Casinos of Slovenia: Embracing the Future
By William N. Thompson, Boris Nemec and Carl Lutrin

Although Slovenia is one of the youngest — and smallest — nations on Earth, having been born in an “almost” peaceful revolution in 1991, the Slovene people have existed for almost two millenniums. So, too, the land of Slovenia has been familiar with gambling for many centuries. Still, formal licensure and regulation of casino gambling are also of recent origins.

Slovenia has a population of almost 2 million, all of whom speak Slovene (91 percent are Slovenes, and 3 percent Croats). The largest city, its capital, is Ljubljana with a population of almost 300,000. Slovenes live on a 7,827-square-mile piece of land (the same area as New Jersey) located just south of Austria, southeast of Hungary, east of Italy and northwest of Croatia. From the 13th century until World War I, Slovenia was mostly part of or ruled by the Austro-Hungarian Empire. Napoleon ruled Slovenia during his ascendancy over Europe.

The territory of Slovenia was exposed to the Orient by traders en route to Italy who brought playing cards and dice on their journeys. The predominant Catholic Church forbade gambling on certain days, however, the practice was widespread among both laity and clergy. A fresco from around 1460 in the Holy Sunday Church in Crngrob shows two eager card players at the game with the “devil’s pictures.” (It is reminiscent of the Guardian Angel Church on the Las Vegas Strip, with its stained-glass windows of casinos). A gaming motif was found in a Slovenian folk song from the 17th century. The finding of three dice by archeologists in the Ljubljana castle is clear proof of what the lords of the castle did for entertainment. The inhabitants of Ljubljana rolled dice, and played cards and billiards in inns and cafès in the early 18th century.

In the middle of the 18th century authorities tried to curtail gambling. They made attempts to prevent excessively high stakes and unsuccessfully forbade certain games. There was a special prohibition of gambling concerning servants. The large and repetitive numbers of prohibitions suggest that gambling was booming. The ineffectiveness of forbidding gambling is proved by the existence of card production and trade. The first “native” professional card painter is mentioned in the Ljubljana tax registers in 1724. During the second half of the 18th century, Ljubljana was also the seat of the guild of card painters in the Austrian provinces.

Although authorities made great efforts to stop gambling, they could not help but try to make some money from their subjects’ weaknesses. They introduced a special tax on cards and a special stamp for them. Despite restrictive laws, newer games soon emerged, namely, the lottery and Bingo. Systematic legislation that mentioned penalties for forbidden games were embodied during the reign of Emperor Franz II (1792–1806). In the second half of the 19th century, Austrian penalty law threatened punishment for people who played games of chance, especially those that were banned by special regulations.

For over 70 years, Slovenia was an integral part of the Yugoslavian federation. While traditional casino resorts had been known in the Balkan lands that were united into the SHS (Serb-Croat-Slovene) Kingdom in 1918 and Yugoslavia in 1929, gaming ceased while World Wars I and II engulfed the territory. In the new Yugoslavia, professional gambling was first classified as a criminal act of “unwillingness to work,” together with vagabondism, harlotry and begging.

Post-World War II Gaming in Yugoslavia

However, a revival of the economy after World War II under communist leader Marshal Tito led to the renewal of gambling as a means to generate tourism to the beautiful beaches of the Adriatic and to the mountain cities of the interior.

The federal Law of Games of Chance came into force in 1962 and was modified in 1965. The law allowed “special” games to be played in gambling houses where foreign guests played for foreign currency. The state was more comfortable with the lottery and used it, in large part, to finance state entities.

In 1963, the first Yugoslavian casino opened in Opatija, in present-day Croatia. A casino followed the same year at the Palace Hotel in the Slovenia coastal town of Portoroz. It soon opened a branch casino in Lipica. A casino was established in the mountain village of Bled in 1965, as well as the large Serbian city of Belgrade and the Croatian city of Zagreb. Nova Gorica got its casino in 1984 and created branches in Rogaska-Slatina, in Otocec and at Kranjska Gora. In Ljubljana, a casino in the Hotel Slon began operating in 1969, died out in the 1970s and was reborn in the 1990s.

By the end of the 1980s, there were 21 casinos operating under a blend of European and Marxist principles. First of all, the casinos were organized like other businesses under Tito’s brand of communism. They were truly self-managed by their workers (the actual workers, not Communist Party officials), but they were still state-owned property. After the money was counted and all expenses and wages were paid, the profit reserves were reinvested into the company for facility expansion, promotion and investment in tourist business. Second, the style of play was European. Gaming floors were very small, most with fewer than 5,000 square feet for play, fewer than 10 tables and not many slots. The largest casino at Portoroz had 36 tables and 150 slots. The casinos were generally in larger hotels and operated only during the evening and early morning hours, typically from 8 p.m. to 3 a.m. Local residents were not permitted to enter. Indeed, the casinos banned everyone except passport-holders from non-communist lands from play. The casinos used Western currency in all play, and Yugoslavian money could not be exchanged for chips. Roulette was played according to American rules, but with only one zero on the wheel. The casinos also had Blackjack, Baccarat and some Craps, and used French and Italian as the language of all the games.

