Slovenian Gambling Industry: From Land Based to a Need of Stronger Internationalization

ABSTRACT

The coronavirus pandemic in 2020 is and will be marked by international social interactions. Gambling as a part of tourism, which is considered to be a globally important economic sector, like many other sectors, is facing a new reality and is practically in shock. Changed circumstances under normal conditions, and all the more so in emergencies, require rapid and effective adaptation. In this context, we want to raise the issue of the readiness of the Slovenian gambling sector to operate under the changed circumstances of international proportions.

Also the land-based (offline) gambling on the Slovenian territory has a relatively diverse history. Online gambling began to develop around the world in the middle of the 1990s when it experienced a strong boom and development. The article deals with the study and the issue of the strategic documents related to gambling in Slovenia, the implementation of guidelines in the normative regulation as well as the adequacy of strategic thinking regarding the international interaction of social activities. As gambling is part of tourism, a brief discussion about the strategic documents related to tourism has also been presented.

Slovenia’s strategic attitude towards the development of gambling is mainly focused on land-based gambling in a relatively narrow international space, with relatively conservative and cautious treating of online and classic gambling activities.

KEYWORDS: games of chance, gambling, casino, gaming salon, international economic relations, diplomacy

INTRODUCTION

Originally, gambling games were those whose sole purpose was entertainment. All other game-related effects were secondary, becoming gradually part of the games, along with the development of the culture. In cultural development, games and religion have been significantly related. This connection can be observed and found in all people. During the cultural development, people have tried to force luck into the games, by a random decision that does not depend on human will.[2]

The game, as a social phenomenon, has been present in human history practically from the very beginning. We associate the phenomenon with a pleasant area of social activities, which offers relaxation and entertainment as well as satisfaction, and does not contain or reflects any negative effects. We are talking, of course, about social games, sports games, dramatic games and also about games of chance[3] (the result is determined by chance). All of these games will take on a completely different meaning and connotation when the factor of money, goods, or services is included. Thus, the risk becomes a key component. The risk is the basis of human action without which it is practically impossible to live.

The article focuses on the development and responsiveness of the Slovenian gambling industry to international development and trends. It discusses and studies the strategic documents related to gambling after the independence of Slovenia and the implementation of the guidelines into the normative regulation of gambling. Additionally, the article includes reflections and raises the issue of the past strategic orientations taking into account the changed international circumstances in connection with the coronavirus pandemic (COVID-19). It also deals with the land-based (offline)[4] gambling, online gambling and classic games of chance[5]. As gambling tourism is part of a wider tourism offer, the strategic documents in the field of tourism in Slovenia are also discussed. The article is aimed at giving a useful general analysis of the gambling industry in the region. Only certain segments from strategies (types of gambling, ownership structure) have been considered. The area of gambling levies and their distribution, the enforcement control, concession award policy and socially responsible conducting of the gambling activities has not been included in this article.

Gambling in the EU has not been regulated centrally. Member States regulate this field at the national level, following national values and goals.

Kaburakis and Rodenberg conclude that the European economic sector of the regulated gambling industry is the largest source of income, which represents one of the most volatile areas due to the variety of legal systems governing the gambling sector.[6]

A high level of interdependence and interaction of the international community in the context of economic activities has been demonstrated in the recent experience of the coronavirus pandemic in 2020. Benko considers that a high degree of interdependence in social processes is easiest to identify in international economic relations in connection with trade[7], which undoubtedly also applies to tourism and gambling. Individual and independent measures imposed by individual countries, especially the closure of state borders or restrictions on the free movement of people between countries, have shown the vulnerability of economic activities related to international markets, and so have Slovenian tourism and gambling industry. Overnight, the tourism industry has become dependent on domestic tourists, and Slovenian land-based gambling has practically died out, as it is largely dependent upon Italian and Austrian tourists. Even before the outbreak of the coronavirus pandemic, part of Slovenia’s gaming activity took place online, but not all operators are allowed to operate games of chance online, which actually makes it impossible to do the business at the time when the world was in a “lockdown”. A new reality and an uncertain future call for unconventional measures, new models and theories.

OVERVIEW OF TERMS

This section presents the definition of the basic terms: gambling, games of chance, classic games of chance, special games of chance, online games of chance, casino, gaming salon and hazard.

Gambling is “an economic activity that concerns operation of games of chance.”[8] The phrase “conducting the games of chance” can be defined as the equivalent of the term gambling.

The games of chance, According to the Gambling Act, are “games in which participants have the same chance to win prizes based on the paid amount of money with the outcome of the game depending exclusively or predominantly on chance or some uncertain event”.[9]

Classic games of chance pursuant to the Gambling Act are numerical lotteries, lotteries with currently known winnings, quiz lotteries, bingo, lotteries, sports forecast, sports betting, raffles and other similar games.[10]

Special games of chance are games played by the players against a casino or against each other on special gaming tables with balls, dice, cards, on boards or on slot machines, as well as betting and other similar games in accordance with international standards.[11] According to the law, special games of chance must be operated only in casinos, with the exception of betting, which is allowed also on the Internet or other telecommunication media.[12] In gaming salons, however, a joint stock company or a limited liability company may, subject to a granted licence, operate only the games on slot machines, which the players play against the slot machine[13].[14]

According to the Slovenian legislation, online games of chance[15] are not a different type of games of chance – it is merely the way of operating certain games of chance[16]. Operating certain special games of chance via the Internet or other telecommunication media (online gambling) may be conducted only by the companies that are given concession for permanent operation of classic games of chance, or for the operation of special games of chance in casinos.[17] Online gambling is not allowed to be operated by the companies that hold the concession for operating special games of chance in gaming salons.

