Pulse
Dragonara Gaming seals second successive casino concession
By Lewis - 5 August 2021
The Government of Malta announced that the Ministry for the Economy and Industry concluded a 10-year casino concession with Dragonara Gaming Limited pursuant to the Request for Proposals that the Privatisation Unit had issued on February 17, 2021.
Through this concession agreement, Dragonara Gaming Limited has been awarded the concession to operate a casino for the next 10 years, extending the tenure of Malta’s foremost casino that was established in 1964. The Dragonara Casino, which is considered to be a blue-chip property in the Mediterranean, is home to over 300,000 visitors a year.
G3 interviews Johann Schembri – Chairman and Chief Executive Officer of Dragonara Gaming Limited, a joint venture between IZI Group plc (the largest retail-based gaming operator in Malta) and Toss-a-Coin Limited, about what this new concession means for the Group and for the land-based casino industry in Malta.
What does winning the concession for a second time mean for Dragonara Casino?
We are obviously delighted to be able to steer Malta’s most established and longstanding land-based casino to a second successive concession. The first 10-year concession was very interesting, to say the least. The changing market competitive landscape in 2015 and the restrictions of 2020-21 due to the COVID-19 pandemic have tested our resilience as an operator.
Our focused approach to investing in technology and embracing innovation has enabled us to reposition the Dragonara Casino in its rightful place as Malta’s No.1 Casino and one of the most prestigious casino properties in the Southern Mediterranean.
Being able to extend our commitment by a further 10 years enables us to continue our investment strategy to create something meaningful and unique, deserving of the location, history, and heritage of the Palace from which we operate. The next 10 years will be challenging, but we embark on this new path with a renewed sense of optimism and determination.
Dragonara Gaming Limited has managed a sustained investment programme since taking over the Casino in July 2010. Has the investment paid off?
Dragonara Gaming Limited took over the Dragonara Casino with a clear investment plan that reflected the growth opportunities in the local land-based casino market. The investment in gaming systems and gaming content coupled with the relentless drive to find the best human talent in the market has paid off for Dragonara Casino.
This is reflected across the most important key performance indicators for our Casino, including growth in patron numbers as well as the value generated per patron visit.
What are the improvements you have made during the first 10-year concession period and what are your prospects for the next 10 years?
We took over a casino property in 2010 that was in desperate need of investment. In the past 10 years, we have invested approximately €21million to ensure that our patrons are provided with the best casino experience possible. The casino has been equipped with the best slot product from the world’s leading providers.
Our live tables are also best-in-class, providing a diverse product portfolio for an exceptionally varied customer base with different playing limits. The investment in our in-house poker room is something we pride ourselves on. We converted one of the lateral terraces of the Dragonara Palace into a unique poker setting in which players can enjoy stunning views of St. George’s Bay.
Our plans for the future and specifically our plans for the next 10 years are quite ambitious. We would like to utilise the property in a more efficient manner, and this can be done through the redevelopment of the northern side of the property, formerly known as The Slots Palace.
Our plan for this area and the surrounding grounds is to create the basis for an Integrated Casino Resort (ICR) in a location that is unique in many ways. The plans for this development are well underway and in the first years of the new concession we will bring these plans to fruition.
Once completed, the Dragonara Casino Resort will be in a position to offer a more extended range of services including dedicated gaming areas for high rollers in a private setting like no other, the possibility of hosting Grade 1 International Poker tournaments, and first-class ancillary services through some of the world’s finest brands.
Obtaining the long-term lease of the property till 2083 has been a remarkable achievement. What does this mean for the company?
As any investor can appreciate, timing in large capital investment projects is key. The current policy of issuing competitive tenders for casino concessions for a 10-year period is fair but has limitations in attracting long-term capital investment projects.
Having concluded a long-term lease for the Dragonara Palace and the adjoining grounds till 2083 through the unanimous approval of the Maltese Parliament, gives the company the necessary framework to be able to think long-term in the way it plans its investment.
The long-term lease of the property does not mean that we will have a concession to operate the property as a casino until the lease expires but would certainly allow us to undertake the necessary investments in the property and create multiple activities beyond gaming.
The uniqueness of the property coupled with our know-how of the market and our willingness to make sizeable investments going forward are the pillars onto which we will construct our future in this industry.
The last two years have been very challenging for the Casino. How has this impacted your operations and what are the challenges of the future?
Needless to say, the period March 2020 to June 2021 has been a roller coaster for the industry and an exceptional situation that was quite challenging to manage. The COVID-19 pandemic has reaped havoc on an industry that, until such time, was experiencing encouraging signs of growth.
In the past 16 months, we have had to endure a six-month lock-down which is unprecedented. The biggest challenge was to keep the workforce motivated when there was no certainty as to when operations would resume. Despite all this, we have come out from the pandemic reasonably well, due mainly to a resilient local market that is extremely loyal to the Dragonara Casino.
The local market has always been the bedrock of our operation, so when we reopened, we ensured that the local market was fully satisfied with the new casino experience. The main challenge in this respect was to provide peace of mind to patrons that the casino was a safe place to visit. We are very grateful that our efforts have thus far been rewarding.
Going forward, the main challenge will come in the form of ‘over regulation’. While we have always built our success through the adoption of very stringent compliance mechanisms, the compliance requirements are becoming overbearing and are stifling business.
Some rules are set with the mindset that the industry is made up of heavy players, when in reality most casinos attract, in their vast majority, casual players that are worth even less than €100 per visit.
Unless gaming and financial services regulators understand that over-regulation will stifle business and drive it underground, the demand for our services will diminish while the player will seek alternatives in the form of illegal gambling. Like most things in life, the right balance must be found, and this must be found through consultation with the industry.
What about online? What is the Dragonara doing in this space?
As you are aware, our Group is predominantly a land-based gaming group. However, we are well aware that the future is also digital. Since 2013 we have been operating an online portal, www.dragonara.com firstly as a white label but recently under our own MGA licence.
We have undertaken sizeable investments in this space because we truly believe in convergence and the opportunities that exist in leveraging both the land-based and digital channels with our customer base.
Dragonara is a trusted brand in the Maltese market and we aim to repay this trust by providing our customers with a great online experience, including a vast range of casino products and a sportsbook with thousands of markets available every week.
