Memorandum from Accor Casinos (DGB 98)
Thank you for your letter of 11 December. Your
heavy work schedule is understood and our invitation to you and
your colleagues to visit some of our French casino operations
still stands. We would be very pleased to show them to you and
explain the functioning, whenever the occasion would permit.
Following your suggestion, I have enclosed a
document that gives an outline of the administrative and fiscal
set-up of casinos in France. The document also outlines the complications
of the casino licensing system in France. Whilst I would not in
any way suggest that the draconian and convoluted fiscal regime
under which we operate should be replicated in Britain, it does
show that it is possible to turn a profit in a casino operation,
even when the taxation is relatively punitive; this in spite of
what some international operators have been quoted as saying.
The downside of this high taxation is that there
is a tendency by some French groups to progressively reduce their
table gaming operations. It goes without saying that table gaming
is very expensive to run—even given that here basic gaming
wages are from tips; salary charges, taxes, etc, are still high—and,
there is not a single casino group in France that could be profitable
without slot machines. This is certainly the case with Accor Casinos
where, in spite of the lack of table games revenue, we make a
positive effort to run as many table games as possible. As an
example, the casino at Enghein, near Paris, had the highest gross
gaming revenue in France but, until it recently was permitted
slot machines, it was not profitable at all.
I have also enclosed an outline of the Accor
Casinos responsible gaming programme that we have had in place
for several years now and where we currently support directly
the service provider, and who has just started to receive limited
government funding—not admittedly the best method. Currently,
of the six major French casino groups, only Accor Casinos has
a programme of responsible gaming in place. And neither the national
lottery nor the national association of bookmakers have taken
steps to set up such a programme.
The Gambling Industry Charitable Trust in Britain
appears to have made an admirable effort to raise voluntarily
the £3 million funding for the research and treatment of
gaming abuse, as suggested in the Budd Report, but we at Accor
Casinos are not convinced that voluntary funding is the answer.
It would seem to us that the GICT will have
some difficulty in raising voluntarily the sum required, that
is some way from being fully achieved. Our thoughts are that this
may never be realised by voluntary means and that the threat of
a government levy may well come to pass. While bigger operators
will probably have their own mitigating safeguards in place, they
also have more to lose from adverse gaming climate change, and
at the same time they will probably have deeper pockets. If the
tariff is voluntary, smaller operators may be less willing to
belong and participate if the tariff for them appears too expensive.
Until all those in gaming are convinced of the
need for a social responsibility programme (and our own practical
experience tells us that this is not likely to be the case), then
voluntarism will probably not work and a form of levy, such as
we have proposed for France, may well be the best and most equitable
means to raise the necessary funding.
We would be pleased to comment further on these
or other related points should you feel it pertinent.
A PROGRAMME TO
PREVENT THE
RISK OF
EXCESSIVE GAMING
The continued growth of the casino industry
in France has inevitably led to a perception of an increase in
problem gambling, raising the issue of corporate social responsibility
in casino gaming. But as of yet it would be inaccurate to suggest
that this concept has taken root.
Several years ago, Accor Casinos began an internal
debate about the appropriateness of developing a responsible gaming
programme. A survey carried out among the operational management
revealed that the majority felt it was not the business of the
profession to get involved in prevention. The reactions were not
surprising—it should be noted that a large part of the remuneration
of casino employees is made up from tips. In fact, in France it
is legally the only remuneration received by table gaming staff.
Many staff made it clear that they had mixed feelings over balancing
moral perception with that of profitability (for themselves and
the casino).
Staff were made aware that problem gambling,
however marginal it might appear, could not and would not be ignored.
The content of a prevention programme was drawn up and approved,
leading eventually to the rollout of a programme in all Accor
Casinos establishments beginning in the summer of 2001. Once the
content of our prevention programme was drawn up and approved
by the panel of Accor Casinos' management, we set up a team of
volunteers drawn from all levels of the personnel of our casinos.
They were trained and given assistance by professional trainers
from the Académie Accor (the Accor University).
