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Introduction
The title of this paper is
taken from a comment made to me by the Turkish Cypriot manager of a casino
in northern Cyprus during fieldwork in 1999. What was bubbling was northern
Cyprus's casino sector, 20 casinos having recently opened, with another
20 applications pending in a territory with an area of 3,355 sq. kilometres
(1,295 sq. miles) with a permanent population of about 250,000. His comment
reflected double perplexity: firstly, that of a casino manager operating
in a climate of enormous uncertainty; secondly, the concern of a Turkish
Cypriot concerned at the effects he observed of the casino industry on
his home. From both a professional and a personal point of view, he confessed
to grave doubts about the sustainability of the sector.
In this paper I want to try
to describe this bubbling mixture and identify its ingredients. I shall
argue that the problems and dilemmas faced by northern Cyprus, as it seeks
to come to grips with its new industry, are representative of the problems
faced by peripheral regions in general when they engage in casino tourism
development. And for a number of reasons, it is precisely in such peripheral
regions that much of the casino development of the past decade has been
concentrated. On the one hand, locating casinos in physically peripheral
regions effectively isolates gambling activity, rationing the gambling
opportunities for the residents of metropolitan centres and shifting many
of the associated problems and costs elsewhere (Stansfield, 1996; Felsenstein
& Freeman, 1998).
On the other hand, the economic
marginality of many peripheral areas may make them eager to cash in on
the growing demand for casino gambling. In doing so, they can turn their
location into a comparative advantage, whether they are an urban economy
in need of regeneration in the aftermath of industrial and economic restructuring
(Goodman, 1995; Deitrick, et al., 1999); an emerging former Soviet-bloc
state seeking the means to kick-start post-communist economic activity
(McMillen, 1996a; Thompson, 1998); or a small, offshore island with limited
development options. Northern Cyprus, in the eastern Mediterranean, is
one such island.
Northern Cyprus
The Turkish Republic of Northern
Cyprus (TRNC) could be considered perhaps the quintessential peripheral
location. Recognised politically and diplomatically only by Turkey, this
northern third of the island of Cyprus has been literally cut off from
the rest of the world since its partition in 1974, following an attempted
coup engineered by the military junta in Athens and subsequent military
intervention by Turkey. Boycotts put in place by the United Nations ensure
that all post and telecommunications to northern Cyprus must be routed
through Turkey, and there are no direct international flights to the north.
These problems of accessibility
and negative image render the north artificially remote from the mass
tourism markets of northern Europe, the mainstay of the Greek Cypriot
tourism industry in the south. They make them triply dependent on mainland
Turkey, which is their gateway to the rest of the world, the main source
of aid and investment in the north, and also, the main tourist market
(Scott, 2000a). The primary attractions of northern Cyprus for Turkish
tourists are sun, sea, sand, shopping, and the opportunity for casino
gambling.
The Development of the Casino
Sector in Northern Cyprus and Turkey
Research in northern Cyprus's
casino sector was undertaken as part of a wider project looking at diversity
and sustainability in tourism development. The author, an anthropologist
at the Business School of the University of North London, worked in collaboration
with Turkish Cypriot colleagues at Eastern Mediterranean University, Famagusta,
Cyprus. Using a combination of survey, interview and participant observation
methods, our research explored the relationship between northern Cyprus's
conventional tourism product and the casino tourism sector (Scott and
Asikoglu, forthcoming), and the impact of casinos on traditional gambling
(Scott, 2000b).
At the commencement of fieldwork
in spring 1999, 20 casinos were operating in northern Cyprus. All were
attached to, or located within, hotels, holiday villages or other tourist
accommodation, and eight were in town centre locations, the majority of
these in the main tourist resort town of Kyrenia (Girne). By far the largest
is the Emperyal Casino, with 22 gaming tables and 377 slot machines. This
compares with an average of 10 tables and 70 slot machines per casino,
although the smallest has only seven tables and 18 machines (Ministry
of Tourism, 1998). The main games played are American and French roulette,
Las Vegas craps, Black Jack, poker, chemin-de-fer, punto banco, baccarat
and keno. However, a number of other games are also permitted on casino
premises, including chug-a-lug, wheel of fortune, rummy, backgammon, and
betting on horse and dog races and football matches. Casino opening hours
are subject to government regulation, and operation is currently permitted
from early afternoon to early morning, with seasonal adjustment from winter
to summer. Alcoholic drinks are available free of charge, and may be consumed
at the gaming tables. At the time of writing, citizens of northern Cyprus
and students, regardless of nationality, are not permitted to gamble on
casino premises (nor, technically, in any other location).
