Davos) has only four tables; the largest, at Mendrisio has 31 tables12.

The southern border area near Italy has two “B” casinos, at Mendrisio—just 7 km from the border, and Lucarno, 50 km away. The eastern mountain region has casinos in St. Moritz, Davos, and Bad Ragaz. The northeast has a casino at the German border in Schaffhausen, and another in Pfaffikon, near Zurich.  Near Basel, there is a casino at Courrendlin, and near Geneva, there is one in Meyrin. The central western mountain tourist area has “B” casinos in Fribourg, Interlaken, and Crans-Montana. Casinos Austria, an international gaming giant operating in over 60 jurisdictions and on ships, has ownership participation in six of the casinos which they also manage13.

The Swiss law has a surprising wrinkle in its taxation provisions. The small “B” casinos pay a higher initial taxation rate than the larger “A” casinos.  The rate is set at 40 percent for the first 10 million Sfr in annual wins, and it increases one percent for every million thereafter. There is a philosophy behind this partially regressive tax structure. First of all, the notion that the “rich should pay more with higher tax rates” has no credence with casinos, because in no case anywhere in the world does a “poor” person “own” a casino.

All owners are either rich, affluent, or they are corporations or associations—as in Switzerland municipalities own portions of many casinos. “A” casinos must have collective ownership, either by corporations or governmental units, while “B” casinos may find controlling ownership in private hands14.

Second, there should be some recognition that smaller casinos do not have promotional budgets to recruit affluent players who may live further distances from the casino. Smaller casinos are less likely to invest in attractive amenities such as upgraded restaurants or shows. They also rely more on machine gaming, and they have fewer employees for each Swiss franc won from customers. When the rates are all thrown together, the effective tax rate on the gaming wins for the “B” casinos is 48.5 percent¹⁵.

The collective tax rates reflect the reality that the “B” casinos for the most part are small. The 12 facilities average 29.6 million Sfr in annual wins. The smallest three win less than 10 million Sfr: Davos, St. Moritz, and Courrendlin.

However, given its wonderful location right at the Italian border on a superhighway less than 45 minutes from metropolitan Milan with nearly 7 million residents (an amount equal to all of Switzerland), Casino Admiral in Mendrisio won 121.6 million Sfr in 2005. It paid a tax of 80 percent on the top 61.6 million Sfr it won¹⁶.

Reflecting the tax philosophy presented above, the average “A” casino employees 190 workers, while the “B” casino hires 78. 

The legal concern for problem gamblers is expressed in programs that must exist at each casino.  The casino places a psychologist on psychiatrist on its staff. There is then a committee of dealers, supervisors, and administrators that oversee decisions to limit play and even exclude play of persons believed to be troubled gamblers. All employees are trained to observe signs of compulsive play and report them to the committee.

The committee may authorize immediate lifetime bans from all 19 Swiss casinos, or they may authorize observations of the player for an eight week period—after which they decide on having a ban or on limiting the number of times the player may come to a Swiss casino each month. While the bans are for life, the committee may review the bans at the player’s request after a year. Players with observed problems are urged to agree to voluntary bans before official action is taken.

Several policies not directly tied to the casino plan do support programs for responsible gambling. The urge to expand is not in most business plans. The casinos are rarely crowded, albeit, on weekends and special days they can be full. Their nearly continuous modicum of surplus capacity suggests that the 19 facilities are meeting the collective needs and wants of the Swiss people (and their border neighbors) to participate in casino gambling. The casinos are permitted to openly advertise, and they do so, but usually in an unobtrusive manner. Most often, advertising is tied to an event or a promotion such as a jazz festival¹⁷.

There is a major disincentive for expansion and rapid promotion of gambling: taxation. The tax rate escalates dramatically as casino revenues approach those of an even small Las Vegas Strip casino. Also, rates start rather high at 40 percent. As indicated, the Mendrisio property pays a rate of 80 percent on about half of its gaming revenue, and would pay the rate on any additional revenue if they expanded. While tips contribute to workers’ salaries, personnel costs still approach 20 percent of revenues, making profit returns on new revenues miniscule¹⁸.

The dealers are well paid. They are also unionized, but have little incentive to strike. On the other hand, Campione and other Italian casinos (as well as casinos in France) have had well-publicized strikes. The dealers’ compensation is mostly from casino gaming revenues.

Generally, dealers receive a Tronc—that is, a collective tipping pool. However, tips in Switzerland are less than elsewhere, as tipping has simply not been a strong part of the Swiss labor system.

At Lugano, the Tronc is equal to about seven percent of the gaming win¹⁹. As the dealers’ wages equal about 20 percent of the win, and only half of the Tronc goes to dealers, one can see that tips are not a large part of their wages. For this reason, dealers do not feel a loyalty to the players that would transcend obligations to report signs of troubled. They do not feel they have to protect and hide the compulsive’s disease in order to keep money in their pockets.