The foundation team then developed a training module, which was
attended, in stages, by eventually all the group's personnel in
touch with the public.
Those players with problems are offered information
and assistance, without any claim made to replace the professionals
and therapists in the field of addictions. To this end, there
is close collaboration with social agencies and recognized specialized
associations, such as the French organisation SOS Joueurs and
Sedqa in Malta. All counselling is entirely voluntary.
In practice, this means that:
— Our teams are able to assess the
risks of excessive gambling. Each team has several members who
are designated to advise clients in difficulty, based on very
specific guidelines, with assessment criteria to enable them to
avoid awkward situations, particularly by distinguishing the fine
line between a client who plays a lot (without putting himself
in danger) and a client who plays to excess.
— Our clients may become better informed
by consulting the leaflets and brochures on excessive gambling
that we make available to them in all our casinos. We can also
advise them on external contacts and to direct clients who ask
for this assistance towards professionals who can offer them appropriate
solutions.
Currently, of the six major French casino groups,
only Accor Casinos (with its associate Groupe Barriere) has a
programme of responsible gaming in place. And neither the national
lottery nor the national association of bookmakers have taken
steps to set up such a programme.
We have presented our programme to the French
casino operators' group, Casinos de France, who has now presented
this programme to government. At present, however, this movement
involves only the casino operators and even within this group,
we are moving very slowly and convincing a few at a time.
The first question to be answered was how the
Trust would be funded. We have suggested that there be a levy
of 1 Euro per 1000 Euros of each casino operator's net casino
win (after gaming tax), which would generate roughly 1,2 million
Euros based on the current year (naturally, if the lottery and
the bookmakers were involved, the sums raised would be tenfold).
It is anticipated that most of this money would go into direct
education, treatment and support.
Data from SOS Joueurs and other available research
indicate that the major source of problem gambling in France does
not stem from the strictly controlled casinos with their limited
numbers of slot machines, but from the huge numbers of illegal
slots in downmarket bars and the "scratch card" lottery
tickets sold everywhere. This is difficult to combat when the
official interest in prevention appears small.
Has our programme worked? It is hard to say
so far, as success is dependent on the will and social conscience
of all the French casino operators. Given this, it may be necessary
that official authority becomes involved in responsible gambling
programmes. We also believe that formal codes of social responsibility
should be applied and that operators should adhere to them as
a condition of their licence. It is of limited use that one casino
operating group may put into place a responsible gaming programme,
if the "banned" player may be able simply to move to
the casino down the street.
CASINOS IN
FRANCE
1. Overview:
France, the originator of many forms of gambling
and creator of roulette, led the world in the casino sector for
many years. Then, in the 1960s, saddled with the highest taxes
in Europe and a shrinking market of players, the French casino
industry went into, what appeared to be at the time, terminal
decline.
At the same time, gambling in French society
was given a boost with the spectacular rise in state-run gambling
(Lotto, Tapis Vert, pan-mutual betting, etc.). This corresponded
to a new trend in gambling demand, with people now wanting simpler
forms of gambling, accessible to all and offering large stakes
for small bets. The configuration of French casinos at this time
no longer met this demand.
In this difficult context, the authorisation
of slot machines by a law passed in 1987 gave a new boost to the
casino business.
Since then, the gross proceeds generated by
these machines have continued to grow. The rise in the number
of slot machines, requiring large-scale investment, has also lead
to a greater concentration of the operators active in this market.
Over 100 of the existing 180 casinos belong
to groups varying in size, sometimes subsidiaries of prominent
investors (international companies quoted on the stock market).
The five major groups operate between them 109 casinos and achieved
a gross gaming revenue (in 2003) of 1,917 billion Euros, being
75,29% of the market.
The changes brought about in the French casino
market have been accompanied by the introduction of even stricter
regulations than were already in place.
Today, in spite of higher taxation (with the
recent introduction of the Social Security deficit income-based
tax, the C.S.G.), investors continue to show interest in the casino
business.