The death of Marshal Tito in May 1980 in Ljubjana, now the capital city of the Republic of Slovenia, opened the doors for changes in national structures. Yugoslavia was then a multiethnic country of six republics, five nationalities, four languages, three religions, two alphabets and one central authority. While there had been one law, Tito was in essence that one authority. The ethnic divisions of the land carried many centuries of hatred. An army ruling from Belgrade kept order through the 1980s, having behind it — albeit it was non-aligned between the East and West Blocs — an unspoken moral support of the Union of Soviet Socialist Republics’ armies. But then, as the years of the 1980s unraveled, so too did the U.S.S.R., and ethic division erupted into violence and calls for independence by several of the separate Yugoslavian Republics.

Slovene Independence and New Gaming Structures

The most severe turmoil surrounded breakaway efforts by the areas of Croatia and Bosnia. The central authority of the Serbian-controlled government in Belgrade used arms to rally Serbian nationals in effort to subdue the others. While much of the center of the country succumbed on the killing fields, Slovenia maneuvered its course almost as if it were on a lucky cloud. There were almost no ethnic minorities among the 2 million Slovene residents, and it was buffered from the Serbian area by its Croatian neighbors. When push came to shove, the national (Serb) army felt a mere show of force would put down independence ambitions, and the Slovenian home guard militia (essentially its police force) would quickly and peacefully yield power. They did not expect resistance, and they were totally unprepared for the ensuing skirmishes, suffering unexpected causalities. When world opinion quickly endorsed the Slovenia move for independence (with support from the Vatican, Germany and Austria), the Serbs decided it was not worth the effort, and they retreated. Independence was ratified in 1992 with recognition by the European Union and United Nations membership. In 2004, Slovenia joined the European Union and began using the Euro as its currency in 2007.

A new state called for new rules for casinos. However, for the initial years of the new republic, the established casinos operated under existing laws leftover from the Yugoslavian regime. Then, in 1995, after more pressing issues had been engaged, casino regulation and reform was moved to the active political agenda. A new act was passed.

The Gaming Act of 1995 confined all gambling activity to the Slovenian lottery and to two types of casinos. Up to 15 major casinos were authorized. These facilities could have as many games — tables and machines — as allowed by their application and concession grant. The law also called for as many as 45 slot gaming halls, each having between 50 and 200 machines. Gaming hall machines must pay back at least 90 percent of their play as prizes.

An Office for Gaming Supervision was created within the national Ministry of Finance. The office is controlled by a director appointed by the government, and has a legal department, a sector for financial supervision and analysis, a sector for technical supervision, and a department for information science. The initial function of the office was to grant concessions for the casino facilities. To date, 13 major casino concessions have been granted, as have 41 gaming hall concessions. The 13 casinos collectively have 246 tables and 3,317 machines; the gaming halls have 3,377 machines. Each of the concessions also had to be approved by a municipal government. The applicants for concessions had to provide details about their corporate structures. Major casinos had to be owned by public corporations, while private owners could operate gaming halls. The applicants also had to describe all equipment for each facility, as well as provide a system for internal security and financial controls, and a business plan for at least three years.

A special commission was established within the Office for Gaming Supervision, consisting of two government members and one member from the casino association. This commission was responsible for licensing all casino managers, croupiers and dealers, supervisors, cashiers, and internal security and accounting personnel. Licensed personnel had to have appropriate training and education for their positions. They could not have criminal records.

The office also certifies each gaming device, as well as a centralized computer system for monitoring play. The sectors of the office supervise casino operations. They have the power to enter all parts of the facilities at any time in order to conduct inspections and make investigations.

The 13 Major Casinos

There have been 12 active and one new major casino in recent years. Of the 13 major casinos, seven are under the ownership and control of HIT (an acronym for Hoteli Igralnice Turizem, which translates to Hotels, Casinos and Tourism). The HIT group is a public corporation with 60 percent of its shares owned by government entities — 20 percent by municipalities, 20 percent by a federal government corporation and 20 percent by public employee pension funds. HIT has two of its casinos in the city of Nova Gorica on the Italian border. The casinos are in the Perla and Park Hotels.

The group is pinning its hopes on developing these facilities, especially the Perla, into major world-class tourist destinations with American-style (as opposed to European-style) casino gambling. The Perla has expanded to 400 rooms with top amenities. Discussions have taken place between HIT and foreign casino operators, particularly the Harrah’s organization, over the possibilities of expanding a Nova Gorica casino complex into a mega-resort with more than 1,000 rooms.

Nova Gorica is located very near the prosperous Northern Italian industrial region. Also, there are 26 million people within a one-day (500 km, or 300 mile) car drive. Moreover, the city is within a one-hour drive of ski resorts to the north and Adriatic beaches to the south and west. HIT already boasts that the Perla is the largest casino complex in Europe, with its almost 1,000 slot machines and 59 tables, as well as Bingo games.