The terms casino and gaming salon[18] are not directly defined in the Gambling Act. Dictionary of Standard Slovenian Language defines the term casino as “a company, an institution that deals with the organization of gambling”[19]. From the above, we can derive a definition for a gaming salon and define it as a company, an institution that deals with the operation of certain gambling (hazardous) games prescribed by law. The term gambling (hazard) refers to a game for money, usually played with cards or dice, the outcome of which depends on chance.[20] Mihelič attributes the term “hazard” to the meaning of a special type of game, which, due to coincidences and unpredictability of the outcome, represents an adventure that is irresistibly attractive and contains sweet surprises as well as bitter disappointments.[21]

Often, gambling is defined as an activity of the betting or staking of something of value, with consciousness of risk and hope of gain, whose result may be determined by chance or accident or have an unexpected result.[22] In gambling, i.e. forecasting or predicting an unknown/random outcome of an event, it is difficult for many players to accept the fact that further/future outcomes of events or results are completely independent of the past outcomes of events or results that occurred under similar circumstances. This also applies to connoisseurs of the theory of statistical independence. The belief that a set of successful/winning outcomes of events is inevitably followed by failure/loss and vice versa is very powerful, in fact predominant. Belief is like an optical illusion. Although it is false, we cannot dispel it.[23] In addition to prostitution and espionage, the phenomenon of gambling can certainly be considered one of the oldest “crafts” of civilized society.

OVERVIEW OF SLOVENIAN TOURISM STRATEGIC DOCUMENTS RELATED TO GAMBLING

The article further presents the chronological review of important Slovenian tourism documents related to gambling and highlights key findings from the Resolution on Strategic Goals of Tourism Development in the Republic of Slovenia from 1995, Slovenian Tourism Strategy 2001-2006, Slovenian Tourism Development Plan and Guidelines 2007-2011, Declaration on Partnership for Sustainable Development of Slovenian Tourism from 2011, Strategy for the Development of Slovenian Tourism 2012-2016 and Strategy for Sustainable Growth of Slovenian Tourism 2017-2021.

The importance of tourism for the Slovenian economy is significant, which is also shown by the figures. In 2016, 12.9% of all employees were employed in tourism; tourism generated 8.1% of the total value of Slovenian exports, and the contribution to GDP amounted to 12.6%.[24]

In 1995, the National Assembly of the Republic of Slovenia adopted a Resolution on Strategic Goals of Tourism Development in the Republic of Slovenia with a program of activities and measures for its implementation.[25] The Resolution states that only Nova Gorica has the characteristics of a complete gambling product. It also states that the attractiveness and advantages of gaming reflect in a concentration of the variety of games and entertainment as well as easy accessibility (what accessibility is meant is not stated – A/N), as well as that for a higher competitiveness, the product requires upgrading in terms of greater diversity and product range.[26] In the

document Tourism Policy and Analysis of Slovenian Tourism in the Period 1995-2001, the Office for Macroeconomic Analysis and Development states that casinos generated the largest structural share of foreign exchange earnings in 2001, namely 13.6%.[27] The introduction of the American gaming model in the Slovenian tourism industry enabled the development of competitive services on the European market. Gambling, as one of the anthropological characteristics of human development, represents a lasting source of tourism offer. For the imaginary world, gambling centres represent a fundamental attraction.[28]

Gambling tourism is recognized in the Slovenian Tourism Strategy 2001-2006 as an absolute competitive advantage of Slovenia.[29] The aforementioned Strategy of the Slovenian Tourism from 2001 envisages the construction of five gambling and entertainment centres[30], as a strategic goal of Slovenian tourism, and gambling is defined as a basic business and entertainment orientation.[31] It follows from the above Strategy that gambling was the most developed Slovenian tourism product and it represented the biggest competitive advantage of Slovenia and its biggest tourism business development opportunity. It has been noted that in recent years the basic policy of the gaming industry development has remained markedly restrictive rather than developmental (concession restrictions and high tax burdens). In the 1990s, Slovenia was the first in Europe to develop or introduce the so-called American type of gambling (casino as an entertainment space), however, it has not developed appropriate business (ownership) and other regulatory mechanisms that would suit the mentioned method or type of its tourism offer. The Strategy included gambling tourism in the priority program guidelines of the Slovenian tourism and defined some important business guidelines based on the development of the gaming industry in the period 2002-2006 (privatization of the gambling industry, increase of gambling concessions, tax relief, central state regulation, certification of gambling devices). It was further anticipated that gambling tourism would become the main business program of the Slovenian tourism in the period 2002-2006 and that the activity would be developing within the tourism offer in all major tourist centres with traditional tourism offer. In 2003, a new gambling strategy and appropriate legal/regulatory mechanisms to enable privatization were created. The main investment cycle in the gambling industry was projected for the period 2004-2006.[32]

Slovenian Tourism Development Plan and Guidelines 2007-2011, in the part where the internal environment is analyzed, states that the gambling and entertainment product is one of the most important segments of the Slovenian tourism[33], but the legislation still restricts the development activity, thus reducing the competitive advantage. It is further stated that in the development of the gambling business, it is necessary to follow the guidelines for granting concessions to gaming salons only in tourist places.[34] Entertainment and gambling are classified into the basic areas of the tourism offer.[35] Slovenian gambling industry is understood to be distinctly an export industry. It is related mostly to the Italian market, which is intensively developing its gambling services. The most important gambling services in Slovenia are concentrated in the border zone between Italy and Austria, while elsewhere they are subordinated to other tourism offers.[36] As a precondition for the creation of a favourable business environment in tourism, when gambling is concerned, it will be necessary, in addition to the creation of more favourable business environment (encouraging entrepreneurship and competitiveness), to envisage a condition in terms of the amendment of the Gambling Act “towards the creation of favourable normative environment encouraging the gambling development cycle (especially the abolition of the progressive fiscal restrictions of gambling activity and concession relief for development investments) and the limitation of the number of concessions for gaming salons.[37]

Declaration on Partnership for Sustainable Development of Slovenian Tourism from 2011[38] states that gambling is insufficiently integrated into the tourism offer, which is also highlighted in the Strategy for the Development of Slovenian Tourism 2012-2016[39] and is recognized as an obstacle to achieving greater competitiveness of the Slovenian tourism.

