Europe's oldest operator

By David Cook
David Cook provides the key information you need to know about the state-owned Monte Carlo casino market

We are used to the key terms and perhaps clichés attached to Monaco. Yachts, the annual Formula 1 Grand Prix, tax and of course casinos are among them. But unlike the world’s premier land-based casino gambling hubs of Macau, Las Vegas and Atlantic City, the Monaco casino market, operated by a state-owned monopoly, seems to slip under the radar. To give the microstate on the French Riviera some of the coverage it may have been lacking, Gambling Insider thought it would provide some of the key facts and information you may not be aware of.

Société des Bains de Mer (SBM), run by the ruling Grimaldi family, owns and operates all four casinos in Monte Carlo as well as five hotels. Its Casino de Monte Carlo, which charges an entrance fee of €10, has been featured in a number of James Bond films and its interior appears more like a palace or art gallery than a casino. Gambling chips and plates worth €200,000 can be used at its tables.

The Monaco market is truly unique in the way it is run and the history it possesses. SBM was founded in 1863 by a sovereign decree passed by Prince Charles III. The first SBM casino was inaugurated in the spring of the same year, becoming the first casino to open in Europe.

Aristotle Onassis' majority stake was reduced to a minority stake when the ruling Prince Rainier created 600,000 new shares to be bought and held by the government
The Monegasque state holds a 69.5% majority stake of share capital in SBM. The Grimaldi family has had sole ownership or a majority share in SBM almost entirely since its birth, with one brief exception. Greek shipping tycoon Aristotle Onassis began investing in SBM in the 1950s and eventually secured a majority stake of 52%. This was then reduced to a minority stake when the ruling Prince Rainier, the father of Prince Albert and husband of Grace Kelly, created 600,000 new shares via his National Council to be bought and held by the government - as you do. Real estate investment company Qatari Diar is reported to have attempted to purchase 30.4% of the stock in 2008, valuing SBM at $1.4bn, which proved to be unsuccessful and no deal materialised. Qatari Diar owns just over 6% of the stock. It was reported in July that Macau operator Galaxy Entertainment is to purchase a 5% stake in SBM.

SBM reported turnover of €452.4m for the year ended 31 March 2015, down 4%, while gross gaming turnover dropped 6% to €196.4m, which accounted for 43% of overall turnover. An operating loss of €16.3m was reported. SBM has not made an operating profit since 2009/2010. While these figures may seem miniscule and even disappointing in comparison with the world’s biggest gaming hubs, it should be noted that this represents the total figures for a principality with a population of 37,800, as of 31 December 2014. By way of comparison, Las Vegas has a population of over 619,000, with the Las Vegas Strip and downtown Las Vegas generating a combined $6.88bn in gaming win last year. Macau, with a population of over 642,000 as of the second quarter of 2015, reported accumulated gross casino revenue of 351.52bn patacas ($44bn) for 2014.

Despite its tiny size, Monaco’s gross national income per capita was ranked as the highest in the world in 2014, according to the World Bank national accounts data. The exact figures for Monaco are not available, but third-placed Bermuda totalled $106,140. The last total given for Monaco was $163,036 for 2011. SBM is also assisted by Monaco being a tax haven, as declared by the International Monetary Fund in 2003. Its residents are exempt from paying tax on their income.

SBM raised $240m by selling shares traded on the Paris Euronext exchange earlier this year and plans to renovate its Hotel de Paris, a project which is expected to cost over €650m, something which may be necessary for SBM to arrest its current slide. It could be just what it needs to further cement its position as one of the most iconic firms in the leisure and gaming industry.

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