Casino gambling was both welcome and prolific in Venezuela when Hugo Chavez ascended to the nation's presidency in 1999.
Chavez determined more than a decade later that casinos, betting parlors, etc. were having a negative impact on society by attracting everything from prostitution to drug use. His administration shut down gambling throughout Venezuela in 2011. In the nine years since, only a small number of online operations have been allowed to operate.
That is about to change. According to current president Nicolas Maduro, the Hotel Humboldt in Ávila National Park will soon be home to a brand-new international casino operation intended to serve both Venezuelans and international travelers. Even more interesting is the fact that the casino will operate on Venezuela's national cryptocurrency, the Petro (PTR).
It would appear that the casino is the latest economic gambit the Maduro administration is hoping will help turn around the nation's struggling economy. Maduro says that profits generated by the casino will fund public education and healthcare. If you are skeptical of such claims, you are in good company.
Casino gambling is profitable
On its face, embracing gambling as a way to raise revenues makes a ton of sense. Casino gambling is profitable pure and simple. In the UK, gambling is embraced in all of its many forms. From casinos to betting shops and online gambling operations, the UK is one of the most lucrative places to set up a gambling business.
It benefits operators who find plenty of opportunities to make money. It benefits consumers who find entertainment value in everything from slot machines to betting on football games. Finally, it benefits the UK government through significant tax revenues. You could say that the UK is living proof that gambling works - when it is done the right way.
So why the skepticism over Venezuela's plans? For starters, Nicolas Maduro is well known for making promises his government cannot keep. For instance, PTR was supposed to be the savior of Venezuela's economy by allowing the country to get around the prohibitive sanctions that have crippled it for so long. PTR has been anything but.
One cannot help but wonder just how profitable a PTR casino could be. If you are a Venezuelan citizen, do you really have the disposable income to visit a casino on a regular basis? Probably not. And if you are an international traveler who likes to gamble, would you bother going through the hassle of acquiring PTR just say to play a few table games at a hotel casino in the Ávila National Park?
Let's face it, Venezuela is not Monaco. It is not as though the world's rich and famous are lining up to visit the South American country and its national park. Maduro and his people are going to have to bring something big to the table if their plan is to produce enough money to fund healthcare and education.
Logistical questions to answer
Let us give Maduro the benefit of the doubt and just assume his casino plan is a good one. There are some logistical questions to answer right off the top. For example, will the casino only accept PTR? If so, gamblers will want to have easy access to PTR in order to gamble with it. That means making the cryptocurrency available on exchanges worldwide.
Remember that most of the casino's revenue is going to come from travelers; it will not come from locals. Furthermore, it makes no sense to force travelers to delay purchasing PTR until they get to Venezuela. If Maduro wants to push this hard, he is going to have to find a way to make PTR attainable anywhere in the world.
The next question is how winners will be paid. If the casino only accepts PTR payments, it would be reasonable to assume that all winnings will be paid out in PTR as well. This could be a problem. Why? Because PTR's value is tied to Venezuela's oil and gas industry. That, in turn, is tied to a combination of international sanctions and Venezuela's economy.
As it stands right now, there is very little monetary value in PTR. A casino paying winners only in PTR is asking those winners to take tokens that may not have any real value outside of Venezuela. So now you are looking at whether or not winners will be able to exchange PTR for a more valuable fiat before leaving the country.
Venezuela has come up with the PetroApp, a mobile app that facilitates buying and selling with PTR. It could solve liquidity problem if it is tied to enough exchanges. However, not much is known about the app or its usefulness. It should not be considered a viable option at this point.
The games on offer
An extension of the logistics questions are additional questions surrounding the kind of games on offer at the new casino. Table games seem to be the easiest place to start. Table games can be run completely independent of any third parties whatsoever. These are games like blackjack, baccarat, roulette, and poker.
If operators want to get into things like video slots and keno, they have to start thinking about bringing in partners. For purposes of illustration, let us say that casino management wanted to offer the MegaMoolah.com video slot. It is not as simple as buying machine and setting it up on the floor. Mega Moolah has to be licensed. It also has to be networked so players can have access to the game's progressive jackpots.
Offering Mega Moolah would require getting involved with Microgaming. That is not necessarily a bad thing, but will the Maduro government be willing to entangle itself with vendor partnerships? And if so, how much control will those partners exert over the casino operation? You see, things start getting complicated as soon as you begin to expand beyond table games.
A small number of online gambling operations have managed to survive in Venezuela. If Maduro and his people were willing to lean on those operations for help and support, they could probably make a serious go of things above and beyond table games.
Expansion beyond the hotel
A best-case scenario would be that the hotel casino thrives to such a degree that it forms the foundation of casino gambling expansion across Venezuela. The casino would produce the kind of revenues Maduro was hoping for. Subsequent operations would lift Venezuela's economy out of the doldrums.
All of this is possible under the right conditions. Again, casino gambling is very popular. Between gambling and Venezuela's once proud petroleum sector, the country could survive a little better. It is really just a question of whether or not the government has the will to do what it takes to make prosperity happen.
A successful Hotel Humboldt casino would set the stage for similar operations throughout Venezuela's most attractive tourist destinations. It would also give legitimacy to PTR as Venezuela's default currency. That would be a game-changer inasmuch as it would also provide much-needed support for the petroleum industry.
Expanding brick-and-mortar casinos across Venezuela would inevitably lead to an expansion of the online market as well. That could mean dozens of international operators seeking licenses to set up shop. They too would have to embrace PTR as the primary currency under which they operate.
All of this could happen under the right kind of leadership. But will it happen? Only time will tell.
The Chavez-Maduro problem
Nicholas Maduro has been hoping that the Petro would save his nation's economy. It has not. Earlier in January (2020), the Maduro administration announced plans to sell 4.5 million barrels of oil currently held in reserve. The goal is to raise much-needed cash. Thus far, the plan hasn't worked. Now we are talking about opening a new hotel casino in hopes of funding public healthcare and education with its profits.
All of these plans sound good except for one problem: government control. The problem is a Chavez-Maduro problem of not allowing free enterprise to do what it does best. Remember that Venezuela's economy was the envy of South America prior to Chavez taking office. In the 30 years since, the once proud economy has completely collapsed.
For Maduro's casino plan to succeed, he is going to have to loosen the reins and let an experienced gambling operator take over. He is going to have to understand that the cryptocurrency casino will not survive only on PTR payments. It is going to have to embrace Bitcoin, Litecoin, and a few others. Finally, he is going to have to agree to allow the casino to partner with others in the industry in order to maximize opportunities.
All eyes are now on Venezuela as it embarks on its latest economic gambit. Will the Humboldt Hotel's casino prove to be everything Maduro has promised? The world is skeptical. Still, let us hope the plan does succeed. Venezuela's citizens deserve better than the lives they currently live. A profitable casino could at least give them the hope of better education and healthcare.
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