Israel casinos could bring both pain and gain, according to gov’t report

israel-eilat-casinosA report prepared for Israel’s finance ministry says the government’s plan to authorize legal casino gambling will offer both pain and gain.

Last week, Israeli prime minister Binyamin Netanyahu signed off on a Tourism Ministry study of building up to four casinos in the Red Sea resort town of Eilat. On Monday, Haaretz reported on a cost/benefit analysis prepared for the Finance Ministry last December that may have influenced Netanyahu’s decision.

First, the benefits. The document says casinos in Eilat would attract more international tourists, especially given Eilat’s reputation for being a pricier visit than comparable resorts in neighboring Arab countries. The casinos are expected to boost Eilat’s annual international tourist arrival numbers by 240k, while overnight stays at Eilat’s hotels would rise 10% to 230k per year.

The casinos could also attract Israelis who would otherwise have to travel to other countries in order to access casinos, but this assumes that Eilat’s casinos won’t be restricted to holders of international passports, a matter that has yet to be decided.

The casinos are projected to generate annual revenue of $336m, based on an annual 2.1m guests spending an average of $160 per person. This revenue could rise to $511m per year after several years of operation, based on a survey of 13 countries in which casinos are legal.

No tax rate on gambling revenue has been put forward but the government nonetheless expects its tax coffers to enjoy a healthy boost once the casinos are operational. Once complete, the casinos are expected to lead to the creation of 11k new jobs, directly and indirectly.

And now, the bad news. Assuming Israelis are allowed to access the casinos, it’s estimated that the ranks of the nation’s problem gamblers could swell by 30k. The Social Affairs Ministry said it would need around $2.2m in additional annual funding to mitigate the increased social harms casinos would bring.

There are concerns that casinos will boost crime rates and encourage nefarious behavior such as money laundering, but the Tourism Ministry believes it can manage these downsides, saying “ a great deal of knowledge exists” that will aid its efforts to keep the negatives under control.

Getting anything done in Israel’s fractured political climate is never an easy proposition and social conservatives are already on record as stridently opposing the casino plan. Even under a best-case scenario, the government estimates it could be four to eight years before an Eilat casino welcomes its first gambler.