Hit and Harrah's Form Joint Venture for Mega Gaming Project
Slovenian gaming company Hit and US casino operator Harrah's Entertainment have formed a joint venture to build a major new gaming and entertainment centre near Nova Gorica, an investment worth US$ 700m scheduled for completion in 2009 provided that the government loosens gaming legislation.
The mega project rests on the government's willingness to tweak legislation: currently, foreigners can hold no more than 20% in a gaming venture, whereas the gaming tax is set at a high 30%.
Gary Loveman, chairman and CEO of Harrah's Entertainment, told the press in Ljubljana on Tuesday that the company was in talks with the government on changes to the gaming law that would allow foreigners to hold a 50% stake.
Harrah's would also like the government to lower the gaming tax. High taxation means fewer casinos and accompanying entertainment centres; lower taxes means more hotels, entertainment, bars and jobs, and consequently higher tax revenues, Loveman stressed.
Loveman said Harrah's was interested in two locations owned by Hit, which their experts will soon inspect and evaluate. Hit chairman Branko Tomazic said the locations in question were the site of the Cimos factory at Sempeter near Nova Gorica and a site in Ozeljan.
According to Tomazic, talks are indeed underway with the government to cut the gaming tax to no more than 10%. In the US, casinos are taxed at a rate of 6.5%, he noted.
Tomazic said Hit was looking for investors in Slovenia to help provide it with half of the hefty investment. He said one option would be a capital increase, yet the project is still in an early phase, so the option is not being seriously considered.
The project involves building a high-class hotel with 800-1,200 rooms, a casino stretching over 4,500 sq. metres with 1,500 slot machines and 70 tables, as well as a convention centre, spa, shopping centre and vars, restaurants and nightclubs.
The partners in the joint venture are pinning their hopes on gambling-eager guests from Austria and Italy just across the border. According to Tomazic, the casino could attract up to 3.1 million guests a year and raise Hit's annual revenues from EUR 240m to EUR 420m in the medium term.
The project would be the largest greenfield investment ever in Slovenia, which is probably why the government has expressed willingness to tweak legislation.
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