International edition
June 23, 2021

The aim is to draw gamblers from London to Moscow

Harrah’s and Hard Rock gamble us$ 8 billion on East Europe

(Slovakia / Hungary / Austria).- Harrah’s Entertainment and Hard Rock International are competing to overcome local opposition and build the first U.S.-style casino resort in eastern Europe. The complexes would stand where the borders of Slovakia and Hungary, former Soviet satellites, and Austria, once the European Union’s frontier, converge.

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he aim is to draw gamblers from London to Moscow and counter shrinking revenue at home. “You just have to look at eastern Europe,” Jan Jones, senior vice president for government relations at Harrah’s, the world’s biggest casino company, said by phone from Las Vegas. “It has hundreds of millions of people, but little gambling product. Their casinos are small, so we have an opportunity.”

While it’s more than two decades since the demise of communism in the region, economic output lags behind the European Union average and companies are still betting on an increase in consumer spending. Governments also are keen to promote tourism, jobs and investment to help mitigate the worst economic climate since they embraced capitalism.

Harrah’s 1.5 billion-euro (us$ 1.85 billion) resort and Hard Rock’s 5 billion-euro “EuroVegas” complex would be about 20 kilometers from each other on the highway between Bratislava and Budapest, making them reachable from the main Vienna and Bratislava airports within 20 minutes. They would have hotels, convention centers, shopping and swimming pools.

The “future of the gaming sector lies in bigger multifunctional resorts,” said Indrek Jurgenson, chief executive officer of Estonia’s Olympic Entertainment Group AS, which runs a chain of 67 smaller casinos from the Baltic to the Black Sea. The addition of a U.S. presence will “benefit the gaming market in the region,” he said in an e-mail.

Pavel Lupandin, who covers Olympic for Swedbank AB in Tallinn, said the company will survive the rivalry as many gamblers may still opt for smaller, more sedate gaming. “If the U.S. companies give it a hard go, Olympic will lose a bit,” said Lupandin. “But overall, for Olympic itself, it won’t be a big problem. The concept is new, and there is a reason why this thing has not gone on in the past. It is cultural.”

The U.S. companies need to overcome opposition from residents, and clear legal and political hurdles. Some locals are concerned about drugs, prostitution and traffic, while others welcome prospects of new jobs in a downtrodden area.

Angry residents gathered 110,000 signatures to force a debate in the Slovak Parliament, said petition organizer Eleonora Mackova. “It will be a huge catastrophe,” said Sarka Kamocsaiova, who lives on the fourth floor of a communist-built apartment building that faces the wheat fields where the casino would stand. “It will destroy my beautiful green view. And who needs more hookers around here?”

Viera Kimerlingova, the deputy mayor of Bratislava’s Petrzalka district, which lies along the southern edge of the city and is one of the capital’s poorest neighborhoods, said the Harrah’s application lacks assurances that the developer will stick to the plan. “A mega-casino doesn’t have a place in Europe,” she said.

Gabor Zaszlos, the head of the Slovak unit of TriGranit Development Corp., the developer for Harrah’s, said he hopes local government opposition will wane. “We are not giving up on this,” said Zaszlos. “This is all about nerves and endurance.”

Harrah’s and Hard Rock need to counter a two-year slump at home, said Ben Bubeck, a director at Standard & Poor’s Corporate Ratings in New York. In Las Vegas, the Number 1 U.S. gambling destination, 2009 gaming revenue dropped 9.4 %, while in Atlantic City, New Jersey, revenue fell 13.2 %. “Americans are certainly pulling back on discretionary spending,” said Bubeck. “It’s not a good time in the U.S. right now. So they have to look abroad.”

While eastern Europe also suffered from the global crisis that crimped consumer demand, Slovakia and Hungary will outperform the U.S. and the EU next year as a whole, according to the International Monetary Fund’s April outlook.

Per-capita gross domestic product, as measured by purchasing-power parity, in the EU was 29,729 euros last year, versus 21,244 euros in Slovakia and 18,566 euros in Hungary. Jones at Harrah’s said in the end, it’s up to gambling executives to win over the skeptics. “We are not trying to take from the community, but give to them” jobs and investment, she said. “They’re afraid because they don’t understand. We have a responsibility to teach them.”

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