In Strategy for the Development of Slovenian Tourism 2012-2016, gambling and the entertainment tourism form a common product, or a set of leisure services.[40] Gambling tourism, or operation of special games of chance, significantly completes and complements the Slovenian tourism offer and is considered a special segment of tourism, which is internationally competitive and which develops with high added value. One of the identified obstacles in achieving greater competitiveness of the Slovenian tourism is too small, or insufficient integration of gambling tourism into the tourism offer of Slovenia. The Strategy states that it is crucial for the gambling industry to encourage capital-strong concessionaires for operating special games of chance, who are capable of building more socially acceptable gaming centres and investing in the tourism infrastructure by individual destinations. “Specific goals in the field of tourism-oriented gambling are to encourage the development of tourism and entertainment infrastructure by introducing a stimulating system of gambling taxes, to ensure quality and diverse gambling services, to introduce an active concession policy, to create complete gambling areas, to define in more detail conditions for each individual type of gambling and to obtain the largest possible share of economic rent for the state, which still enables an appropriate level of investment in the gambling and tourism product and appropriate return on investment to the concessionaire.”[41]

In the Strategy for Sustainable Growth of Slovenian Tourism 2017-2021 the entertainment and gambling tourism are no more considered as the key/main product[42] [43], but as the so-called secondary/support product[44] to all main products of practically all macro destinations (Alpine Slovenia, Mediterranean Slovenia, Pannonian Slovenia, Central Slovenia & Ljubljana), except so-called Pannonian Slovenia.[45] No special measures for gambling are envisaged, except for “restructuring of state-owned hotel companies, which includes an investment plan and a management plan”. Furthermore, the strategy shows that hotel and gambling companies owned by the Republic of Slovenia “are facing inefficient management, lack of investment in recent years and deterioration of hotels and resorts with little hope that the current situation will be resolved in the short term.”[46] In the analysis of the tourist industry, the strategy mentions, among other things, “a high share and control of the public sector in hotel and catering companies and gambling. The public sector has 38% ownership share in the 20 largest companies in terms of income in the hotel business, 32% in hotel companies together with gambling and 27% in catering and gambling.”[47]

Based on a chronological review of the strategic documents in the field of Slovenian tourism, we can conclude that gambling was recognized in the last decade of the 20^th and the first decade of the 21^st century as a highly developed activity, representing Slovenia’s competitive advantage and its greatest tourism business development opportunity. At the beginning of the second decade of the 21^stcentury, it has been established that gambling is insufficiently integrated into the tourism offer, which is an obstacle to achieving greater competitiveness of Slovenian tourism. Change of direction or the treatment of gambling is defined in the Strategy for Sustainable Growth of Slovenian Tourism 2017−2021, where gambling loses its importance and is classified as a support product to the key product. The gambling treatment, development and services are strongly focused on the land-based services in tourist resorts and border towns, primarily intended for foreign tourists.

OVERVIEW OF STRATEGIC DOCUMENTS RELATED TO GAMBLING IN SLOVENIA

Among the most important/basic documents in the field of gambling are the Strategy of Gambling Development in Slovenia 1997 and the Strategy of Gambling Development in Slovenia 2010−2020, which have been analysed here below. Additionally, the scope and content of the implementation of the normative guidelines outlined in the strategies have also been analyzed and the key findings with an emphasis on the integration/placement of Slovenian gambling in international economic flows highlighted.

Strategy of Gambling Development in Slovenia 1997

The Strategy says that the mission of the gambling activity is that “within the given, clear and development-oriented framework, it is appropriately and transparently managed, with effective supervision in a positive environment, and that it successfully uses the given resources, the effects of which are coordinated towards integrated tourism development. It also encourages the competitiveness of the tourism offer and increases the total tourism income and thus also direct and indirect fiscal resources in the long run.”[48] As its goal, the Strategy envisages the transfer of the gambling’s positive effects to the development of the tourism offer within the bordering area and wider, to the entire territory of Slovenia.[49] It was found that Slovenia had a relatively modern concept of gambling and that in previous years it successfully competed with European competitors, especially by upgrading its offer. However, the acquired competitive advantage has not been so pronounced in recent years[50]. Demand for gambling tourism grew faster than demand for traditional forms of tourism. In addition to the awareness that gambling can have negative effects in the form of addiction and compulsive gambling, it was largely seen as entertainment. Through the strategy, the development of gambling has been directed to the parts of Slovenia where market resources are provided, but it is necessary to ensure the conditions for development. However, turning the whole of Slovenia into a gambling destination was not the goal of development.[51] At that time, the income generated by the Slovenian gambling industry predominantly represented cash inflows from abroad. Slovenian gambling was called “net export of services with high added value”.[52] The gaming services in Slovenia were almost entirely focused on foreign markets. The major market was the north-eastern part of Italy, followed by the market of southern Austria, and the markets of Slovenia and Croatia were negligible at the time of the elaboration of the Strategy.[53]

At that time[54], the European gambling market was dominated by classic and gambling-oriented offer (European type of gambling[55] – A/N), intended for wealthy domestic guests and wealthy tourists. Supply, despite increased demand, did not include gambling[56] activities typical of the American[57] entertainment and gambling product. It was estimated that an adapted American gambling model has a future and potential also in Slovenia. The proof in favour of this estimation was the successful development of Slovenian gambling in the area of the western state border, which offered the services mainly to the Italian guests. The standard offer of gambling services was believed to have smaller development possibilities. An opportunity for development could have been a modern centre, limited to a specific area, which would include an attractive, integrated, harmonious and modern designed offer. With appropriate management, such a centre, which had never been seen in Europe, would have a realistic chance of operating successfully.[58]^[59] The existing situation in Slovenia, such as the proximity of rich markets and the tendency of tourists from these markets to enjoy rich, quality and temperamental life, should, in addition to good business tradition, quality staff, and so on, have enabled the Slovenian gambling industry, in contrast to other tourist products, the fastest and the most effective development.[60]