Over the five years until 2001, the average
annual growth of the sector in France has been constantly over
10% and for the last two years around 5%.
This development is due to:
— Increased attendance at the casinos;
— The opening of new casinos and the
modernisation of the existing product;
— The acceptance by the public of gaming
as a regular part of their leisure spend and entertainment package.
Municipalities (cities and towns), aware of
the many advantages that a casino can bring, have issued "invitations
to tender" for casino licences in increasing numbers.
There are three main advantages for a commune
to have a casino on its territory:
— The local authority obtains increased
and, importantly, direct tax revenues;
— A casino contributes to the economic,
tourist and cultural development of the town and the region;
— A casino creates a significant number
of local jobs.
Licensing procedure for a new casino: An outline
As part of the public sector, French casinos
are under the control of the Ministry of the Interior and all
casino licences are municipal concessions.
The opening of casinos in seaside, health, mountain
and spa resorts was regulated in 1907. The scope of the law was
widened in 1988 to include those major cities of over 500,000
inhabitants and which met certain cultural demands.
Eligible municipalities wishing to open a casino
grant their concession to a private operator after requests for
proposals have been submitted. On an equal footing to gaming,
the operator must develop tourism and cultural oriented activities,
entertainment and an appropriate food and beverage offer.
— A Request for Proposals for a "public
service concession" (ie a casino) is opened for offers by
the municipality or community that wishes to have a casino on
its territory.
— The choice (shortlist) is made by
the municipality of the preferred candidates for the concession.
— Specifics of the "contract"
are given to the candidates.
— Presentation of candidates projects
is made to the municipality.
— Negotiations are carried out between
the candidates and the municipality.
— The choice by the municipality of
the concessionaire is made for a maximum term of 18 years.
— The submission of the authorisation
dossier by the municipality is made to the to the Sous-Préfécture
(regional authority).
— A public enquiry is held, of which
the results are attached to the dossier.
— The transmission of dossier is now
done to the to the Préfécture (senior
regional authority).
— After approval at this stage, transmission
of the dossier to the office of "Libertés Publiques
et des Affaires Juridiques" (central government, Paris).
— Set up of an enquiry by the sub direction
"Courses et Jeux" (gaming police) into the suitability
of the selected candidate.
— Examination of the dossier by the
"Commission des Jeux" (gaming commission, essentially
of the Interior Ministry).
— The commission gives its opinion
as to the suitability of the candidate and, indeed, to the suitability
of the casino for the community.
— The authorisation is now submitted
to Minister of the Interior. If the decision is favourable, the
authonsation (casino licence) is limited to a maximum of five
years but can be limited to one year. The procedure for renewing
an authorisation takes six to eight months.
— Note that if the demand is for a
new casino, the building must be relatively complete before the
demand for a licence may be made.
— The initial casino licence will be
for table games operation only. It is to be noted that this restriction
applies to all candidates, whether they are already casino operators
or not.
— A demand for slot machines in the
casino may only be made after 12 months of operation, with no
guarantee of success and also with no assurance as to the specific
number of slots that may be allowed.
2. Administration and Functioning
The regulations lay down very strict conditions
for the administration of casinos and their gambling activities,
along with specific rules and documents for the specific accounting
systems of gambling establishments.
— Authorised casinos must have a general
manager and a management committee who are personally responsible
(and in the case of the general manager, Directeur Responsable,
criminally responsible) for following the regulations and meeting
the specifications and procedures. The manager and the members
of the management committee must be approved before their appointment
by the Minister of the Interior.
— In a partnership or public limited
company, the executive director must be the manager actually running
the casino, and in a joint-stock company he must be the Chairman
of the Board of Directors or the Managing Director and member
of the Board. He is obliged to live near the casino (if not actually
in the community).
— The appointment of the gaming personnel
must be approved by the local Police Commissioner and the head
of the Special Branch (Renseignements Généraux)
of the district in which the casino is located.
— A monthly statement on the casino's
operations must be sent by the fifth of each month to the Prefect
of the Region (Département).