It should also be noted that several casino managers indicated their “best” players are not troubled players²⁰. The typical troubled player is a grind player-a low-roller who persists. Reports shows that most voluntarily banned players are slot machine players²¹. 

All casinos close each day. Typically, hours of operation are noon until 4 a.m. Non-stop open casinos promote problem gambling as players may engage in binge behavior. A break in the action has a calming influence over those who are caught in excitement of play.

A player who does not go home for sleep, one who just sits on a park bench, or in a car, waiting for the casino to reopen, might exhibit an appearance that might be reported as “troubled” by a casino employee.

Entrance fees can discourage problem gamblers; however, only one casino, at Bern, has an entrance fee of ten Sfr. In exchange for the fee, the player is allowed to have one soft or hard drink at no additional cost²². Only Lugano has a dress code, another deterrent to troubled play²³.

The casinos are not allowed to give credit, and checks may not be cashed. Automatic Teller Machines are confined to areas outside of the casino.

While drinking is permitted in the casino, drinks are not taken to the players, nor are they free.  There is no system for “comps,” although a special player may be invited to dinner or drinks away from the gaming areas. There are no player’s or loyalty clubs that give awards for volumes of play²⁴.  

The casinos are allowed to advertise, but do so with discretion. The facilities are like the ads: placid. The Bern casino tried to decorate with red colors, but decided that the colors were too aggressive. The casino is now blue so as not to “excite the players²⁵.”

Machines are increasing in importance. They represent 80 percent of casinos’ wins. However, the Swiss players like high pay-back odds and more winning plays, rather than lower odds and large jackpots. Linked machines do not get as much play as individual machines that pay back 95 percent²⁶.

While perhaps not as excited as American-style players, the players nonetheless leave a lot of money behind. Each casino averages about 700 visitors a day. The largest attract over a thousand a day. These are not big numbers by Las Vegas standards. However, the revenues per player are large. The typical visit produces about 180 Sfr or $150 U.S.; this is twice the revenues casinos make from typical
visitors in the U.S²⁷.

Entertainment at the Swiss casinos leans to high-brow, gentle jazz background music—not hip-hop or similar. The music is designed to attract mature players, not youth. A plan to have a disco in Lugano was scrapped because the city did not want youth near the gaming floor, although the gaming age is 18²⁸.

Parking is difficult at these casinos, and players usually have to pay. Public transport is good, but casinos do not pay for it either. They don’t have casino busses either.

The casinos also sponsor community social events, such as good citizens. 

1.     Interview, Salvioni, 2006.

2.     Haeberling, 1999, pp. 474-475; Vieregge, 2000,
        pp. 495-496.

3.     Dombrowski, Uchtenhagen, and Rehm, 2001, p. 2.

4.     Haeberling, 1999, p. 475; and Vieregge, 2002, p. 496.

5.     Vieregge, 2002, p. 496; Haefeli, 2006a, p. 4,  and Interview, Haefeli, 2006b.

6.     Interview, Haefeli, 2006b.

7.     Haefeli, 2006a; and Interview, 2006b; Vieregge, 2002, p. 497; Dombrowski, Uchtenhagen, and Rehm, 2001, pp. 2-4.

8.     Eidgenossiche Spielbankenkommission-ESBK, 2005a; Schweizer Casino Verban, 2005; Vieregge, 2002, p. 498.

9.     ESBK, 2005b.  

10.   ESBK, 2005a. 

11.   Interviews, Carron, 2006; Fischer, 2006, Pauscha, 2006; Ferrari, 2006; and Vieregge, 2002, pp. 499-500.

12.   ESBK, 2005a; Interview, Esposito, 2006.

13.   Interviews, Ferrari, 2006; Pauscha, 2006; Grenacher, 2006; Haefeli, 2006b,

14.   ESBK, 2005b.

15.   ESBK, 2005a.

16.   Schweizer Casino Verban, 2005; Interview Esposito, 2006.

17.   Interviews, Salvioni, 2006; Pauscha, 2006.

18.   See Casino Lugano, 2005.

19.   Casino Lugano, 2005.

20.   Interviews, Ferrari, 2006;Foraboschi, 2006; Pauscha, 2006.

21.   Haefeli, 2006a. 

22.   Interview, Pauscha, 2006.

23.   Interviews, Foraboschi, 2006; Salvioni, 2006.

24.   Interviews, Grenacher, 2006; Pauscha, 2006.

25.   Interview, Pauscha, 2006.

26.   Interview, Pauscha, 2006.

27.   Haefeli, 2006a.

28.   Interview, Foraboschi, 2006.