The scale of the current level
of casino activity has caused enormous local controversy, yet casinos
themselves are nothing new in northern Cyprus. A law permitting the licensing
of premises for betting and gambling was first passed in 1975, to encourage
tourism investment and diversify the north's fledgling tourism product
in the aftermath of the island's partition. Casino operators were required
to meet tourist bed/night targets as a condition of their licence, but
this requirement was soon dropped when it became clear that none of the
casinos had been able to meet their targets, and that all would face heavy
penalties (Yesilada, 1994). In the face of the low level of demand, would-be
operators who had received permission to open casinos bided their time.
By 1991, only four small premises were in operation, although permission
had been granted for 10 casinos to open.
Throughout the 1990s, however,
the licensing and opening of casinos gathered pace. The development of
the Israeli "casino junket" market began to ensure a steady
stream of weekend gamblers, but posed enormous logistical problems in
the absence of direct flights to and from Israel. Turkey presented a much
more accessible and potentially much larger market.
Although casino gambling was
legalised in Turkey in 1983 — again with the aim of stimulating investment
in tourism and attracting overseas tourists — Turkish citizens were
initially barred from the live game areas of casinos. High rollers were
obliged either to play the slot machines — where some individuals
would lose as much as US $2,000 to 3,000 on a daily basis (Kent-Lemon,
1988:409) — or to visit casinos outside Turkey, with northern Cyprus
a convenient location only one hour by air from Istanbul or Ankara.
By 1995, a further eight casinos
had been licensed in northern Cyprus, but with the liberalisation of gaming
laws in Turkey, allowing Turkish nationals access to the gaming tables,
the Cypriot casinos again found themselves struggling to survive. However,
by 1997 the tide of public opinion in Turkey was turning against the casinos,
fuelled by an apparent increase in widespread problem gambling (Duvarci,
et al.,1998) as well as stories linking casinos with organised crime and
corrupt politicians. The electoral success of the Islamic Welfare Party,
who opposed gambling on religious and moral grounds, hastened their demise,
so that by autumn 1997, Turkey's 78 casinos had been closed down.
For the biggest casino operators,
however, the closure represented only a temporary hiatus. As early as
March 1997 Sabah newspaper reported on plans to shift casino operations
to locations outside Turkey — to Poland, the Czech Republic, Russia,
Slovenia, Azerbaijan and France. Furthermore, six operators announced
their intention to move to northern Cyprus (Sabah, 1997). By 1998,
the Turkish Cypriot Ministry of Tourism had granted a further six casino
licences, bringing the total to 24, but many more were waiting in the
wings, eager to capitalise on the Turkish market for casino gambling where
it had become an essential leisure activity. By the spring of 1999, a
further 20 entrepreneurs were lobbying hard for casino licences. If all
were successful, the total number of casinos in northern Cyprus would
reach well over 40, a situation that raised a number of dilemmas for the
new minister of tourism.
Policy Dilemmas
While on the one hand, giving
the go-ahead to all of the casino applications might have provided a pragmatic
short-term solution to many of the problems besetting northern Cyprus's
tourism industry, the wholesale licensing of casinos holds threats and
uncertainties for the long term.
Partisans of gambling tourism
and casino expansion argued that the casinos had raised the demand for
hotel accommodation and would potentially increase the demand for other
tourism services, such as travel agencies, restaurants, car hire, entertainment,
etc. Even some of the smaller hotels that did not have a casino claimed
they had improved their chronically low occupancy rates by accommodating
the overspill from the larger casino hotels. Furthermore, the casinos
themselves would provide a source of local employment. Indeed, to promote
this objective, legislation passed in the mid-1990s required that the
proportion of foreign nationals employed in any casino should not exceed
30 per cent. Taxes and licence fees levied on casinos, it was argued,
could provide a lucrative source of income for the government. Finally,
from 1994 onwards, casino licences were granted only to hotel premises
with a minimum four-star rating and 200 to 250 beds. After 1996, this
was raised to five-star premises with a minimum of 500 beds, with the
intention that casino investors should improve the level and quality of
hotel stock in the north.