— At the beginning of each casino gaming
year (the financial year running from 1 November to 31 October),
the casino must justify having on the premises sufficient cash
and bank guarantees whose sum will cover any eventual winnings.
Very precise regulations control each gaming activity and codify
the gaming equipment used, the functions of the pit bosses, croupiers
and other gaming staff, the different steps in the running of
each game, etc. . .
— Customers who wish to play at the
gaming tables must produce their identity, before entering the
gaming room and be registered on a file that may be checked by
officers of the Ministry of the Interior.
— Customers who "buy-in"
for or win over
l,000 must be listed in a special register which
may be consulted by police officers assigned to supervising the
casino's activities. The legislation on the laundering of money
derived from drug trafficking reinforced the obligations imposed
on casinos by requiring them to register the names and addresses
of gamblers who exchange tokens and chips valued at over
l,000.
— No person employed in a casino can
lend money to gamblers. However, the casino can make loans in
the form of tokens or chips.
These strict regulations (amongst others), the
frequency of the checks made on the casino personnel by the officers
of the Ministry of the Interior, and the frequent controls of
the casino operations by the Gambling Police (Central Racing and
Gambling Department) and the Revenue authorities, are due to the
large tax revenues generated by this activity.
3. Financial and fiscal aspects
The establishment of a casino within a community
generates new and sustainable resources in the form of financial
and tax revenues. These revenues take different forms: part of
them derive from the contractual payments made by the casino to
the local authority and the rest come from the taxes levied on
the casino's operations in the local authority area.
The state and the local authorities collected
around
l,38 billion in the 2002-03 season, the equivalent
of 55% of the gross eamings of casinos (total gross earnings were
2,54 billion for this period). To these revenues
must be added the local and corporate taxes.
The Municipal Tax Levy
Casinos are economic and social partners of
their municipalities
A direct local tax is laid down in the specifications
negotiated between the local authority and the casino operator
with a ceiling capped at 15% of the tax base.
Casinos make a significant contribution to the
budget of their local authority through taxation, and are often
the largest contributor and the positive effects on the life of
the community are beneficial to its economic development.
Apart from their direct contribution, they also
have significant indirect effects on the economic life of municipalities.
Their operational requirements—maintenance of premises,
construction investments, organising entertainment programmes,
etc—require them to call on local and regional companies
for these and other services and casinos devote a large part of
their profits to these investments.
Finally, thanks to the complementarity of their
activities, casinos make a significant addition to the region's
tourist and cultural attractions and thus favour the economic
development of its different sectors.
Apart from the municipal tax levy that is guaranteed
by contract to last a number of years, additional tax revenues
are generated mainly via corporate tax.
The investments made by the casino operator
in the construction and fitting out of the land and premises,
as well as the considerable work force needed for running a casino
(generally local), generate additional and substantial tax revenues
for a municipality. However, it is difficult to predict the annual
amount that a local authority can expect to gain from the opening
of a casino. Owing to the wide variations in local and regional
tax rates, the constant changes made in the tax system and the
possibility of tax ceilings, it is not possible to draw up a generally
applicable revenue model.
But is clear that the prospect of a long-lasting
and substantial increase in the revenues of a municipality through
the opening of a casino is one of the key factors in the adoption
of such a project in a local authority. And it is worth pointing
out that, for many small municipalities, the casino becomes its
main taxpayer, sometimes contributing up to 50% of its revenue
from taxation.
The State's Fixed Levy
Based on the gross proceeds of the gambling
activities, it is 0.5% for the gaming tables and 2% for slot machines.
The State's Progressive Levy
This tax is raised every month on the cumulative
amount of the tax base from the start of the fiscal year. The
rates applied each month start at 10% and rise to a maximum of
80%.
When the state's progressive levy combined with
the municipality's level exceed 80% of the tax base, the state's
levy is reduced to make the total of the two levies equal to 80%.