While the style of the Perla casino (which has a luxury ship theme) is certainly American, it still has some European restraints. Typically, hours are restricted for tables from afternoon to late morning hours, although the machines area is accessible 24 hours a day. Players must show identification, be at least 18 years old, and pay a door fee of five Euros (which is redeemed with a chip that must be played — that is, cannot be “cashed in” directly). The smaller Park Hotel (with 100 rooms) has the same operation restrictions. It offers 528 slots and 38 tables, with Bingo as well.

Other HIT properties are smaller. Two casinos are to the north in the Alpine mountain areas. One is on the Italian border at Kobarid. It is the Aurora Casino, with 256 slots, 10 tables and Bingo. On the Austrian border to the north at Kranjska-gora is the Korona Casino, with 358 slots, 23 tables and Bingo. In central Slovenia, HIT has the small Otocec Casino, with 49 slots and four tables. On the southeastern border with Croatia is the Rogaska-Slatina Casino, with 90 slots and eight tables. Soon to open is the new casino at Sentilj in northeastern Slovenia at the Austrian border. It will have 570 slots, 18 tables and Bingo. The HIT organization also has two Slovenia gaming hall facilities, as well as several hotels and restaurants. The Slovenia HIT casinos entertain 1.5 million guests annually, producing gaming revenues of over 200 million Euros. They win approximately 130 Euros from each guest visit.

Top players do receive a full array of on-site complimentary services — room, food, beverage, show. However, there is no direct credit play. Credit for high-end players is arranged through a third party.

HIT also owns two other casinos, one in Sarajevo, Bosnia, and the other in Przno, Montenegro.

A second group of three Slovene casinos is controlled by the Portoroz Company. Its largest casino facility is on the Adriatic Coast at Portoroz. The casino at the Grand Hotel Metropol has 191 machines and 10 tables, along with Bingo. Also in the Carst region is the Grand Casino Lipicia in the Lipa Hotel, with seven tables and 168 machines. The company’s Grand Casino in the Lido Hotel at Catez, on the Croatian border, offers thermal baths along with its four tables and 100 slot machines. Most of its customers come from the Croatian capital city, Zagreb, which is only 25 miles away. Together, the Portoroz Company’s casinos won 41.7 million Euros from their players in 2005.

Three other casinos in Slovenia are operated independently. In 2004, a major casino opened in Ljubljana in the Grand Media Hotel with 24 tables and 147 slot machines. One of the oldest casinos is on the shores of the lake in Bled, next to the Park Hotel. It has 20 tables and 85 slot machines. The casino in Maribor, in northeast Slovenia, has 117 slots and 11 tables.

Collectively, the 13 casinos of Slovenia attracted 2.3 million visitors in 2006. The players lost close to 2.4 million Euros (104 Euros per visit). Of the visitors, 86 percent came from outside Slovenia. Gaming halls had revenues of 105 million Euros, with visitors numbering 2 million, each losing an average of 52 Euros per visit. Only 55 percent of the gaming hall players came from outside of Slovenia.

Taxation and Employment

Taxes on casino gambling vary according to the status of the casino and whether the win is at the tables or from machines. To start with, all gaming wins in casinos and gaming halls is subject to an across-the-board 18 percent tax. This tax goes directly to the national budget. In 2006, the casinos provided 43.2 million Euros in general win taxes; the gaming halls gave 18.9 million Euros.

In addition to the general win tax, there is a concession fee. The gaming halls each provide a fee of 20 percent on all their machine wins. The casinos give a concession fee of 5 percent of their table wins, plus from 5–20 percent of their machine wins on a sliding scale. The 20 percent rate is applied to machine wins in excess of 420,000 Euros per month for each casino. Overall, the casinos provided 33.9 million Euros in concession fees, and the gaming halls gave 20.9 million Euros in fees for 2006. Total government revenues (taxes and fees) for 2006 for all gaming hall and casino wins was 117.1 million Euros, or 33.9 percent of a total 344.9 million Euro win.

While gaming taxes all go to the national government, concession fees are divided and sent to various sources. The national government takes 47.8 percent of the concession fees for stimulation investments in tourist infrastructure and tourism promotions. Another 47.8 percent goes to the budgets of local governments, with 60 percent of this amount allotted to the city where the facility (casino or gaming hall) is located, and 40 percent to neighboring communities. Of the remaining fees, 2.2 percent goes to a foundation that finances disability and humanitarian organizations, and 2.2 percent goes to a foundation that finances sports organization.

In addition to providing revenues for governments and good causes, the casino facilities are important for their communities as sources of employment. More than 3,000 individuals sustain full-time employment in gaming establishments. They receive both wages and tips for their work. With planned expansions, especially at Nova Gorica, employment levels should expand significantly in future years. Expansion will be the watchword for the future of Slovenia gaming.

MINI BIOS William N. Thompson, University of Nevada-Las Vegas Boris Nemec, Senior Vice President for Strategic Development, HIT Casinos, Slovenia Carl Lutrin, California Polytechnic State University