North Rhine-Westphalia disposes of Westspiel casinos.
The NRW parliament recently approved the contentious privatization of state-owned gaming firm Westspiel. The opposition is vociferously condemning this action. Workers have been demonstrating against the sale for months. Merkur's owner Gauselmann could be the prospective purchaser. What developments can we anticipate?
Westspiel Privatization
NRW passed legislation last week authorizing the privatization of Westspiel casinos. This now enables a bidding process to identify a new operator for six locations. Votes from the CDU and FDP factions sufficed to overcome the staunch resistance and pass the law.
In May 2018, the black-yellow coalition first disclosed their intentions to sell Westspiel and the state-owned NRW Bank's shares. Since the operation of casinos was confined to public entities at that time, NRW's gambling laws had to be amended to permit the sale. The government has been citing unsustainability as the rationale since then.
Westspiel vs State
Accusations against Westspiel were based on financial information from 2016. Gross gaming income totalled 80.4 million euros, yet there was a deficit of 2.9 million euros at the time. NRW Finance Minister Lutz Lienenkemper declared the organization to be "chronically loaded with debt" and "mismanaged." NRW ultimately had to sell "the whole thing."
Nonetheless, the company's works council strongly objected to this. They contended that no business report for 2017 had been disclosed. The privatization was regarded as "economically senseless" as the casino gross gaming income had significantly increased since then. Gross gaming revenue had grown from 79.6 million euros in 2015 to 92.3 million euros in 2018.
Currently, Westspiel generates 107.7 million euros in revenue. From this, NRW received 50.4 million euros. The SPD and Greens warned against hasty privatization, citing many unanswered questions and urging thorough negotiations with specialized experts. Jobs and locations were not guaranteed, so Westspiel workers started demonstrating.
Potential Westspiel Purchaser
Four casinos are now operational in Aachen, Bad Oeynhausen, Dortmund (Hohensyburg), and Duisburg, with the latter managed by a subsidiary. Westspiel also oversees two other casinos in Bremen. To expedite the sales process, Duisburg is offering construction of two additional casinos. The new owner will decide the locations.
The tender is open to all EU/EEA gambling enterprises. Applicants must submit strategies for event management and player protection. The Interior Ministry will monitor the new license holder. This individual will receive a "15-year effective monopoly for casino gambling in NRW."
Every property is subject to a 30% gross income tax on all earnings up to 15 million euros. With each additional 15 million euros, the tax increases by an additional 10%. The tax liability for the two new casinos is set to be reduced to 25% of gross revenues during their first three years of operation.
Although no company has publicly expressed interest in participating, local media speculates that Merkur's owner Paul Gauselmann (85) is likely to be among the top contenders. Active in Düsseldorf sports sponsorships since May 2018, his participation is uncertain.
As NRW's parliament approved the sale despite intense opposition, Westspiel's future is becoming increasingly tenuous. Critics worry about putting consumer protection on the back burner. Meanwhile, Westspiel's roughly 1,000 employees fear potential job cuts from the new concessionaire. Since October, croupiers, cashiers, technicians, service employees, and administrative personnel have requested job and location guarantees. Additionally, they demanded an intermediary to represent Westspiel's interests to the government.
The works council claims "solidarity" against the privatization at Westspiel and that employee interests have been disregarded. The NRW Bank simply offered employees dismissal protection "within the existing conditions." Whether this coordinated resistance will make a difference awaits to be seen.
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Source: www.onlinecasinosdeutschland.com
