SL Casino Riga which was opened at the end of the last year in the Grand Hotel Kempinski Riga, being a part of the Shangri La casino network and managed by the Storm International, celebrates its first year of operation.
While summing up the first year of operations, the General Manager Andrey Ivankin emphasized that in 2018 the casino employed 130 people and brought about 2,000,000 EUR to the State budget as licensing fees, gaming tax, personal income tax and other taxes. The casino supports local sports and cultural events.
Last year on the opening day, the President of Storm International, Michael Boettcher presented an assessment of the Latvian market as one of having a balance "between transparent and sensible legislation, adequate tax burden and potential of the market." The CEO of Storm International Darren Keane added that the company evaluates the gambling business of Latvia as highly competitive, however, "there is space for development in the VIP niche where the company has the most experience."
Yet, during the first year of functioning, SL Casino Riga has faced changes in the tax legislation assuming tax withholding from each winner. This measure is not a common international practice and has affected significantly the attractiveness of Latvia as a direction of gambling tourism, especially among VIP gamblers. As the result, you can say now that these innovations have re-directed the flow of wealthy foreign guests to other countries – Belarus, Lithuania, Estonia, Russia and Georgia where taxation is implemented in another form, or it is not required for players to pay taxes from winnings.
"Our strategic competitive advantage is the experience in attracting wealthy gamblers and providing them with the according level of service, which has been exposed by implementing the winning tax", - Andrey Ivankin says. – "in some developed countries like the USA, there is a kind of such a tax, but firstly it is paid only by the residents and secondly not for every win but for a reporting period which is a year. In a casino, people not only win, but also lose, that is why it is logical to withhold a tax only from residents and not for every win, but for a certain period from the sum of net income from gambling".
Immediately after the tax implementation the casino management has noticed the negative trends in the quantity of the foreign gamblers visiting Latvia for leisure time. Such measures affect not only profitability of the business, but also all the industries making money out of tourism, leisure and entertainment – transport, hotels, restaurants, clubs, retail and so on.
Andrey Ivankin adds: "As a result, the tax designed to increase the budget revenues, actually affects the growth of tax revenues – there are less tourists, less money is brought into the country, and less taxes paid".
The company is in constant contact with the authorities controlling the gambling business, showing with legislative examples of other developed countries the need of quick revision of the measures taken, otherwise not only the success of the industry, but tourism to Latvia in general might be affected.
Tbilisi Georgia, where Storm International operates one of the largest casinos, could be a good example – due to the prudent politics of the local authorities, the annual tourism growth is about 30%.