The Border Casino Case - Benefits, Costs, and Downsides

The Border Casino Case – Benefits, Costs and Downsides

Dr. Johanna Järvinen-TassopoulosGambling, Casinos and the Public Good – International

Research Conference26.9.2013, Ateneum Hall, Helsinki

Welcome to Vaalimaa, Finland!

26.9.2013 Johanna Järvinen-Tassopoulos 2

Introduction• Finland was among the first Nordic countries

to allow land-based casino operation, but it took more than three decades to open the first international casino in Helsinki

• In 1969, a committee was assigned by the Ministry of Trade and Industry: it was commissioned to find out about the possibilities to operate casino gambling and increase tourism in Finland

• The Ministry of the Interior set up a working group in February 1990 and the Council of State allowed the Slot Machine Association (RAY) to start casino gambling operation in 1991

• Between 2009 and 2011, the national gambling operators anticipated the legislative changes to be made concerning age limits, lotteries, casino gambling, and tote games


• RAY wanted to open a second casino in the Eastern Finland: many municipalities offered their premises to the gambling operator, because a casino would boost local economy, create employment and increase tourism

• A small community (3,452 inhabitants) on the Finnish-Russian border won the competition: it had land for a suitable building project, but nothing else

• Operating casino gambling on the border raises many questions:

a) How to define the socio-economic impact of casino gambling on the community?

b) Will the border casino increase tourism and what type of tourism?

c) What does cross-border gambling mean from the national gambling policy perspective?


ContentIntroduction1. Casinos on the Border: What are the

characteristics of border casinos?2. Data, Methods and Ethics: Articles, comments

and opinions published in the Finnish press (2012); content analysis; research ethics

3. Main Topics in the Finnish Press (2012): What were the mains topics (or arguments) in the public discussion concerning the opening of a new casino?

4. The Impact on Vaalimaa Region: How can the border casino case be represented within the Socio-Economic Impact of Gambling Framework (SEIG)?

Conclusion26.9.2013 Johanna Järvinen-Tassopoulos 5

1. Casinos on the Border• Why are border casinos different from other

land-based casinos?• 1) Can gambling be seen as a sustainable

economic strategy in a community? 2) Can gambling be categorized as a tourism and leisure activity? (Felsenstein & Freeman 2002)

• ”The border is a favorite site for the development of casinos, particularly if a large market exists on the other side.” (Felsenstein & Freeman 2002)

• Border casinos are exploiting the differences in regulatory regimes between neighboring states (Zagorsek & Jaklic 2009)


• Gambling tourism and occasional gambling during the visit (Zagorsek & Jaklic 2009)

• A location on the border is fraught risk (Felsenstein & Freeman 2002)

• If prohibitions of gambling disappear, tourism-based gambling will diminish as well (Eadington 2001)

• Export-oriented gambling (Zagorsek & Jaklic 2009): some Slovenian casinos are for foreign tourists (Italians) only

• Problem gambling: self-exclusion from the local casino does not mean that the gambler is excluded from the casino on the other side of the border (Järvinen-Tassopoulos 2010)


2. Data, Method and Ethics• Data: Articles, comments and opinions

published in the national press between August and November 2012; many regional newspapers commented the Eastern casino project

• Method: Content analysis• Ethics: I was allowed to use RAY’s press

archive for my study on casino operation in Finland. Special thanks to Anssi Airas, Hannu Rinkinen, Anu Hyvönen, Elina Huumonen and Mari Kauppinen.


3. Main Topics in the Finnish Press (2012)• Competition for the casino:

About 15 to 20 municipalities competed with each other for the Eastern casino – only a few of them were revealed in the press. Some of them had premises ready a casino and others offered to build a hotel and a spa near the casino.• Location:

The chosen location (Vaalimaa, the Finnish-Russian border) provoked a heated debate in regional newspapers: some municipalities were disappointed and challenged RAY’s decision. The winner (municipality of Virolahti) was more than excited.

RAY explained that location is a key issue in casino business. The border region was seen as a potential business area.


• Casino gamblers:Russian tourists were seen as potential

customers, because they were represented wealthier than the local residents and there are no land-based casinos on the other side of the border.• Employment:

Job creation was much anticipated both in the border region and the surrounding areas. The shopping center, in which the casino will be opened, was seen as a major employer in Virolahti.


