There is serious concern in Prague and around the Country for the spreading of gambling premises. In addition to the big casinos, there is a proliferation of the so called “herna bars”, strange, dark places with sparkling slot machines and video poker.
One of the few Czech words that foreigners soon begin to learn in Prague is “herna”. Herna bars are those peculiar places with coloured neon lights and darkened windows or with questionable window panes that may, practically, be seen in every neighbourhood of the capital. The latest statistics, carried out by the Czech Ministry of Finance, counted nearly 1,500 of these bars in Prague alone, and about 2,800 throughout the Czech Republic. To provide a complete picture of gambling, we need to add to that figure, more than 130 casinos and a total of about 50 thousand slot machines [1] throughout the Country. Practically, one slot machine for every 200 inhabitants. As a comparison, we may quote some research work carried out by Lidové Noviny: France, the country in western Europe with the highest number of gambling machines, has a slot machine every 18,000 inhabitants.
Three years ago, the municipality of Prague, waged a battle in its attempt to combat the herna phenomenon, by introducing a law obliging gambling houses to be closed if placed in the vicinity of schools, historical buildings and on premises owned by the municipality. The measure should have led to the closure of 256 local gambling premises, but in actual fact, it reached that objective only partially and the number of new gambling houses has continued to rise.
Many of those living in Prague in the last few years, will still remember the explosion in the city centre, when a bomb blew up a gambling house in Na Prikope. It was August 1st 2004. The attack, which had been carried out with the aim of killing the owner of the casino, wounded 20 people instead, including a number of tourists. The days after the attack were followed by a great number of disputes and debates in the Czech media on the connection between gambling, money laundering and organized crime in the Czech Republic. Everyone – public opinion, the press and, above all, the political world – seemed to agree that the situation had got out of control and that a stop on gambling houses had to be put in place. The then Mayor of Prague, Pavel Bem, declared war on casinos and herna bars, by promising a drastic reduction in their number.
The good intentions and promises made at the time, gave hope for a real change, but, as is often the case, the declarations of intent were followed by very few actual facts.
And the fact is that Czechs spend about 90 billion crowns a year in slot machines and the like, while the gambling industry employs about 50,000 people. The municipality of Prague collects around 150 million crowns annually from taxes linked to gambling, while the municipal public Transport company (Dopravní Podnik) earns more than eight million crowns from renting its premises to the various herna bars. This is the reason why these places have not been closed or reduced in number, and why new ones have been springing up. By the end of 2009, Dopravní Podnik had the obligation to terminate 20 of its leases and just as many gambling houses: an enquiry made last year by Ceska Televize showed that only one of these 20 contracts had actually been enforced. Not only: last year, the Prague transport company even signed a lease for its premises with a casino, for the duration of 13 years.
However, if it is true that some premises have actually been closed near schools, hospitals and in old town centres, it is not uncommon to see an old clothes shop or a travel agency in the suburbs closing down and, a few months later, a herna bar opening up.
In particular, the battle against gambling houses seems to be carried out by municipalities with little support from the government. For a long time, local administrations have asked to be granted more independent decision-making on legal issues that seem very confusing and vague. Clear and precise regulations – also requested by anti-criminal associations in their fight against criminal organizations – have been expected for a long time and to such an extent that legitimate suspicions have been raised as to whether there is any serious determination to introduce effective regulations on this issue.
Last June, the Czech Constitutional Court, issued a verdict, according to which, it is up to the municipalities to decide whether to grant licenses to local gambling houses and determine exactly where they should be placed. The battle has been waged by the tenacious Chrastava mayor, Michael Canova, who has challenged the government that, until the Constitutional Court ruling is issued, he will entrust the Ministry of Finance to deal with this matter. In the past few weeks, a number of other local governments announced that they would follow the indications of the Chrastava mayor, including Mlada Boleslav, together with the Prague 4 municipality district.
Local administrators, who are pursuing this battle, tend to associate casinos and herna bars to illegal activities carried out by criminal organizations, while opponents, remind us of the serious impact that the elimination of such houses would have on municipal coffers. Not only: the authorities are obliged to make public the information regarding the amount of tax revenue collected from local gambling houses, and how this money is then utilized (usually to help charitable organizations, sports and cultural institutions). Until the new law comes into effect, it is in fact the casino owners themselves who have the right to indicate which association the money should go to. It is pointless to say then how this could inevitably turn into another ploy for money-laundering, obtained in such a doubtful manner.
The gambling industry in the Czech Republic is particularly prone to the risk of money-laundering. This is on the one hand, due to the presence of numerous active gangs in Eastern Europe, Asia and the Middle East and on the other, due to lack of legislative clarity, which one may add, does not even provide security to the gambler.
According to Senator Josef Novotny, the gambling industry is represented by a powerful lobby that for many years has hindered any possibility of a serious discussion on legislation. These local gambling houses, which by law must have a capitalization of at least 100 million crowns, are not subject, according to present regulations, to specific anti-money laundering obligations.
If we look at some of these premises, they are nearly always empty and it is surprising how they can afford to remain open 24 hours a day, seven days a week.
Czechs often associate organized crime with the presence of foreigners – and are partially right. The Russian, Polish, Ukrainian, Vietnamese, Arabic, Israeli and Balkan mafias are well established in the Czech Republic and there is a suspicion that they might control a large segment of gambling. The Czechs often play a second lead, but we must not underestimate the weight that the money coming from these organizations has on the economy of this country. A factor that seems determinant, in order to legislate clearly and decisively on this subject.
By Alessio Marchetti