The characteristics of the gambling guests, in addition to visiting casinos and participating in gambling, are also the use of other gambling-related services such as shopping, catering, or accommodation, that is, the consumption outside the range of the gambling services. It means that gambling activities also affect the development of other activities in the place where the casinos are located, which further affects the tourist attraction of the place and the region. Therefore, the starting point for casinos, or the companies involved in the operation of games of chance, is cooperation and stimulation of the development of tourism in the place where the gambling activities are carried out.[61]

In terms of the global strategic definitions, the Strategy states that gambling is an integral part of Slovenia’s comprehensive tourist offer. The strategic management of the development policy ensures a model of gambling and entertainment offer that will be naturally and culturally acceptable. Development of the activities/offers is enabled only in areas where market conditions are appropriate, meaning primarily the presence of foreign guests. Gambling that takes place online and payments are made abroad must be legally restricted.[62] The use of slot machines outside casinos[63] must be prohibited or the machines removed.[64]

For the next 10-year period, the issuing of 14 large concessions[65] (gaming and entertainment centres, casinos in tourist resorts, city casinos) and 20 small concessions (gaming salons)[66] was proposed, and all the concessions were to be granted before Slovenia’s accession to the EU, which would protect Slovenia’s economic interests in the field of gaming. Its focus was on export-oriented gaming services, that is, on foreigners, and the ownership of gaming companies was to remain in the domain of domestic owners.[67]

Classic games of chance are not included in the Strategy, and in this regard it is only stated that “it will be necessary to regulate the field of operating various games of chance within the framework legislation, both for operating classic games of chance and special games of chance.”[68]

Normative implementation of strategic directions of gambling after 1997

The amendment to the Gaming Act of 2001[69] abolishes the use of slot machines outside casinos and regulates gaming business, i.e. operating special games of chance in gaming salons. Until then, slot machines were allowed to be used in certain spaces outside the casinos.[70] The number of concessions for gaming salons was not yet defined, but the upper limit of the share of shareholders or the partners of foreign legal entities and natural persons was determined, which together was not allowed to exceed 25% of the share of a company having a concession for special games of chance in gaming salons.[71] This restriction on the foreign entities ownership was removed in the amendment to the Gambling Act of October 2003[72], which stipulates the condition for operators or concessionaires that only a person who has the citizenship of the Republic of Slovenia or a Member State of the European Economic Area, or the registered seat in the Republic of Slovenia or a Member State of the European Economic Area, is allowed to participate in the company’s capital. With the implementation of the amendment to the Gaming Act of 2001[73] the operation of games of chance in Slovenia becomes the exclusive right of the Republic of Slovenia, and the ownership of casino concessionaires was defined in detail in 2003 onwards.[74] The key provision is that the Republic of Slovenia controls the majority share in companies that have a concession for the operation of special games of chance in casinos.

The normative regulation of online gambling was implemented for the first time in Slovenian legislation in the Act of 2001[75], which we estimate as relatively late, especially considering that the beginning of online gambling in the world dates back to the mid-1990s.[76] It is, however, true that the operation of online games in Slovenia was allowed only to “companies that obtain a concession for the permanent operation of classic games of chance or a concession for the operation of special games of chance in casinos”[77], which were either majority state-owned or full state-owned companies.

The number of concessions for casinos and gaming salons was defined in the Gaming Act of 2003. The maximum number of concessions granted for casinos was limited to 15 and for gaming salons to 45[78], which does not reflect the guidelines of the 1997 gaming strategy.

Significantly larger number of concessions was defined for gaming salons (45) than it was defined in the Strategy (20).[79] The four types of gaming products proposed in the Strategy (gaming and entertainment centres, casinos in tourist resorts, city casinos and gaming salons) were not legally regulated, and the number of slot machines in gaming salons was limited to 200 instead of 100 as proposed in the strategy.

Gambling development strategy in Slovenia 2010-2020

The mission of the Strategy states that “special games of chance in Slovenia complete the offer of Slovenian gaming and non-gaming activities in tourism and as a gaming and tourism product represent a specific segment of tourism that can be internationally competitive and consequently can continue to develop with higher added values, which are today typical for most tourist products in Slovenia.” In order to realize the mission in the strategic period, a smaller number of granted concessions is emphasized, whereby the concessionaires will be stronger in terms of capital and able to build more socially acceptable gaming centers. The offer of classic games of chance in Slovenia was carried out to the extent demanded on the domestic market and for the purpose of financing of disability, humanitarian and sports organizations.[80] The key findings of the Gambling Development Strategy from 2010 show that the gaming market in Slovenia was saturated and, with unchanged demand, the number of operators of games of chance in casinos and gaming salons was too large.[81] A higher demand can be achieved only with the additional range of gambling services as well as higher quality of the gaming and non-gaming offer.[82]

The Strategy states that the concept of the classification of games of chance into classic and special[83] is no longer appropriate. With the development of new technologies and related games with remote access via the Internet, the term “classic” gambling is most often used for games of chance that are played in certain indoor locations (the terms land-based or off-line gaming are also used), but the term special games of chance is not known in other countries /regulations or it is not in use. Guidance is given to abandon the existing classification of games of chance and re-classify it into lottery games, betting and casino games. It follows from the Strategy that the definition of individual types of classic and special games of chance is unclear and inconsistent and unsystematically determined. Namely, they are defined in terms of the casino player/casino relationship, then in terms of playing accessory (ball games, cards, dice, boards, slot machines) and as betting games, which is the general term in games of chance. The issue of ambiguity and inconsistency is highlighted mainly in betting, namely sports betting are included in the classic games of chance, and at the same time, betting is a series of special games of chance.[84]

Furthermore, regarding the offer of games of chance, the Strategy recognizes decreasingly smaller difference between the casino and the gaming salon. Namely, with the development and introduction of new technologies (computerization and automation of typical games of chance – card, dice and roulette games), when certain games, which could be played only with human assistance before, now can be played also via electronic devices, casinos are increasingly resembling gaming salons. The visitor can no longer notice any significant difference between casinos and gaming salons. Now he can play for larger amounts also in the gaming salon, with a wide offer of slot machines and a mandatory registration and identification upon entry, just like in the casino.[85]

