Recollections - Heading East

Chris Moore reflects on his expirences in the Casino industry during his time in the former Eastern Block.

New casino doors started swinging open all over Eastern Europe almost as soon as the wall came down in 1989. Being in the casino development business, I witnessed the start of an amazing new chapter in the industry’s history. The enormous, potential market began to emerge on the back of a fast spreading rumour that there were billions of US dollars sitting under mattresses all over the former communist landscape. The commercial challenge was to quickly determine where the cash was stockpiled and whether it could be enticed back into circulation. It was a time when the large casino corporations stepped away from the potential market, having correctly deduced that the raw, regulatory controls were paper-thin. However, there was still an Aladdin’s cave of opportunities for the smaller, more venturesome companies, even though most of the potential markets seemed to be sitting on the razor’s edge.

My first development trip was to Belarus, or White Russia, as they liked to be called. It took only a few days in Minsk to determine that there was no potential market at that time.  The city was essentially bankrupt and the only revenues that could have been generated would have originated from corrupt officials and highly dubious local businessmen. I returned to London and wrote a very forthright evaluation report.  I remember thinking that I had probably made my first and last venture into Eastern Europe, but I was wrong. During the next decade I travelled extensively across Eastern Europe, opening casinos in Azerbaijan, Armenia, Croatia, Czech Republic, Kyrgyzstan and Poland.

As the market burst into life, it became essential that you dealt with everything and everyone on an improvised basis. The new gaming rules, when there were any, were ambiguous and in a state of constant flux. It seemed that the further east you ventured, the sharper the razor’s edge became. However, as a young and enthusiastic groundbreaker, I went where the opportunities beckoned, not where comfort levels pointed. My working life became focused on a region that had been under Communist rule for a generation and was emerging like a phoenix from its red ashes. As the previously hidden panorama emerged, amazing opportunities presented themselves, but for every successful project there were multiple failures. In most jurisdictions gaming laws changed continuously for all the wrong reasons. As more casino companies and individual investors entered the arena, the benchmark rules became ever more bizarre and the entry costs grew exponentially. In a few of the wilder jurisdictions, the politicians were so intent on continuously attracting new investors and feathering their own nests that they had no qualms in cancelling the licenses that they had previously granted.

In the depths of one harsh winter I opened a casino in Ganga, Azerbaijan’s second city. I should have guessed from the city’s name that the project had not been conceived properly. I had been handed the responsibility of opening the casino, but I had had nothing to do with the project’s research or development. The city was to the west of Baku and the journey to reach it took six hours in a Russian-made, bone-rattling car. The city was like nothing I had ever witnessed, it was falling apart. There were collapsed buildings with rubble spreading out into the streets and broken electrical cables strewn across the potholed roads. As the occasional battered car drove over the cables, huge sparks flashed across the snow-covered streets. There were power cuts almost every hour plunging the whole city into darkness. Rather than walk away, as I would have liked to, I halved the set up time by working day and night and opened the casino ahead of schedule. I had to acquire an ancient truck and convert its diesel engine into a back-up generator that was in use most of the day and all of the night. Fortunately, once the casino opened, my responsibility ended and I moved on to the next development project.  I learned later that the casino had done well for six months, until the mattress money had run out, and then it faded back into the city’s crumbling backdrop. In those pioneering days many casino projects were ill-conceived and poorly located because there was no benchmark to build from. The early learning curve in the ex-Communist arena was almost vertical.

Everything in the vast, virgin region seemed to have potential on some level, but there were also impending disasters waiting around every corner.  A few years into the gold rush I recall visiting Yugoslavia and meeting up with a local slot arcade owner who is now an old friend. I was working for a Swiss company at the time, seeking slot machine venues in the heart of what was to become Croatia. As we made our way further south into what is now Bosnia Herzegovina, we could suddenly hear explosions and gunfire closing in all around us. My friend drove at speed through the lashing snow until we arrived at Sarajevo airport.  As the deadly siege began, he managed to bribe our way on to one of the very last flights that left the city.  We landed in Austria and went our separate ways, relieved to have escaped the danger. I saw him again ten years later at a gaming show in Milan. Incredibly he had continued to operate his slot arcades throughout the entire war and had become a very wealthy man.  Sometimes fate follows very unpredictable paths.

Opening a casino in Armenia was a more pleasant experience than I had expected when I first arrived in Yerevan.  I was disturbed to see almost everyone dressed entirely in black, giving me the impression that all the locals were grim and dour. I was pleasantly surprised to learn that I had been wrong and that the Armenians had a sense of honour and humour and were actually quite sociable. Surprisingly the gaming regulations were relatively sensible and the process of opening a poker-based casino was reasonably straightforward. I setup the casino in the centre of the city.  It was an instant success and became a very popular venue for all the local poker lovers. There were the inevitable challenges, but the investment proved to be a sound one. That was until a new law was passed banning all casinos from the city centre. There was no obvious rhyme or reason for the change, but it was something that I had somehow come to expect. Moving ten kilometres outside the city was an impractical transition and most of the regular players, as expected, would not make the long trek. The highly successful business wound down to closure. All the local staff lost their jobs and the local tax collectors lost the majority of their monthly revenues.

I have to confess that working on casino developments in Eastern Europe was not the favourite part of my career path.  Although the individuals I dealt with over the years were a fascinating group of characters, they seemed to be as unaware of how things were likely to turn out as I was. Most of them had a stoical attitude and a relaxed approach to opening casinos in places that had never expected to see one. One thing that was consistent were the customers themselves, they took to table games like ducks to water, although initially they showed a real reluctance to play the slot machines. It transpired that there was a long established and sensible ground rule never to trust or rely on machinery of any kind. Unsurprisingly the new customers presumed that slot machines were anything but random and were set up to fleece them of their mattress money.  I could understand their trepidation, especially when all the machines in a new Polish casino had been wired incorrectly and delivered electric shocks to any player that touched them.

 

Eastern Europe has evolved into an established and highly profitable casino environment.  The mattress money is long gone, but many of the economies have expanded hugely and are still thriving. Some of the big corporations have now entered the market, but they maintain an understandably cautious approach. There are still unpredictable and unfathomable changes waiting around many corners and many of the jurisdictions have introduced numerous radical changes over the years. In some cases, rather than upgrading their gaming laws, the local politicians have banned previously sanctioned casinos altogether, destroying the original investments in their economies. Over two decades later the same discouraging rule seems to be hanging in the wind, the further east you go the sharper the razor’s edge.

cmoore@telefonica.net