1. INTERNATIONAL TOURISM INSTITUTE ECONOMIC IMPACTS OF SLOVENIAN GAMING INDUSTRY USING TSA METHODOLOGY by Janez SIRŠE, M.Sc. CEI COOPERATION ACTIVITY: “MEASURING THE ECONOMIC IMPORTANCE OF TOURISM IN CEI MEMBER STATES (focused on TORUISM SATELLITE ACCOUNTS) Dolenjske Toplice, 17.-18. October 2007

2. 2 The paper summarises the findings of the project: Janez Sirše, Tina Vidjen, Janja Kalin, Dušan Luin: “Comprehensive Evaluation of the Economic Impacts of Gaming in Slovenia Using the TSA – Tourism Satellite Account Method”, Ljubljana, International Tourism Institute, 2006 Janez Sirše M. Sc. is Director of International Tourism Institute in Ljubljana and Senior Lecturer at the Faculty of Economy in Ljubljana. INTERNATIONAL TOURISM INSTITUTE

3. 3 The gaming tourist products account approximatelly 25% of Slovenian tourism offer. Most of the revenues generated by casinos are net inflows from abroad, since the bulk of guests visiting Slovenia because of their interest in gambling are represented by foreign visitors. Gaming brings about both positive and negative impacts to the local communities and the national economy and therefore it can be assessed from different points of view. For the purpose of our study, we study gaming as an economic activity. We have used the method of Tourism Satellite Accounts to assess the Slovenian gaming industry from the point of view of its actual and potential significance to local, regional and national economies, as well as for the development of a comprehensive range of tourist products. INTERNATIONAL TOURISM INSTITUTE THE PURPOSE OF THE STUDY

4. 4 Recent worldwide trends of land-based casinos are heading mostly into two directions: the offering of smaller casinos catering to the need of local populations to satisfy their urge for gambling the development of gaming-and-entertainment tourist resorts that offer more comprehensive experiences and relaxation. Such all-inclusive experiences in modern gaming-and- entertainment resorts – designed to a certain theme and expressing the typical offer of the location – comprise entertainment programmes, wellness products, business conventions, festivals, food and beverage, cultural events, recreation, sports and other attractions. INTERNATIONAL TOURISM INSTITUTE CASINOS DEVELOPMENT TRENDS

5. 5 The positive and negative impacts of gaming can be divided into the following categories: Casinos operating mostly in the domestic market: They represent mainly a tool for the re-distribution and the charging of additional taxes on the income of domestic subjects. Casinos of this type, by rule, induce a downward development spiral. Casinos attracting guests from foreign economies: The income and profits spent come from foreign economies, thus generating net inflows of foreign money. In addition to that, gaming guests buy other tourist services, as well. The more structured the gaming tourist product, the stronger the effects of the multiplier of gaming-guest spending. To absorb positive multiplier effects of spendings in casinos local, regional or national economies has to have an adequate size and structure. They need to be involved in development plans and investments in gaming at the right time. INTERNATIONAL TOURISM INSTITUTE ECONOMIC IMPACTS OF CASINOS

6. 6 INTERNATIONAL TOURISM INSTITUTE GAMING INDUSTRY IN SLOVENIA IN 2004

7. 7 Gaming visitors are tourists travelling to a location that is not their usual environment, where spending on games of chance is their main motive for travel. Gaming tourist consumption includes visitor spending on services offered by gaming companies: visitor spending on gaming services, including entrance tickets and tips, as well as spending on other services offered by casino companies: accommodation, food and beverage, transport, travel agency services, retail, events and conventions. Gaming tourist offer includes gaming, business, convention, cultural, festival, sports, wellness and other services. The gaming TSA therefore uses the same classification of products (typical, connected and specific) as proposed by the TSA framework and the system of national TSAs for Slovenia. The only difference in the classification of products and services on the basis of the list recommended by the WTO (TSA/TCP) is that the gambling and betting activities have been separated from recreational and other leisure activities. In addition to the activity of casinos, we have also analysed a series of other economic activities supplying products and services to casino visitors. INTERNATIONAL TOURISM INSTITUTE TSA FOR GAMING INDUSTRY IN SLOVENIA for 2000 & 2003

8. 8 Gaming consumption includes all the expenses paid by visitors for gaming services, including entrance tickets to casinos and tips. Gaming tourism consumption includes all the expenses paid by visitors for gaming services and other services offered by gaming companies in Slovenia (in addition to gaming services also expenses for accommodation, food and beverage, travel agencies and tour operators owned by Slovenian gaming companies). Internal gaming tourism consumption comprises all expenses paid by (or commissioned by) gaming visitors during their travel and stay outside their place of residence or their usual environment (with reference to trips). Internal gaming tourism consumption is the total spending in the country by domestic gaming visitors and foreign gaming visitors in the same country. Gaming value added is the value generated by gaming and other activities in the economy and the result of gaming tourism consumption. Gaming gross domestic product is the sum of value added (at basic prices), generated by gaming and other activities as the result of gaming tourism consumption and net taxes on products and import duties included in the price. INTERNATIONAL TOURISM INSTITUTE TSA FOR GAMING INDUSTRY IN SLOVENIA - AGREGATES

9. 9 INTERNATIONAL TOURISM INSTITUTE TSA FOR GAMING INDUSTRY IN SLOVENIA – CONSUPTION (mio EUR)

10. 10 INTERNATIONAL TOURISM INSTITUTE TSA FOR GAMING INDUSTRY IN SLOVENIA – AGREGATES

11. 11 INTERNATIONAL TOURISM INSTITUTE TSA FOR GAMING INDUSTRY IN SLOVENIA – TAXES

12. 12 INTERNATIONAL TOURISM INSTITUTE TSA FOR GAMING INDUSTRY IN SLOVENIA – MULTIPLIER 1&2

13. 13 INTERNATIONAL TOURISM INSTITUTE TSA FOR GAMING INDUSTRY IN SLOVENIA – MULTIPLIER 3

14. 14 INTERNATIONAL TOURISM INSTITUTE TSA FOR GAMING INDUSTRY IN SLOVENIA – SECTORAL COMPARISON

15. 15 Application of TSA methodology to the gaming industry is a considerable improvement to the collection and evaluation of tourist consumption and production within national TSAs. The results have confirmed that the gaming industry is extremely important to the Slovenian tourism industry in particular and to the national economy The value-added multiplier of the gaming industry is 2.1. The importance of gaming, offering a comprehensive tourism product in addition to mere gambling, including accommodation, cuisine, wellness services, convention programmes and entertainment centres, while encompassing the wider offerings of the local environment, is growing exponentially. By comparison to the economic activities selected among the most efficient businesses in Slovenia, the gaming industry holds the top position in terms of value added by production, as well as in terms of productivity, its share in exports (consumption by foreign visitors) and payment of taxes. It should be pointed out that 85% of the gaming value added and taxes paid stem from the consumption by foreign visitors. Slovenia has few strategic advantages that can be successfully exploited. One of them is certainly the tourism industry, which includes gaming. INTERNATIONAL TOURISM INSTITUTE CONCLUSIONS

16. 16 INTERNATIONAL TOURISM INSTITUTE Vosnjakova 5, SI-1000 LJUBLJANA SLOVENIJA TEL: + 386 1 430 78 10 + 386 1 300 69 40 Fax: + 386 1 433 86 59 WWW.TURIZEM-INSTITUT.SI INTERNATIONAL TOURISM INSTITUTE