RDS—Social Security Deficit Contribution
In February 1996 the French state introduced
a new tax designed to reduce the deficit of the Social Security
system, which is equal to 3% of the gross proceeds of gambling
before the tax allowance is applied.
CSG—Social Security Deficit Income-Based Tax
Since January l 1997, casinos must pay the CSG
Social Security deficit income-based tax, set at 3.4% of the theoretical
gross proceeds of slot machines before the tax allowance is applied
(the gaming tables are not covered by the CSG).
Stamp Duty
Every customer entering the gaming rooms must
pay stamp duty of
10 per day and for each entry.
4. Casinos create jobs in the region
Casinos in France directly employ 13,000 staff,
but a total of 30,000 jobs are concerned if one includes the jobs
in the hotel, food & beverage and entertainment sectors.
Casinos are among the leading employers in local
authorities, and sometimes the biggest employer. The Divonne casino,
for example, with its 450 employees, is one of the municipality's
biggest employers.
5. Casinos: Tourist Development Tools and
Regional Attractions
"A casino is an establishment involved
in three distinct activities: entertainment, food & beverage,
and gambling, combined under one management and always run internally
by the operator's management".
Owing to the complementarity of their activities,
casinos make a significant addition to the region's tourist attractions
and thus favour the economic development of its different sectors.
Moreover, since they are linked by their specifications
to the future of the municipalities in which they operate, casinos
seek to create genuine tourist synergies through working closely
with the local bodies involved in the economy.
Casinos offer a wide range of leisure activities:
restaurants, discotheques, shows, gaming rooms, slot machines
. . . and quite often hotels, whose presence is directly related
to the existence of the casino.
As initiators of events which stimulate the
life of the municipality, casinos create a permanent local attraction
which boosts tourist numbers.
The advantages of collaboration between the municipality
and the casino
Each casino is bound by a specifically negotiated
contract to its municipality or community. This document also
enables the municipality to decide which local or regional marketing
or cultural actions will benefit from the payments made by the
casino.
Hence casinos contribute, often in substantial
proportions, to the development of the economic and tourist activities
of municipalities.
Furthermore, some events that gain wide recognition
(particularly festivals, artistic events, etc. . .) get off the
ground thanks to joint financing by the municipality and local
private partners, with the casino being among the leading contributors.
Thanks to this pooling of resources, these events often have an
advertising budget of a national or even international dimension.
Successful events, in turn, reinforce the image of the municipality
in the media.
The local effects of the casino's marketing policy
Independently of its compliance with the contract
with the community, the casino generally devotes a large budget
to its own marketing actions, usually highlighting the specific
attractions of the town or the region.
Thus, by creating activities that attract a
very varied population (in terms of both socioprofessional and
age groups), the casino boosts the economic life of the municipality.
Moreover, the marketing operations that it initiates increase
the flow of tourists.
(a) Food & beverage
A food & beverage offer is an essential
activity in the running of a casino, firstly because the regulations
make in inseparable from the gambling operations and, secondly,
because it is a fundamental part of the "leisure infrastructure"
that the casino aspires to become.
The restaurant's positioning, usually upmarket
in quality, is generally defined in line with the town's specific
features and needs, and avoiding any unnecessary competition with
existing restaurants.
(b) The marketing policy
Casino operators organise many and varied marketing
campaigns, which may include:
— Sponsoring local sports events,
— Organising promotional campaigns
(lotteries, competitions, etc.)
— Partnerships with local operators
in the tourism sector,
— Advertising campaigns in the media,
etc.
Furthermore, if the casino is part of a large
group, its marketing actions can be given a national or even international
dimension by integrating them into the group's marketing policy.
6. Conclusion
By becoming genuine leisure centres with strong
links to the local economic life, casinos now play a key role
in the tourist and economic infrastructure of their region.
Their participation in the economic life of
the municipality generates additional financial resources for
the local community.
But, most of all, through the organisation of
promotional and marketing campaigns to draw visitors, the casinos
help to reinforce the town's image at both national and international
level.
January 2003
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