For the strategic period 2010-2020, five categories of tourist gaming products have been defined: mega entertainment centre, gaming entertainment centre, grand casino, casino and gaming salon. The differences between the categories are in the type and scope of the offer. In addition to the gaming offer, larger gaming centres must also offer accommodation and catering establishments, a congress centre, a health and wellness centre, and a space for parties and events. Casinos and gaming salons do not need to provide additional gaming offers.[86]

Online gambling, according to the current legislation, does not fall into the category of special games of chance, but only special way of operating of the gambling. Consequently, in Slovenia they are not planned, that is, there are no concessions or concessionaires[87] for the operation of online gambling. An individual online game is operated by a concessionaire on the basis of and in accordance with the concession agreement. A more appropriate term for online gambling (games operated via the Internet and other telecommunications means) is the term remote gaming. As regards the online gambling, the strategy defines and prescribes that the games should be operated to a limited extent, to meet domestic demand, that is, to maintain the existing operation of online gambling. The possibility for this type of gambling operation should be granted to the concessionaires who operate lottery games and betting and to the concessionaires who operate games of chance at gaming and entertainment centers and at grand casinos, who would also operate online the same games they operate in the casino. The field of online gambling needs to be monitored at EU level and it should be actively involved in the joint regulation of this area. It is important to effectively protect the consumer, maintain social order, prevent fraud, money laundering and gambling addiction.

Regarding the ownership structure of concessionaires who operate classic games of chance, the Strategy highlights the unresolved issue of the existing regulation. It also presents an appropriate solution, namely that a concessionaire is publicly owned by non-profit organizations, where the non-profit purpose of the business should be pursued in favour of financing disability, humanitarian and sports organizations. The rules on the ownership structure of concessionaires operating special games of chance in casinos should remain unchanged in the future.[88] It is also proposed to change the limit of a maximum 20% of shares per individual private company and the exception that the ownership share of the state, state-owned companies and local communities may be less than 51%, only in cases of joint ventures with the private sector into gaming and entertainment mega centre.[89] The ownership structure of companies that operate special games of chance in gaming salons is not specifically prescribed, nor are any changes envisaged.[90] In the field of operation of the classic games of chance, it is anticipated that in the future in Slovenia there will be two providers of classic games of chance, which will be in public ownership or owned by non-profit organizations. As it is typical of most other countries, this area will be regulated by a public monopoly. The area of special games of chance is aimed at reducing the number of concessions, which will be larger and located in tourist areas with an emphasis on strengthening the tourism component. By 2020, it is planned to gradually reduce gaming units (casinos and gaming salons) to a maximum of 30.[91]

Normative implementation of strategic directions for gambling after 2010

It has been found that after 2010 there have been no considerable conceptual changes in the normative regulation that could change/upgrade the gambling model in Slovenia. Among other things, the amendment to the 2010 act[92] prescribes the change of the authority who decides on the restriction of access to websites on which online games of chance are operated without the concession from the Government of the Republic of Slovenia.

In 2018, an amendment to the Gaming Act was proposed. The basic purpose was to systematically regulate and stabilize the financing of the Foundation for Funding Sports Organizations (FŠO) and the Foundation for the Funding Disability and Humanitarian Organizations (FIHO) and to regulate the field of sports betting operation with the EU acquis.[93] The goal would be achieved by introducing the possibility of awarding concessions for operation of betting to a larger number of concessionaires, which would enable a higher tax inflow. The proponent supports this proposal with arguments that in Slovenia there is an “administrative monopoly” over the operation of classic games of chance (betting), as most of the Slovenian residents use the online services of other providers outside the Republic of Slovenia. As a result, most of the financial resources that domestic residents spend on sports betting outside Slovenia are not integrated into the Slovenian financial and tax system. Additionally, a more appropriate definition of betting is proposed – the skill game. In the skill game, the player, thanks to his knowledge and experience, has a partial influence on the outcome, which is not typical for other games of chance, which are completely dependent on chance.[94]

This section can be finished with the conclusion that the new gaming act was to be prepared by the Ministry of Finance of the Republic of Slovenia within six months after the adoption of the Strategy[95], that is, until the summer of 2011. The review of positive legislation in the field of gambling shows that the guidelines set out in the strategy were not realized. Unfortunately, a frequently found practice has been seen along with the basic shortcoming of strategies – non-implementation or poor implementation and the lack of upgrading or improvement.

CONCLUSION

Gambling was once considered to be the greatest competitive advantage and the greatest tourism development opportunity, as well as the main program of Slovenian tourism. Today, however, it can be seen that gambling is increasingly moving away from the primary position in tourism. At the time of the predominant offer of land- based gambling (casinos and gaming salons), when online gambling had not yet been developed, we can talk about a relatively successful and complex Slovenian tourism product, which included shopping, oil, culinary and gambling tourism meeting the needs of daily foreign visitors. Having analysed the content of the two strategies so far we may conclude that significantly more attention was paid to the land-based gambling, and classic and online gambling were treated with restraint or with the focus on ownership control of the market for such games of chance, which is uninteresting for foreign investments and hinders the expansion into the international markets. In practically all forms of gambling, except for gaming salons, there is an essential emphasis on the protection of the domestic ownership structure for managing the gambling market in Slovenia, with the primary goal being, the so-called export of activities, or an offer that will be attractive for daily foreign tourists. The gaming development strategy for the period 2010-2020 envisages and provides guidelines for the development of such a product that would significantly increase the interest even of foreign guests from distant countries, who would have, in addition to the gaming offer, an additional high-quality and wide offer[96] for which reason they would not stay just for one day and just for the purpose of gambling. In case of such an offer, provided by the so-called mega entertainment centre, an exception in the ownership structure of the company would be granted, and it would obtain a concession for operation of the games of chance to such an extent and with the above mentioned additional offer. In this case, the state and local communities would give up the majority share in such a company and thus provide private, even foreign capital with a more interesting and stimulating business environment. The success of this type of product, considering the non-compliance with other challenges, primarily infrastructural[97] is questionable, and investments and development are consequently risky.

