Are casino workers being betrayed by the state ?

After all the razzmatazz about the casinos in Mauritius, it is high time to shed the true light about this sector which was regarded as a blue chip by the Ministry of Finance. However, our politicians have succeeded in rendering the business a non-value chip. The casino sector can be a very interesting case for an academic researcher to study how political intervention can affect efficiency and cause the decline of a most profitable business.

Historical background

Through the instigation of Sir Gaëtan Duval, the first casino, that is Casino de Maurice, was opened in 1970 in Curepipe. It was considered as a supporting activity to the tourism industry. Soon after, several casinos, namely St Géran, La Pirogue and Trou-aux-Biches, were opened within hotel premises. In 1996, there were seven casinos in the country providing direct employment to about 950 persons. International casino companies were recruiting the local casino professionals to work abroad in countries like South Africa, Gabon, Australia and France amongst others.

State investment

In 1989, the Government, through the State Investment Corporation (SIC), decided to invest in the casino by taking over 51% of the shares in the casino companies and managed the sector by its newly created subsidiary, the State Investment Corporation Management Services (SICMS) Co. Ltd. Actually, the SIC owns 100% of shares in most casino companies.

Taxation system

The business, apart from paying huge amount for licenses and permits, was highly taxed through the gaming tax which was 50% on gross win. Only in recent years has the gaming tax been reduced to 35% for slots machine and 15% for gaming table. However, the licenses have been enormously increased. The annual casino license fee is Rs 3.5 million per casino and Rs 125,000 per coin-operated machine (machine à sous). The casino companies are also subject to a Corporate Tax of 15%. Moreover, a management fee of 2% on turnover is being paid to SICMS. From 2002 to 2012, the government had received more than Rs 4 billion as Gaming Tax. Further, Government, through the Gambling Regulatory Authority, issued licenses to several Gaming Houses that have now reached up to 19 units in the country. This has worsened the situation.

Amateurish Management

Unqualified and incompetent people have been appointed to manage the business. Even the outgoing General Manager was not qualified nor does he possess any experience in the core activity of the business. The successive Governments were appointing people that would be at their beck and call. As a result of these appointments mismanagement, discrimination, injustices and corruption were the norms. The voice of the workers and their union were simply ignored.

In March 1996, Mr Harris Balgobin, who was the arbitrator for the industrial dispute, concluded his award as follows: “I consider that it is essential that I should at this stage point out that a proliferation in the number of casinos and a number of unresolved issues closely related to management but which does not directly concern me here threaten the very existence of this industry. The workers should not and cannot be made to suffer from such factors which are beyond their control and business and clearly there is therefore need to put some order in the house.

The alternative is obvious. ‘No more bets please’ will take an entirely different meaning.”

Furthermore, in a letter dated 7th July 2010, the Casino Employees Union alarmed the then Minister of Finance in the following terms : “The company’s finances are in tatters but nothing is done to arrest the present decline. Worst, spending is going unabated. We watch with deepening concern the company ‘sleep walking’ into disaster.”
The Steering Committee report (October 2014) submitted by Mr A.K. Gujadhur found that for several decades, no major investment has been made in the casinos, the machines are outdated and the buildings are in ruin.

Window Dressing

Recently some top officials have been declaring that the casinos have become profitable. If such is the case, why has no financial statement been filed at the Registrar of Companies since 2014? However, arrears long overdue and allowances have not been paid to incumbents. Several employees are having resort to the judiciary for redress.

Pension Scheme

The employees are extremely anxious about their future more specifically about their pension benefits. In 2012, after an actuarial exercise, the pension fund showed a deficit of Rs 82.4 million and the same exercise for the year 2015 showed an increased deficit of Rs 240 million and presently, there are more than one hundred pensioners. Most employees enjoy a Defined Benefit Scheme, that is, their pensions are guaranteed. Therefore, it is the duty of the employer to foot the bill.

However, since the last AGM dated 30th June 2016, the SIC has failed to appoint the six employers’ representatives on the Management Committee, although there is a petition from 400 workers requesting for a Special General Assembly. Even the Investment Manager has requested, several times, that a meeting be convened to transact investment opportunities. These requests have been ignored. Furthermore, the regulations of the Financial Services Commission pertaining to technical funding requirements of Private Pension is being violated since the employer has not submitted any proposal about the funding of the deficit of the pension fund.

Government’s position

In the Budget Speech this year, Honourable Pravind Jugnauth, Minister of Finance, stated that “Government will limit its role to regulating the Gambling sector, and will, therefore, gradually divest itself of its businesses in the gambling sector. To this end, both the ownership and management of casinos in Mauritius will be reviewed”. Casino workers are expecting that before divesting, Government will assume its responsibility and obligations by investing heavily to modernize the casinos and also compensate the fund deficit in the pension scheme. As an important stakeholder, the workers hope that privatization will be done in all transparency and that they will be embarked in the process.

End Words

There is an urgent need to adopt some of the valuable recommendations made in the Steering Committee report namely management should come forward with a Mutually Agreed Retirement Scheme in order to right size the workforce, to reduce the salary bill and to invest gradually in sophisticated machines and infrastructure. Good governance should be high on the agenda of the business. This will pave the way for a brilliant and successful future for all stakeholders. Casino workers hope that as citizens of the Republic they will not be betrayed by the State. Without fear and favour...