In addition to fears that the
casinos would lead to increased crime and rates of problem gambling (the
anecdotal evidence for which is so far unverified by definitive research;
c.f. Scott, 2000b), critics of the casinos identified a number of negative
impacts on existing tourism and its future prospects. These criticisms
had two major themes: firstly, that the benefits of casino tourism were
exaggerated and unevenly distributed; and secondly, that casino tourism
was distorting the north's tourism product and introducing a dangerous
element of dependency on the casinos.
Who benefits?
There is no doubt that large
flows of money have accompanied the establishment of casinos in northern
Cyprus. The casino iInvestors and operators own association estimates
their annual contribution to the local economy to be in the region of
US $65,000,000 (Kibris, 20/6/99). But it is far from clear who
is benefiting from these flows, and it seems likely that the gains to
the public purse are extremely modest. Certainly, the issuing of casino
licences is proving less lucrative for the government (which grants two-year
licences for an annual fee of between $80,000 and $100,000 US) than it
is for the licence-holders who then illegally sell their (supposedly non-transferrable)
licence to third parties for much larger amounts; according to one casino
manager, amounts up to $2,000,000 US.
Hotel owners renting out casino
premises are also reported to be charging an average rent of $100,000
US a year, although during fieldwork, amounts of up to $35,000 US per
month were also mentioned. In the eyes of many, this speculation in
casino licences and rents functions as a secret subsidy to hoteliers,
which has ensured their economic survival and enabled them to refurbish
and maintain their properties in the absence of either established tourism
or adequate financial assistance from the cash-strapped government. Yet
it has also reinforced the casino sector's status as a largely hidden
and secretive industry, and weakened central government's grip on development
and their capacity to exercise effective controls.
The lack of effective government
control is reflected in their inability, so far, to enforce local employment
quotas. Despite the legal requirement that a minimum of 70% of the casino
personnel should be local, research carried out by the Ministry of Tourism
in 1998 indicated that this requirement was honoured more in the breach
than in the letter. Thirteen out of 18 casinos surveyed employed fewer
than 50% local staff, and four employed fewer than 20%. Only two either
met or exceeded the 70% target (Ministry of Tourism, 1998). The majority
of the staff are from either Turkey or Eastern Europe.
Far from boosting business
for local shops, bars and restaurants, many of them claim to be suffering
as a result of the casinos. Restaurateurs complain that the casino tourists
seldom venture out to sample the local restaurants. What is worse, they
also claim that their local business (i.e. their Cypriot clientele) is
influenced by the free food, drink and entertainment offered in the casinos.
This particularly hits alcohol sales, where local restaurants derive most
of their profits. Although no official statistics have been gathered,
anecdotal evidence from the restaurateurs' association suggests that restaurant
closures have increased with the upswing in casino activity.
Relationship to tourism
Despite the fact that rents
and illegal income from selling off licences provide a 'hidden subsidy'
to hotels in northern Cyprus, this income benefits only a small proportion
of the hotels trying to make a living from tourism. Only four- and five-star
hotels are allowed to have casinos, yet 85% of the membership of the hoteliers'
association is made up of one- and two-star hotel owners. Small-scale
hoteliers complain that their traditional market is being squeezed out
by the priority given to casino tourism. The president of the hoteliers'
association claims that tour operators have stopped actively promoting
northern Cyprus as a "family market," thereby changing its tourist
profile. Travel agents point out that casino tourism is exacerbating the
transportation bottlenecks to which the north is subject by monopolising
scarce aircraft seats at the expense of other tourists. There is also
evidence that the local tourist supply chain is being distorted by the
trend for casinos to deal directly with tour operators in Turkey and elsewhere,
thereby cutting out local travel agents. This practice is technically
illegal, but appears to be increasingly rarely policed.
A Policy Stand-Off?