The online gambling, which basically allows remote access and use, and compared to the land-based gambling expands the market from the narrow/local international market to a significantly wider international market, is treated in the Strategy with restraint and caution. It results from the point of view that online gambling should be operated to a limited extent and meet only the needs of the domestic market. There is no identified ambition to break through or expand Slovenian online gambling over wider international developments, but, unlike the land-based gambling, which is highly oriented and dependent on foreign guests, it is focused on the domestic guests. This proved to be extremely sensitive and vulnerable for the existing Slovenian gambling model during the “lockdown” and all the restrictions during the corona crisis. Slovenian land-based gambling immediately ceased when the borders were closed, and the online gambling offer was focused on the domestic guests and thus unprepared for changed circumstances. The Slovenian gambling model is focused on a narrow international space, on neighbouring countries with a higher economic standard and consequently higher purchasing power of the guests. Behaviour and habits of people have changed and will continue to change, all the more intensely in view of the effects and consequences of the coronavirus pandemic. Thus, a thorough consideration of the necessary adaptations and changes might be useful.

So far, the relative success of Slovenian gambling, which has stagnated in the last decade or even recorded a declining trend[98], is based on daily foreign guests, mainly from neighbouring Italy and Austria, and a smaller part are other foreign guests for whom visiting the casino is not their primary goal when visiting Slovenia. It seems that focusing on the relatively narrow international market has satisfied the ambitions of the development of Slovenian gambling and that there are no more ambitious strategic considerations in terms of a wider international space. In this context, we perceive the absence of ambition regarding inclusion or consideration of the Slovenian gaming model that would include a broader international framework and take into account the situation in the narrow, regional market in Europe, as well as in the world market.

The Slovenian gambling market had been already saturated before 2010[99], and additional demand can only be achieved by increasing the volume of the gambling and the additional non-gaming offer, which would arouse the interest in the wider international market. It cannot be denied that Slovenian land-based gambling is stagnant, and that the online gambling is not at a competitive stage of development and focused on domestic guests, which undoubtedly makes it difficult to expand the scope of business, which is directly related to and dependant of the wider international space. When any activity goes beyond the national framework and is positioned either in a narrow or a wide international space, its further international development requires an understanding of the importance of international relations and diplomacy, especially economic diplomacy. Bazdan attaches great importance to successful economic diplomacy and cites it as one of the factors of economic growth and social development of the most developed countries in the world.[100] In the age of globalization, diplomacy is increasingly taking on an economic role.

Globalization is a process in which national borders play an increasingly smaller role. Processes, events and activities take place independently of the territorial boundaries of each country. In this context, the use of the Internet, and thus online gambling, has incredible potential and is much easier and faster to reach a wider international space compared to land-based gambling. Online gambling is basically intended for remote access or participation in games of chance and are practically automatically placed in the international space. However, the technological development of the Internet and online gambling and the associated possibility of relatively simple expansion of activities to the wider international space are not sufficient in itself without the interest, ambition and social/political consensus which are strongly needed. It is economic diplomacy what is needed for promoting and protecting the interests in the international community.

We associate the concept and the phenomenon of economic diplomacy with the development of modern diplomacy[101] which includes several subjects, from the Ministry of Foreign Affairs, the Line Ministry, chambers, interest associations and companies.[102] The very fact that Vienna Convention on Consular Relations, in Article 5, includes among its key tasks the acquiring of information regarding the development of commercial, economic, cultural and scientific life in the receiving State by all permitted means, the reporting on it to the sending State and providing information to those interested in this[103], testifies to the importance of the role of diplomacy in the development and strengthening of economic interests internationally.

There is a relatively large number of interest groups[104] in the global gambling industry, e.g. European Casino Association (ECA)[105], European Gaming & Betting Association (EGBA)[106], The European Lotteries (EL)[107], Gaming Regulators European Forum (GREF)[108] and many others. The membership of the Slovenian companies in various associations is perceived here[109], but the membership of the Line Ministry competent for gambling and the Ministry of Finance in various international associations or organizations, which are directly related to gambling, are not included. As already noted, diplomatic activities, in our case modern economic diplomacy, which operates at the level of chambers, interest associations and also companies, are essential for the cooperation on the international market and the realization of interests.

The development potential and fast expansion of online gambling was perceived relatively early. The so-called classic gambling (offer of land-based casinos) experienced the development and expansion of online gambling as a potential threat, not recognizing an opportunity. The fact is that online gambling is not such a new reality and that responding to changing needs requires fast and at the same time thoughtful action. The level of online gambling development in Slovenia is not at the level competitive to the international offer.

Undoubtedly, we are witnessing new, changed circumstances that will be reflected in the habits of individuals and the society as a whole. Much of the activity that does not require physical presence moved to the Internet during the coronavirus pandemic. We can rightly conclude[110] that gambling is no exception and that online gambling is recording a growing trend and increasing use compared to land-based gambling. Both types of gambling services, that is, the land-based and online gambling, have advantages and disadvantages. Physical casinos (land-based) have their own charm. It is a place where people, in addition to playing, can also socialize and watch a show (entertainment program), or dine in a restaurant. On the other hand, online casinos offer gambling from the comfort of your own home and an easy access anytime from anywhere.

This brief study of Slovenian gambling gives a general impression that the Slovenian model of gambling is relatively conservative, limited to a very narrow international area and extremely restrained and cautious about online gambling, which makes it difficult or prevents the development and expansion of the activities. Thus, a relatively conservative ambition to focus on foreign gambling guests in the wider European and international space is perceived. Outside the micro environment (the border area of Italy and Austria, with the exception of some locations in the republics of the former Yugoslavia), there is practically no detectable presence or influence of Slovenian gambling.

Let us conclude the study with the thought that the realization of every social activity first of all requires interest and ambition, followed by social consensus, and regarding the entry into the international space, the modern economic diplomacy in a broader sense. It seems that the Slovenian gambling industry, on the path of its development, has stopped somewhere between vague ambition and the conclusion of a social consensus. The step towards serious and active involvement of economic diplomacy in the promotion and protection of Slovenia’s international gambling interests seems distant, at least until the first two preconditions are met.

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[1] ABOUT THE AUTHOR: Aljoša Komljenović, M.A. of International Relations and Diplomatic Studies and a PhD student. For the last decade and a half he is employed as a Casino Operation Manager. Email: aljosa.komljenovic@gmail.com

[2] Gizycki, Gorny, 1972, p. 9.

[3] Not in the context of the Gambling Act definition of the term where the essential

component is payment or investment in the game and the expectation of profit or loss.

[4] Casinos, which, in physical form, are located indoors. Gamers’ physical presence in the

casino is required to be able to play.

[5] The terms are defined in the section »Overview of Terms«.

[6] Kaburakis, Rodenberg, 2012, p. 64.

[7] Benko, 1987, pp. 9-10.

[8] SSKJ, e-source.

[9] ZIS, Official Gazette of the RS, No. 14/11 – official consolidated text, 108/12, 11/14 –

edited and 40/14 – ZIN-B, Article 2.

[10] Ibid, Article 10.

[11] The types of special games of chance are:

– the games that players play against each other (chemin de fer, poker);

– the ball games (French roulette, American roulette, boulle);

– the playing card games played against the casino (black jack, punto banco, mini punto,

carribean poker, 30/40, red dog);

– the dice games (craps, tai sai);

– the board games (bingo, keno, big wheel, toto);

– the slot machine games played by players against a slot machine;

– betting.

Source: ZIS, Official Gazette of the RS, No. 14/11 – official consolidated text,

108/12, 11/14 – edited and 40/14 – ZIN-B, Article 53.

[12] ZIS, Official Gazette of the RS, No. 14/11 – official consolidated text, 108/12, 11/14 –

edited and 40/14 – ZIN-B, Article 53.

[13] Electronic devices that do not require human assistance to perform.

[14] ZIS, Official Gazette of the RS, No. 14/11 – official consolidated text, 108/12, 11/14 –

edited and 40/14 – ZIN-B, Article 92.

[15] The games of chance on the Internet or other telecommunication media. See ZIS, Official

Gazette of the RS, No. 14/11 – official consolidated text, 108/12, 11/14 – edited and

40/14 – ZIN-B, Article 53.

[16] All kinds of special games of chance with the exception of betting. See ZIS, Official Gazette

of the RS, No. 14/11 – official consolidated text, 108/12, 11/14 – edited and 40/14 – ZIN-

B, Article 3a.

[17] ZIS, Official Gazette of the RS, No. 14/11 – official consolidated text, 108/12, 11/14 –

edited and 40/14 – ZIN-B, Article 53.

[18] Key differences between a casino and a gaming salon: casinos are majority owned by the

Republic of Slovenia (local communities and legal entities, whose 100% owner or sole

founder is the Republic of Slovenia); they are not subject to a limited number of

gaming devices on which special games of chance can be played; they do not have the

prescribed rate of return on investment. Gaming salons can be owned by a private owner

(foreign or domestic); they have a prescribed minimum and maximum number of gaming

devices on which special games of chance can be played. Gaming salons are also subject

to a minimum return on investment rate.

[19] SSKJ, e-source.

[20] Ibid.

[21] Mihelič, 1993, p. 7.

[22] Eadington, 1976, p. Xi.

[23] Cohen, Hansel, 1956, p. 10.

[24] Declaration on Partnership for Sustainable Development of Slovenian Tourism, 2017.

[25] ReSCPRT, 1995.

[26] Ibid.

[27] Koprivnikar, Šušteršič, 2002, p. 47.

[28] Slovenian Tourism Strategy 2001−2006, 2001, p. 12.

[29] Ibid, p. 9.

[30] Slovenian Tourism Strategy 2001−2006, 2001, p. 32.

[31] Ibid, p. 14.

[32] Ibid, pp. 16-17.

[33] By generated income, added value, number of employees and tourism turnover

Source: Uran, Ovsenik, NN, p. 115.

[34] Uran, Ovsenik, NN, p. 9.

[35] Ibid, pp. 31−32.

[36] Ibid, pp. 115−116.

[37] Ibid, pp. 69−70.

[38] Declaration on Partnership for Sustainable Development of Slovenian Tourism

from 2011.

[39] Strategy for the Development of Slovenian Tourism 2012−2016, 2012, p. 34.

[40] Ibid, p. 45.

[41] Strategy for the Development of Slovenian Tourism 2012−2016, 2012, p. 53.

[42] Strategy for Sustainable Growth of Slovenian Tourism 2017−2021, 2017, p. 34.

[43] Key/main products include Mountain Holidays and Outdoors, Business Meetings & Events, Health & Wellness, Nature Experience, Gastronomy, Culture, Sun & Sea, Sports Tourism, Cruises and Tourism in the Country. Source: Strategy for Sustainable Growth of Slovenian Tourism 2017−2021, 2017, p. 43.

[44] In addition to gaming, the secondary/support products include Cruise & Nautical, Shopping and Special Interests. Source: Strategy for Sustainable Growth of Slovenian Tourism 2017−2021, 2017, p. 48.

[45] Strategy for Sustainable Growth of Slovenian Tourism 2017−2021, 2017, pp. 39−42.

[46] Ibid, p. 60.

[47] Ibid, p. 162.

[48] Vesenjak et. al., 1997, p. 73.

[49] Ibid, pp. 2-3.

[50] Before 1997, when the strategy was published.

[51] Vesenjak et. al., 1997, pp. 1-2.

[52] Ibid, p. 31.

[53] Ibid, p. 45.

[54] Before the Strategy from 1997.

