Vegas on the Negev? Israel Rolls Toward Resort Casinos

Peace with Arab neighbors opens up competition to attract gamblers

THE Mideast peace train may soon deliver a dicey spinoff: casinos in the Holy Land.

As more Israelis empty their pockets at gambling joints in Egypt - and perhaps soon in Beirut and Palestinian areas as regional peace prospects rise - Israel is leaning toward lifting its ban on casinos.

''We don't want tourists to spend money at casinos that are not in Israel,'' says Orly Doron, spokeswoman for the Israeli Tourism Ministry.

At the casino complex in the Egyptian Red Sea resort of Taba, a majority of the gamblers at the tables are Israelis, many driving from the Negev Desert city of Eilat, a half-hour away.

A special government panel recommended Jan. 1 that five casinos be allowed to operate in Israel - under certain conditions.

Israel has outlawed gambling on religious and moral grounds since the nation was created in 1948. Israelis have traveled to Turkey or Europe, visited gambling ships off Eilat, or frequented illegal establishments in their own cities.

Religious groups argue that allowing gambling will lower moral standards and increase crime in the country.

National Religious Party legislator Hanan Porat, representing the religious right, says that if the government adopts the committee's recommendations, that would give the Israeli parliament grounds to hold a no-confidence vote in the government.

Mood change

But public opinion in Israel is rapidly changing. A recent opinion poll conducted by the Israeli Tourism Ministry indicates that 70 percent of Israelis support having casinos, while only 37 percent oppose them.

''It's no longer a question of whether it will happen, only when,'' an Israeli official says.

The government panel, known as the Gavish Committee on Casinos, calls for moderation: The five casinos it recommends should be located in the southern resort areas of Eilat and the Dead Sea - already the region's favorite tourist spots.

The casinos should be independent establishments - rather than located in hotels as in Las Vegas or South Africa's Sun City. And operating licenses should cost several million dollars, the committee advises.

The favorable polls suggest that the Labor-coalition could get a majority for a law legalizing gambling. But government officials are more cautious.

''With the current priorities of the Israeli government, it would seem unlikely that the Cabinet would take a decision on such a matter before the election due by the end of October,'' says Ms. Doron.

But Israel's treasury could grow substantially if Israel lifts its gambling ban, advocates of gambling argue.

Israeli tourist industry officials estimate that as much as $300 million is gambled away outside Israel. A 20 to 30 percent gambling tax that the Gavish Committee recommends as well as a one-time license fee could provide the government with a revenue boost.

Israeli Tourism Minister Uzi Baram argues that Israel needs to compete for gamblers with Egypt and Lebanon and, eventually, Palestinian self-ruled towns like Jericho and Bethlehem.

Situated between the Red Sea and the Sinai Desert, which Israel handed back to Egypt in 1982 in a land-for-peace deal, the casino at Taba has become a haven for Israeli gamblers.

Israelis provided so much business that after its successful opening year in mid-1994, the casino was doubled in size and is now touted as the biggest casino in the Mideast.

''Egyptians are prevented by law from going into casinos,'' says Peter Byrne, group operations director of London Clubs International. ''It is just across the border for Israelis ... so it is natural that they are the majority of our customers.''

LCI operates three casinos in Egypt. And it is about to reopen the Casino de Liban in Lebanon this year, after closing it for 20 years because of Lebanon's civil war. Once operational, it will surpass the Taba casino and could eventually become another draw for Israeli tourists if peace with Syria and Lebanon is achieved.

Israelis also may be able to gamble in the Palestinian territories they once occupied. Facing the same kind of religious objections to gambling from Muslim fundamentalists as Israel does from its religious right, Palestinian leader Yasser Arafat is also considering the casino card.

''I don't want to encourage gambling,'' says Elias Freij, the Palestinians' tourism minister. ''But if Israel goes ahead with its plans to establish casinos, we will have to follow suit.

''We cannot expect to receive aid from foreign donors indefinitely,'' says Mr. Freij, who is also the mayor of Bethlehem, where he already has plans for adding 2,000 to 3,000 more hotel beds. ''We will have to create a source of foreign revenue, and our main source will be from tourism. Casinos could be a large part of that.''

Enter entrepreneurs

Publication of the Gavish Committee report has aroused widespread interest among international and Israeli wheeler-dealers eager to cash in on huge gambling profits.

While the current Mideast gambling market is dominated by Israelis, the future potential lies in the international market. About 2.2 million tourists visited Israel last year, and the figure is expected to grow by 10 percent per year over the next decade.

Developers who have expressed interest in establishing casinos in Israel include the South African resort and casino-tycoon Sol Kerzner, ITT Sheraton, London Clubs International, and several Israeli operators.

''We are encouraged by the stance the committee has taken,'' says the LCI's Peter Byrne.

''And we will await further developments with interest,'' he adds.

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