Changes Coming to Ireland: Growth Opportunity or Missed Mark

Major changes are on the way in the Irish gaming market with a new law set to go into effect in 2015. The new law puts gaming under the control of the Ministry of Justice, creates a new gaming board and will affect not only the land-based industry, but also the online industry. While the new act has been widely hailed as a long overdue, necessary step, the government’s decision to place strict limitations on the size of casinos has been described by one local MP as “short-sighted.” So will the new act hail the beginning of a sustained and continued growth for the industry, or will the government’s new proposals amount to nothing more than a missed opportunity?

Gaming law in Ireland dates back to 1956 and is enshrined in the Gaming and Lotteries Act. Legislation regarding casinos is almost unique, as while they are ostensibly banned, locals are able to bet in licensed, private member clubs. These are able to operate throughout Ireland because of a provision in the 1956 bill that allows for card playing in private houses. Consequently, land-based casino gaming in Ireland is small-scale for now and only accounts for a miniscule amount of the gaming market (around 1.5 percent), with sports betting (especially horse race betting) making up the vast majority of gaming revenues. All the same, the Irish like to gamble and the gaming market is worth, according to the latest statistics available, around €1.7 billion in gross gaming revenue, while casino gambling and bingo combined account for less than €100 million.

The government has been looking to make major changes to the gaming act since 2006 when it requested that then-Minister for Justice, Equality and Law Reform Michael McDowell look into gaming in Ireland. With a remit to suggest proposals to the 1956 legislation that would more accurately reflect the modern gaming landscape, McDowell consequently proposed the establishment of a special investigative committee that went into session in 2008. When establishing the casino committee, McDowell highlighted the importance of reform and stated that the unregulated nature of casino-style activities was “a major concern of the government.”

As expected, the committee recommended major changes when it came to the regulation of casinos and it was particularly scathing of the 1956 act in which it described in the preface to its final report as a “relic of social history,” which is “utterly unsuited to effectively regulate gaming in a modern, wealthy European state.” Although the 1956 act made no provision for casinos, the committee found that more than 30 casinos were operating in Ireland with almost two-thirds located in Dublin. All of these clubs offered casino gaming such as poker, blackjack and roulette.

The committee made a number of recommendations after its findings and provided the basis for Ireland’s new Gambling Control Bill announced in July 2013 by Justice Minister Alan Shatter. The new act repeals any previous gambling legislation and specifically rules in favor of more modest operations. It rules against large-scale casinos because they are not, according to the ministry, in the public interest. In justifying his decision, Shatter explained that “there were substantial difficulties in other states with that type of framework” and that smaller operations were “the correct way in the public interest overall in dealing with this issue.” The new law—still in its draft form—allows for a maximum of 40 casinos but bans any large-scale operations, as none may have more than 15 tables and 25 slot machines.

In unveiling the new act, Shatter announced that the new legislation had the twin objectives of “effectively regulating the new and dynamic gambling sector that has emerged in recent years, while also providing the opportunity to introduce important new measures to protect vulnerable adults and young people.” Consequently, the new act rules that a proportion of gaming tax revenue will be put aside to ensure safeguards are in place to avoid gambling addiction. As the licensing authority, the Ministry of Justice will grant licenses to those operators who embrace the commitment to actively implement and promote the objectives of the new legislation. The licensing process will be rigorous and the new act puts a number of other restrictions in place, including a ban on fixed-odds betting terminals, which are becoming an increasingly controversial issue in the U.K., and a ban on alcohol being served outside of normal bar operating hours.

The new act was warmly welcomed by the Gaming and Leisure Association of Ireland (GLAI), a nonprofit trade association that represents the casino sector in Ireland and has had a key role in advancing the regulatory process for casinos. In a press statement released after the announcement was made, David Hickson, director and chairman of the GLAI, said the government had decided to take “gambling out of the dark ages.” He added that “proper regulation of the gaming sector is good news. It will help prevent criminal involvement and bring Ireland in line with best international practice.” Hickson also pointed out that a regulated casino sector would “further enhance the attraction of Ireland as a tourist destination, as many tourists enjoy the benefit of a regulated casino offering in their home countries and like to enjoy the excitement of a flutter while on holidays in a safe and reputable environment.”

However, the new bill received a far less enthusiastic welcome from Michael Lowry, a member of the Lower House. Lowry, who represents Count Tipperary, which had been tipped for the site of a future Las Vegas-style strip, said that the cap on gaming machines and tables “is so prohibitive as to make these proposed new casino licensees commercially non-viable.” In a statement, Lowry described the new act as “a missed opportunity to modernize our gaming law in line with European norms,” and he went on to say that “the minister’s proposed legislative reform will fail to maximize the potential for the gaming sector and the benefit to the economy as a whole.”

The large-scale gaming complex in rural Tipperary had already been granted planning permission in 2011 and would have been part of a €460 million, 325-hectares site, which would have included an all-weather race course, greyhound tracks, a 500-room 5-star hotel, golf course and an “Irish Las Vegas strip.” The new act ends this project at a stroke, and as the new casinos will be extremely small-scale, it will likely deter major foreign operators from investing in the market as well.

However, some experts had already hinted that a casino complex of that size in rural Tipperary and not in easy reach of an airport was unviable given the relatively low density of the local population. So, is the new gaming law realistic in that it is in keeping with Ireland’s potential when it comes to the gaming market? Speaking exclusively to CEM, Hickson said the market is limited, but there is still room for growth over the long term.

“The market in Ireland, even during the boom years, has always been quite small, [with] casinos making up approximately 1 percent of the gambling industry,” Hickson said. “The economic situation now is such that disposable income has reduced significantly; therefore I do not believe that the market is there to sustain a larger-scale casino. Perhaps if none of our European neighbors had regulated casino sectors, then Ireland could consider trying to become a casino tourist destination, but Ireland is one of the last of the EU states apart from southern Cyprus to introduce regulation.”

“Rather, by introducing strict regulation for a more modest scale of activity, there is the possibility that business will develop slowly over time as the reputation of the sector is established, thereby broadening the appeal of casinos in general.”

The new act will also have sweeping repercussions on the rest of the gaming industry, as it also covers other types of gaming, including the online sector bingo, lotteries (apart from the National Lottery) and sports betting, all of which will be regulated by a newly established gaming Office for Gambling Control.

So after 57 years, Ireland will soon have a new set of rules when it comes to gaming. Although the new bill does have detractors, many believe that the government has designed a bill that will create a far more closely regulated landscape and address the future of the gaming industry on a realistic scale, thereby paving the way for sustained growth.