• Vaalimaa Shopping Center (VSC):The shopping center will be financed and

built by Russian investors. The fear of these investors culminated in mistrust and objections in several articles and comments. Later the names of the board members of VSC were published.• Local business:

Despite the chosen location, some investors and municipal officials were confident that there would be enough revenues from Russian tourism to benefit other regions as well. Virolahti was represented as a future business center which would happily welcome new investors. 26.9.2013 Johanna Järvinen-Tassopoulos 11

• Finnish gambling policy:Surprisingly the casino debate did not focus on

the gambling monopoly system. The border casino was seen as a way to increase gambling revenues in the name of the public good. The future of the Finnish gambling monopoly system would depend on EU regulation.• Beaten municipalities:

The socio-economic impact on the beaten municipalities was also discussed in the Finnish press. Some municipalities had to change their visions on tourism and business possibilities. On the other hand, there has been negotiations concerning the consolidation of municipalities (Virolahti, Miehikkälä, Hamina): perhaps other municipalities will also benefit from casino operation.26.9.2013 Johanna Järvinen-Tassopoulos 12

4. The Impact on Vaalimaa Region (SEIG)The Socio-Economic Impacts

Economic &Financial

Legal &Justice

Employment &Education

Culture Health &Well-Being

Recreation& Tourism

Benefits Tax revenues;Business investments;Tourist expenditures

Consolidation of municipalities;Exemption from visa?

Job creation in the community;Reopening of the local school

More gambling revenues for the beneficiaries

Entertainment;Leisure;Spa

Tourism; Gambling tourism;Leisure;Shopping

Costs Housing production;Roads;Architecture;Design

Customs;Gambling monopoly system at stake

Daycare;Teaching Russian language in Finnish schools;Job creation in Russia

Tourists have expectations!

Down-sides

Lack ofInvestment in the shopping center project;Untrustworthy business partners

Money laundering;Crime; Prostitution

Not enough tourists for the other regions


Conclusion• A border casino seems to be a challenge for the

gambling operator and the community as well• Its socio-economic impact is wide: it may benefit

several small communities, but casino operation will also cost to the region

• From a regulatory point of view, border casinos are interesting cases especially when gambling operation is restricted or prohibited on the other side of the border

• The Finnish public discussion (highlighted by the press in 2012) seemed to react in a quite positive way to the opening of a casino in the Vaalimaa area

• It is too early to say if casino operation will benefit the municipality of Virolahti: it depends on business investments, tourism, customs and visa policy between Finland and Russia26.9.2013 Johanna Järvinen-Tassopoulos 14

• In the Western world gambling is already a leisure activity: combined with shopping, staying in hotels, relaxing in a spa and discovering new cuisines, what else can it be?

• Nevertheless, Russia has many neighbors which already welcome Russian gamblers to their premises

• Will EU tolerate cross-border gambling in the case of disagreement on problem gambling between two member countries or one member country and a non-member country?

• The Vaalimaa case needs to be studied further: there are a lot of questions concerning the future of Finnish gambling policy and regulation that should be answered!


THANK YOU! [email protected]


ReferencesEadington, W.R. (2001). The Spread of Casinos and Their Role in Tourism Development. In D.G. Pearce & R.W. Butler (Eds.) Contemporary Issues in Tourism Development. London, New York: Routledge, pp. 127-143. Felsenstein, D. & Freeman, D. (2002). Gambling on the Border: Casinos, Tourism Development and the Prisoners’ Dilemma. In S.Karkover & Y.Gradus (Eds.) Tourism in Frontier Areas. Oxford: Lexington Books, pp. 95-112.Järvinen-Tassopoulos, J. (2010). Les jeux d’argent: un nouvel enjeu social. Pensée plurielle 23(1), pp. 65-76.Zagorsek, H. & Jaklic, 21 (2009). Resort Casino Development and Its Linkage to National and International Tourism: A Slovenian Perspective. In W.R.Eadington & M.R. Doyle (Eds.) Integrated Resort Casinos. Implications for Economic Growth and Social Impacts. Reno: University of Nevada, pp. 21-53.


The Border Casino Case - Benefits, Costs, and Downsides

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