The casino sector in northern
Cyprus is characterised by uncertainty and lack of clarity, at least a
partial consequence of the stop-and-go, contingent nature of casino tourism
in northern Cyprus and its extreme dependency on developments in Turkey.
The government has been criticised for being too reactive and ad hoc in
relation to the casino sector. But some casino operators go further and
accuse politicians of deliberately prolonging the state of uncertainty
surrounding the casinos and exploiting the polarisation of public opinion
for political capital. In a public statement in June 1999, the head of
the Association of Casino Investors and Operators claimed: "The government
does not accept us as a sector, they have classified us in the same category
as gambling houses, whore houses and seedy coffee shops. Their goal is
to shut us down" (Cyprus Today, 19/6/99, p. 2). According
to this view, the government's failure so far to establish a gaming control
board is symptomatic of its unwillingness to seriously engage the casino
sector.
The pressures on the government
to grant new licences have become so great, however, that it is finally
being forced to take a position, which is proving to be no easy matter.
Personal interests flourished in the previous laissez-faire climate and
casino operators are now unwilling to bow to stricter regulation by government.
The publication in June 1999 of a draft bill amending the Gambling Establishments,
Casinos and Gambling Prevention Law provoked a strong reaction from casino
operators. The bill proposed tightened restrictions on entry into casinos
and an entry fee of $10 US. The bill also provided for more vigorous action
against "illegal gambling" (i.e. by citizens of northern Cyprus
and students), with increased fines and up to two years' imprisonment
for individuals, and even stiffer penalties (fines, three years' imprisonment
and possible closure) for casino management who permit illegal gambling
on their premises. The Association of Casino Investors and Operators,
which had been moribund up to this point, responded with a full-page public
announcement in Kibris newspaper (20/6/99) denouncing the proposals,
and threatened to close down all of the casinos over the summer season
"so it is understood how much this sector affects tourism and the
economy" (Cyprus Today, 19/6/99: p. 2). The amendments were
watered down, and the threatened closures did not occur.
Conclusion
Eadington (1995) has pointed
out that places eager for the economic benefits of casino tourism development
often overlook the associated costs of establishing and maintaining an
adequate policy and regulatory framework. Resource constraints alone,
however, do not fully explain the experience of northern Cyprus. As McMillen
(1996b) points out, to approach casino tourism development solely from
the angle of costs, benefits and technical management solutions ignores
the radical transformations in social, cultural and economic relations
into which casino tourism destinations are thrust, and in which the state,
out of necessity, plays a central part as the source of legitimation,
legislation and public policy. The history of northern Cyprus's involvement
with casino tourism provides a telling illustration of McMillen's further
observation, that governments are "constrained and complex forums
for competing ideas, rather than the autonomous and single-minded organisations
assumed from a paradigm of economics and public choice" (1996b: 31).
What is most striking in the
northern Cyprus case are not the financial barriers to achieving regulatory
efficiency, but the state's inability to reconcile conflicting internal
and external political and ideological pressures (exacerbated by its symbiotic
relationship with Turkey and dependence on developments there); its failure
to send out clear signals to the competing interest groups and the general
public and its unwillingness to engage the casino sector seriously, from
a position of strength. The example of northern Cyprus suggests that the
obstacles to economic development which characterise peripheral regions,
and which are rooted in conditions of dependency, vulnerability and uncertainty,
are likely to be intensified rather than alleviated by the relationship
with the footloose, global casino industry.
Acknowledgements
Fieldwork was funded by the
Development and Diversity programme of the University of North London.
My thanks to colleague Sahap Asikoglu for his invaluable collaboration,
and to Dr. Turgay Avci of Eastern Mediterranean University for the generous
research facilities made available. I am also grateful to the anonymous
reviewers for their comments.
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This article was peer-reviewed.
Submitted: October 16,
2000
Accepted: March 1, 2001
Julie Scott is a social
anthropologist at the Centre for Leisure and Tourism Studies of the
University of North London. For the past ten years she has carried out
research into various aspects of tourism in northern Cyprus and the
Mediterranean, where casino tourism has, of late, assumed a growing
importance. Her interests lie in using qualitative research methods
to explore the social, cultural, economic and political contexts of
gambling activity.
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