Israel Closes Down Government-Run Slot Machines

Israel shut down all 500 slot machines and 150 keno machines that were government operated across the country on New Year’s Eve, as a part of a crackdown on gambling.

The gaming machines were shut down after negotiations failed between the country’s treasury department and the operating body Mifal HaPayis over the renewal of the license that was expiring at the end of December.

Mifal HaPayis controls both the national lottery and sports betting operations of the country.

The move is not a surprise given that country’s Finance Minister Moshe Kahlon had vowed to shut down the state-owned industry. In a statement Kahlon said,

Eighteen months ago I said there would no longer be slot machines in Israel, and I am very happy that from today, there aren’t anymore. I am hurt by the thousands of families that have lost their property, their money.

Officials from Finance Ministry had extended the license for 48 hours in order to allow discussions to be concluded, on the condition that the machines be shuttered immediately after the discussion was over.

Mifal HaPayis has asked for compensation from the government to make up for the massive loss in revenue from closing down operations. The organization is demanding 800 million shekels ($208 million) by way of lost revenue. Revenue from lottery and slot machines is typically split between the local governments and treasury department.

While the Union of Local Authorities has supported Mifal HaPayis’ estimate of revenue loss, the Finance Ministry has disputed the amount, stating that the loss in revenue was less than 250 million shekels since the ministry is allowing the organization to conduct extra lotteries in exchange for shutting down the gambling machines. Mifal HaPayis is asking for permission to hold 14 more lotteries per year, over and above the two that are currently being operated.

Mifal HaPayis has agreed on a series of cost-cutting measures in order to improve its profitability. The entity will be reducing its share in profits from 7.5 percent to 7 percent. According to sources, whatever be the final agreed-upon loss amount it is likely to be shared between the treasury department and local governments in the ratio of 75 – 25 percent. As a part of his crackdown, