The approval of the gambling law in 1954, sixty years ago, was the first step that paved the way for the establishment of Casino du Liban. The law dated August 4, 1954,  “licensed gaming exclusively to a casino that shall be set up by the seaside, along a straight line lying no further than five kilometers from the seashore and no closer than 1.5 kilometers from populous areas. A minimum straight-line distance of 15 kilometers shall separate the casino from Beirut, Tripoli and Saida.”

 

The games allowed at this casino shall include Roulette, Baccarat and Golden Pharaoh Slots. The investment license shall be awarded for  25 years by bidding on the state’s revenues from gaming profits provided that the said revenues account for no less than 40% of the gross annual income generated from gambling.”

 

The law identified the bodies benefitting from the share of the state and prohibited non-adults (people below 21 years of age), civil servants, municipal staff, treasurers and those residing in Lebanon whose annual income does not exceed USD 15,000- the figure set later at 100 times the monthly minimum wage, i.e. USD 45,000 currently- from entering the casino, thus limiting casino visits by low-income earners. 

 

Earlier in June 1950, a law was issued specifying how to establish and invest in gambling casinos, but the law was cancelled upon issuance of the gambling law. 

 

Pursuant to Decree no. 16694 dated July 30, 1957, a thirty-year license was granted to shareholders Victor Moussa, Emile Kharat and Albert Mnassa to start the Casino du Liban company with a capital worth LBP 12 million, raised later in 1966 to LBP 18 million. The contract between the state and the company was approved in December 1959 and was extended until the Civil War broke out in 1975, disrupting the Casino’s activities and compelling it to shut its doors several times, before it ceased to operate entirely in 1988, affected by the war unfolding in its vicinity and the consequent damage the Casino sustained.

 

After the war had ended, and as the Casino was preparing to return to operation, Law no. 320 was issued on March 24, 1994 authorizing the company to invest in a casino in Maamelteyn on the following conditions:

    - The maximum period of investment shall not exceed 30 years.

    - The revenues allocated to the state from the casino’s gaming profits shall be set at 30% of the gross annual income in the first ten years. The share shall be raised to 40% in the following ten years and further to 50% in the final ten years. 

    - The company shall abide by all the obligations ensuing from previous investment agreements (concessions), be it towards the state or towards its employees.

    - The land in Maamelteyn, all existing premises and equipment or those to be built, shall return to the state at the end of the agreement

 

 

In order to promote and increase the profits of the company and therefore those of the state, Law no. 417 dated May 15, 1995 was issued under the presidency of Elias Hrawi and the premiership of Rafik Hariri granting the Casino du Liban company “the right to invest exclusively in gambling games at the sole casino present in Maamelteyn.”
  On the basis of the new privileges awarded to the Casino du Liban company (a thirty-year contract and monopoly over gambling games) a new agreement was signed on July 14, 1995 between the company and the state represented by the Ministers of Tourism and Finance. The agreement stipulated the following:
- The company vows to restore and rehabilitate all existing premises (particularly gaming halls, the theatre and the Ambassadors Hall) at its own expense and according to the designs, regulations, materials and specifications set by Dar Al-Handasa (Shair and Partners) so as to promote the casino to levels higher than ever before. It also vows to finish all the works in two and a half years starting from the date of signature of the contract and to pay the state USD 4000 for each day of delay.
- The company vows to bear the expenses of building a multi-storey car park that will accommodate at least 600 vehicles.
- The company vows to construct a five-star hotel containing 100 to 150 rooms on its own plots of land according to the designs of Dar Al-Handasa in cooperation with the company. The hotel shall be completed during a five-year period starting from the date of signature of the contract and the company shall pay USD 4000 for each day of delay. Should the company fail to initiate its actual investments in the hotel within a maximum period of five years and three months from the date of signature of the contract, the contract herein shall be deemed null and void and the company shall pay the state USD 15 million.
 
- The investment includes Roulette, Baccarat, Golden Pharaoh Slots and other ordinarily proscribed gambling games. As for the authorized games such as Poker and Bridge, the company may operate them outside its halls and they are not subjected to the terms of investment, meaning that the company does not siphon off any share of profits from these games to the state.
 
- The period of investment, starting from the date of investment in the premises, is 30 years.
 
- The share of the state is set at 30% of the gross annual income  resulting from gaming in the first ten years. The share shall be raised to 40% in the following ten years and further to 50% in the final ten years. During the first three days of every month, a statement of income for the preceding month is to be produced with the share of the state enclosed therein.
 
- The state appoints a supervisory committee that consists of the Director General of Finance, the Director General of Tourism and two members of staff from the Ministry of Finance.
 
- The terms and conditions of entry to the halls shall be strictly abided by.
  In accordance with the contract signed between the state and the Casino du Liban in 1995, the company initiated investments in the casino on November 17, 1996. Nevertheless, it refused to pay the state its share of profits from the slot machines placed in the entertainment hall arguing that, unlike other games, these machines were not covered by the contract. Other contract provisions were also violated. 

Against the company’s inflexibility, the government engaged in a new round of negotiations that led eventually to signing an appendix to the contract stipulating the following:
    - The company shall pay the state an amount worth USD 15 million.
    - The state’s share of the profits shall be raised starting in 2000 from 30% to 40% until the end of the first ten years. For the following ten years its share shall be 50% rather than 40% and 60% rather than 50% for the final ten years of the contract.  
    - The state shall agree to the keeping of the slot machines in the entertainment hall. 
    - The state shall agree to dismiss the clause regarding the construction of the hotel in exchange for an amount worth USD 15 million. 

Accordingly, the company vowed to pay the state LBP 83.3 billion as a settlement of the dispute. The parties agreed that the amount would be paid in installments and the company vowed to keep transferring the monthly share it owed to the state during the first week of every month. 
  The figures announced by the Casino’s management are not an accurate reflection of the generated income and of the state’s share thereof.  In fact, it is alleged that the revenues are much higher than the reported figure but part of them are channeled into the so-called “black box”, which finances the activities of some of the Lebanese political and partisan classes, based on a certain quota.  However, nobody is able to estimate the expenditure of this fund and therefore the actual size of such revenues remains a matter of guesswork.  Furthermore, against the backdrop of the indiscriminate hiring of dispensable workers and the outsourcing of some of the facility’s works to private companies at exorbitant rates, the share of the state becomes insignificant compared to the actual revenues made. Table 1 illustrates the profits of the Casino and the state’s share during the past few years. 
 




 
 

 

 

The Casino du Liban is a Lebanese concessionaire, registered as a joint-stock company in 1966 at number 658 in Baabda’s commercial register. Its capital is currently worth LBP 32.4 billion.

 

Shareholders:

    - Intra Investment Company: 53% (Banque du Liban owns 35% in Intra Investment)

    - Abela: 17% 

    - Banque du Liban: 10%

    - Bank Awde: 7%

    - National Deposit Guarantee Institution: 6%

    - Other shareholders: 8%

 

At face value, the Casino’s board of directors is elected by shareholders, particularly by the Banque du Liban. But in fact, the selection happens based on a sectarian-political quota. The Board of Directors is chaired by Hamid Kraidi (Maronite). It consists of nine members: Mohammad Choueib (Shia’a), Mohammad Hachem Tabbara (Sunni), Majid Jumblat (Druze), Michel Fernainy (Greek Orthodox), Mohammad Naqib (Sunni), George Nakhlem (Greek Orthodox), Hisham Nasser (Shia’a), Fadi Tamim (Sunni) and Farid Suleiman (Maronite). 

 

The Casino employs 1550 people, some of whom do not show up except to receive their pay. 

 

The Casino du Liban company owns 13 plots of land in Kfaryassine, Adma and Al-Dafna in Kessrouan. They stretch across a total area of roughly 109,000 m2.
  Thousands of Lebanese frequent the Casino du Liban’s gambling halls on a daily basis. Visitors come from different regions and have different political and sectarian profiles. They are from varied social classes, ranging from the wealthy and the educated to the poor and the illiterate. All of them arrive at the Casino, setting their hopes on hitting the jackpot. Yet, the vast majority comes out with dashed hopes and grievous losses, wiping out the modest salaries of low-income earners and draining the resources of affluent gamblers. Countless are the houses, properties and belongings gambled away inside the Casino. In the following, we outline a few stories by those visitors who frequent the slot machines. Everyone can have access to these machines and play from very modest to very large amounts of money, according to the means of each player.

A 25-year-old Sri Lankan woman arrived in Lebanon two years ago as a migrant domestic worker. Every now and then, her 76-year-old female employer would take her along to the Casino. Having seen her employer occasional winning, the Sri Lankan worker decided to take her chances and started to spend all her Sundays at the Casino. Within a month, she had gambled away all the monies she had earned since her arrival in Lebanon. The sum amounted to roughly USD 3500. Having lost all her savings, she tricked her Sri Lankan friends working in Lebanon into believing that she was flying back to Sri Lanka so that they would entrust her with their monies, thinking that she would deliver the funds to their families back home. She was hoping to make up for her losses by using their remittances, which amounted to USD 4000 but luck was not on her side. In less than ten days, she lost all the money and is now in such deep trouble, leaving her to face tough choices, which potentially include a suicide.

A 36-year-old employee with a monthly salary of USD 1700 also fell victim to the gambler’s fallacy. The man who is the sole provider for his wife and two children started making regular visits to the Casino every ten days, winning a few hundreds of thousands of liras at times and losing much more at many others. Against his recurrent losses and the high cost of living, particularly the cost of education, accommodation and transportation, his debts started mounting at alarming rates until they were at roughly USD 10,000 because of the debt vouchers of the credit institution that lent him the money at exorbitant interest rates which were as high as 40% annually. Recently, his creditor warned him that if he fails to repay his debts, a legal action will be filed against him. Helpless, the man persuaded his wife to sell her wedding jewelry for USD 4500 to pay off part of his debts. Again, he returned to the Casino in the hope of multiplying the amount. He gambled away USD 1500 on the first day, won USD 800 on the second, then lost USD 2000 and USD 1800 during his third and fourth visits respectively, ending up penniless in just four days.

Our third victim of gambling is a 58-year-old chef who works at a hospital in Mount Lebanon for USD 1200 per month. The man had worked previously in Europe and invested the fortune he had made in buying a house for his family, a wife and two daughters who are currently in higher education.  In addition to his job as a chef, he joined a taxi business and bought a car so he could work as a cab driver after working hours and during holidays.  During the first week of every month, he sets aside USD 500 of his salary for family expenses, then gambles the rest away in frequent visits to the Casino. He spends the rest of the month picking up passengers to make some extra money and then gambles the lot on the thrilling chance of winning a big jackpot. The man and his family are currently in financial distress, and although he knows why, he is not able to cut down or stop gambling.

Another distressing gambling story is that of a 56-year-old spinster who dedicated most of her life to looking after her aging parents. After their death, she inherited the house and plots of land while her brother and sister were deprived of any share in the inheritance, which led to a rift between siblings. Shortly after the woman became accustomed to going to the Casino, she sold one of the plots of land she inherited from her parents at USD 70,000 and wasted the entire sum on gambling in less than two years. She then disposed of another plot of land in return for USD 110,000, which also vanished in less than a year on gambling. Left with no possessions except the roof she lives under and riddled with health problems that she could not afford to treat, she pledged her house to the bank for USD 200,000 in order to pay for her treatment and pay off some of her debts, although the house is worth roughly USD 350,000. The woman is broke, which puts the house at risk of being repossessed so that the bank can recover its rights, leaving her with a small sum that will be hardly sufficient to live on.

The final example of a compulsive gambler is a 40-year old married Lebanese man with a child. The man inherited a large plot of land and sold parts of it, investing the ensuing funds in the construction of nine residential apartments on the remaining area. Upon completion of his project, he sold all nine apartments bringing in roughly USD 1.2 million. Since the day he tried his luck at the casino and won LBP 3 million, he started making regular visits, thinking he would never run low on funds, no matter how great his losses. He was wrong. His losses escalated within three years, reaching as high as USD 600,000 which is roughly half his fortune. Today, he has come to the realization that if he keeps going down the same road, he will end up down and out. 

To see someone walk into the casino with a stuffed pocket and come out without even a few bucks to pay for a ride home is one of the dreariest and most miserable sights one can ever observe. It is both urgent and necessary to tighten control over entry into the Casino and not to allow random access to the large gambling halls or even to the slot machines because this industry can suck cash out of communities and shatter families resulting in serious implications on all socio-economic classes.