Bloomberg News

Swiss Casinos Face Hard Times as Italians Gamble at Home

July 19, 2013

Swiss Casinos Face Hard Times as Italians Stay Home

The view from La Perla restaurant at Lugano Casino is seen in this handout photograph taken in 2012 in Lugano. Photographer: Roberto Barra/Lugano Casino via Bloomberg

With black stilettos, a blond bob and a slash of red lipstick, Milanese accountant Maria Teresa De Gasperi is dressed for a night out in Switzerland. Her visits to Lugano’s casino have grown less frequent as her gambling budget declined.

“A lot, lot less,” she said, referring to her spending while sitting on a sofa in the casino’s brightly lit foyer.

The Swiss town of Lugano has been home to a casino for the past century and about 80 percent of the gamblers are Italian, according to its management. The town, south of the Alps beside a sparkling blue lake and palm trees, is about an hour from Italy’s financial hub of Milan by car or train, and at the frontier of Europe’s prosperous north.

A liberalization of the predominantly Catholic country’s once-strict laws has helped gambling gain prominence in Italy, where the economy is mired in its longest slump in more than 20 years. That change, combined with the strength of the Swiss franc, is making times tough for casinos in Switzerland’s Italian-speaking canton of Ticino. The franc appreciated by about 25 percent against the euro during the past five years. It rose 0.2 percent to 1.2365 per euro at 11:33 a.m. in Zurich.

The gaming industry’s malaise stands in contrast to much of the rest of the Swiss economy, which has managed to recover from the contraction it suffered in 2009. In the first quarter of 2013, Swiss growth outpaced Germany’s, the most resilient economy of the 17-member currency area.

Gross revenue for Switzerland’s 21 casinos was down 24 percent last year compared with 2008, when the financial crisis erupted with the collapse of New York-based Lehman Brothers Holdings Inc., official statistics show. The decline occurred even as new casinos opened, including one in Zurich.

Revenue Slide

Swiss casinos suffered an 8 percent drop in revenue in 2012 to 757 million francs ($800 million), according to the Federation of Swiss Casinos, with not a single one able to maintain revenue at the previous year’s level. The decline suffered by casinos in French- and German-speaking cantons was generally less pronounced last year, the federation’s data show.

At the Admiral casino in Mendrisio, just 5 minutes from the Italian border, gaming revenue fell 12 percent to 64 million francs last year. Lugano’s casino suffered a 21 percent decline, the biggest of any in Switzerland, to 54 million francs.

“Last year, people were spending less,” said Luca Antonini, manager of the Lugano betting house as he sat in his Spartan office down a hallway from three floors of blinking lights, bars, slot machines and tables of blackjack and roulette. “Now we’re beginning to see fewer guests too.”

Household Debt

Italy has traditionally been a nation of savers, whose penchant for putting money aside has helped fund the government’s debt, the euro’s second-biggest relative to gross domestic product. Household debt in Italy stood at 45 percent, compared with a euro-area average of 64 percent, according to data from the European Central Bank. As unemployment rises to more than 12 percent, Italians are increasingly eating into their nest eggs to shield themselves from poverty.

In the past decade, Italian laws forbidding gambling have been relaxed. Slot machines and video lottery machines are now authorized, in what the government says is a drive to make the once-clandestine industry more transparent and easier to regulate.

Critics of the decision say the rule change is bad for society. Every 12th person who plays machines will become hooked, Suedtirol Online quoted the region’s consumer association as saying last year.

Maurizio Cimarelli, a spokesman for the Italian state’s gaming agency AAMS, said the liberalization meant people simply switched to legal gaming. “All this has done is bring to light numbers previously hidden,” Cimarelli said in an e-mail.

Spending Trends

In Italy, spending on various types of gambling and gaming rose 9 percent to 87.1 billion euros in 2012 from a year earlier, according to AAMS data, even as the economy is headed for its eighth quarter of contraction and joblessness is the highest since at least 1977.

There is no figure for average spending per gambler for last year, according to the AAMS. The agency says there are 380,000 slot machines and 50,000 video lottery machines in operation in arcades across the country, particularly in densely populated areas around Rome, Milan, and Turin. There are just a handful of formal casinos with tables in Italy.

“I don’t take big risks,” said a middle-aged Italian who would only give his first name of Alberto, as he exited the Lugano casino not long after midnight and dashed to his car in the pouring rain. “Sometimes I come here, or I go to other places like St. Moritz.”

Unemployment Rises

In a sign of how much the industry is being squeezed, the number of employees at the Lugano casino was down 43 percent in 2012 from 2008 and the headcount in neighboring Mendrisio shrank by 25 percent in the same period, according to the Swiss Federal Gaming Board. The jobless rate in Switzerland was 3.2 percent in June, compared with 2.5 percent five years earlier.

To attract guests, Antonini, the Lugano casino’s manager, is seeking to take advantage of his establishment’s lakeside terrace to promote dining and dancing in addition to gambling.

“We’re hoping to diversify our offering,” he said. There are also more video slot machines since female customers tend to prefer them to tables, he said.

To contact the reporter on this story: Catherine Bosley in Zurich at cbosley1@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net


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