Gambling: Salvation or Scourge?

Money pours in across Eastern Europe, with people from Moldova to Romania pumping coins into machines that feed on their paychecks and their fantasies of quick wealth. In one family’s tragedy, a Bulgarian father found the lure so strong that he stole from his comatose daughter’s medical trust fund.

The tease of easy cash during a bleak economic decade throughout the region has fueled a gambling boom.

But an investigation of gambling houses in six countries shows the real winners are businessmen with shady pasts, criminal records and connections to powerful people. Using their influence to build monopolies and to corrupt local officials - the head of Romania’s anti-money laundering task force is under investigation for money laundering - these owners take advantage of regulations so lax they are often ignored entirely. The public, meanwhile, must deal with gambling addiction and crime related to the betting world.

In February, a Bulgarian casino owner was charged with conspiring to kill rivals in what police call his other business: drug trafficking. Two months earlier another owner was beaten nearly to death on a busy street by two men with hammers. And one of the most powerful casino operators of all, Ilia Pavlov, was assassinated by a bullet to the heart on March 7, 2003.

Jobs that Have a Hidden Human Cost

The Organized Crime and Corruption Reporting Project (OCCRP) sent a team of reporters throughout the region to examine public records, visit casinos and gambling halls and shed light on the secretive industry. It looked at the obvious benefits - badly needed jobs in struggling economies, a boost for the tax base and new or renovated facilities to replace ramshackle buildings - and at the human cost on families living near the casinos, shop owners trying to compete and an upswing in addiction.

And they looked at the corruption that often surfaces when so much money collides with so few regulations.

What OCCRP found raises questions about whether governments are doing enough to protect citizens. Regulators in some countries simply close their eyes and open their hands to payoffs, according to prosecution records, while other countries seem content to just pocket whatever benefits come and let operators do as they please.

Unlike in Las Vegas, the American gambling city that attracts tourists and boasts a glitzy clientele of stars and millionaires,most of these new gambling halls are parasitic, preying on the poor and prospering mainly on the backs of locals, according to an analysis of gaming revenues per visit, public tax figures and official logs of foreign visitors.

Only a fraction of the estimated €1.5 billion played at machines and card tables each year ever reaches public coffers. This is mostly because governments are not equipped or willing to stop gambling hall owners and operators from underreporting revenues. Some owners have been caught keeping separate sets of books; others tamper with their machines to show smaller revenues. Either way, they pay lower taxes, and governments get less than they should.

Some Countries Carve Successes

OCCRP did find signs that some countries are trying to regulate the industry and take advantage of its enormous financial potential. From flashy casinos in Bulgaria down to tiny slot machine shacks in Belgrade, new jobs are being created and plans for more gambling facilities are underway.

Macedonia attracts tourists and reduces unemployment rates by marketing directly to residents of neighboring countries. Bosnia and Herzogovina leaders are pushing new tax laws and accounting systems that regulators say should sharply boost tax revenues.

Across the region, however, a lack of controls and uniform procedures for monitoring casinos and official apathy are far more common.

Romanian licensing requirements are so weak that anyone with an empty hall and enough cash can open a gambling facility. Often the business serves as a money laundering machine that supports other criminal enterprises.

Bulgaria works the opposite way, shutting out unwanted competition that benefits a few, such as the gambling empires of Vasil Bozhkov, known as the Skull, and Sudi Ozkan, the Turkish-born owner of casinos worldwide.

And the warlords and violent criminals who controlled Serbian casinos more than a decade ago have been replaced by a new group of owners, including some whose reputations and organizations were forged in that period.

The OCCRP investigation provides an in-depth look at casinos in the Balkans and at the characters who helped build them. The stories focus not only on the problems, but also explain what’s next for the still growing industry and the countries that seek to control – and profit from – its influence.

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