[55] The European type of gambling is aimed at rich clients, limited to gambling and played on gambling tables. The American type of gambling is not limited to gambling only and it is based on a wide range of business activities and consumer products. It is intended for entertainment and leisure offering a rich gaming and other services. It is played on slot machines.

[56] Entertainment program, shops, catering, accommodation, etc.

[57] The term American type/model of casino/gaming salon is understood as North American model, or a model established in the United States.

[58] Vesenjak et. al., 1997, p. 50.

[59] We concluded that the assessment of the mentioned possibilities and opportunities from the Strategy has initiated some thoughts and activities towards the construction of a mega entertainment centre, with Hit Harrah company in 2005. The idea and the project were not realized.

[60] Vesenjak et. al., 1997, p. 50.

[61] Ibid, p. 31.

[62] Vesenjak et. al., 1997, p. 81.

[63] Gaming Act, Official Gazette of the RS, No. 27/1995, Art. 92-102.

[64] Vesenjak et. al., 1997, pp. 83 and 86.

[65] Taking into account the already issued at the time of adoption of the Strategy.

[66] Concerning operation of special games of chance in gaming salons, the minimum percentage of return is prescribed in relation to payments into the games, namely slot machines must return at least 90% of the payments. It is supposed to be a preventive security measure in terms of protecting players in gaming salons, who are supposed to be predominantly domestic. The percentage of the return for large concessions is not prescribed (op. Cit.).

[67] Vesenjak et. al., 1997, pp. 81-82.

[68] Ibid.

[69] Act Amending the Gaming Act (ZIS-A), Official Gazette of RS, No. 85/2001.

[70] Gaming Act, Official Gazette of the RS, No. 27/1995, Article 93.

[71] Act Amending the Gaming Act (ZIS-A), Official gazette of RS, No. 85/2001, Article 93.

[72] Act Amending the Gaming Act (ZIS-B), Official gazette of RS, No. 101/2003, Article 1.

[73] Act Amending the Gaming Act (ZIS-A), Official gazette of RS, No. 85/2001, Article 1.

[74] Act Amending the Gaming Act (ZIS-B), Official gazette of RS, No. 101/2003, Article 4.

[75] Act Amending the Gaming Act (ZIS-A), Official gazette of RS, No. 85/2001, Article 3a.

[76] The History of Online Gambling.

Available at URL: https://www.onlinegambling.com/online-history/

[77] Act Amending the Gaming Act (ZIS-A), Official gazette of RS, No. 85/2001, Article 3a.

[78] Act Amending the Gaming Act (ZIS-B), Official gazette of RS, No. 101/2003, Article 1.

[79] Vesenjak et. al., 1997, pp. 81-82.

[80] Gambling Development Strategy in Slovenia 2010−2020, 2010, p. 27.

[81] Data for 2020 show that there are 10 casinos and 25 gaming salons in Slovenia (a total of 35 gaming units), and in 2005 there were 13 casinos and 31 gaming salons (a total of 44 gaming units). Two companies have a concession to operate classic games of chance. Source: Extract from the register of concessionaires. Available at URL:

https://www.gov.si/assets/ministrstva/MF/Financni-sistem/DOKUMENTI/Igre-na-sreco/Priloga-6_Izvlecek-iz-registra-koncesionarjev-za-igralnico.pdf, https://www.gov.si/assets/ministrstva/MF/Financni-sistem/DOKUMENTI/Igre-na-sreco/Priloga-7_Izvlecek-iz-registra-koncesionarjev-za-igralni-salon_2019.pdf,

https://www.gov.si/assets/ministrstva/MF/Financni-sistem/DOKUMENTI/Igre-na-sreco/NewPriloga-5_Izvlecek-iz-registra-prirediteljev-klasicnih-iger-na-sreco_2019.pdf.

[82] Gambling Development Strategy in Slovenia 2010−2020, 2010, p. 27.

[83] The definition of terms is given in the chapter Overview of terms.

[84] Gambling Development Strategy in Slovenia 2010−2020, 2010, p. 32.

[85] Ibid, p. 33.

[86] Ibid, pp. 33−34.

[87] Issuance of special licenses or concessions for online gambling in the EU Member States exists only in Malta, Italy and France.

[88] The majority of ordinary shares of a concessionaire must be owned by the state, state-owned companies and local communities, and maximum of 49% of ordinary shares of the concessionaire may be owned by private companies.

[89] Gambling Development Strategy in Slovenia 2010−2020, 2010, p. 37.

[90] Ibid, p. 35.

[91] Ibid, p. 28.

[92] Act Amending the Slovenian Gaming Act (ZIS-D), Official Gazette of RS, No. 106/2010.

[93] Report on a draft act amending the Slovenian Gaming Act (ZIS-F), second reading, EPA 2540-VII.

[94] Zorman, 2018, Draft Act Amending Slovenian Gaming Act (ZIS-F).

[95] Gambling Development Strategy in Slovenia 2010−2020, 2010, p. 54.

[96] Accommodation and catering establishments and other tourist attractions (sports and recreation, health and wellness centres, congress centre, entertainment events).

[97] Airport, port, roads.

[98] Details available at URL:

https://www.fu.gov.si/drugo/posebna_podrocja/igre_na_sreco/#c4709

[99] Gambling Development Strategy in Slovenia 2010−2020, 2010, p. 27.

[100] Bazdan, 2011, pp. 105-106.

[101] The period after the end of World War II. Source: Jazbec, 2009, p. 39.

[102] Jazbec, 2009, pp. 77-80.

[103] DKKO, Article 5.

[104] https://www.gamingregulation.com/associations/

[105] https://www.europeancasinoassociation.org/

[106] https://www.egba.eu/

[107] https://www.european-lotteries.org/

[108] http://www.gref.net/

[109] Hit d.d. in ECA, Loterija Slovenije d.d. and Športna loterija d.d. in EL.

[110] At the time of writing there were no available, serious and in-depth analyses of the impact of the coronavirus pandemic on the in-use performance ratio between land-based gambling and online gambling.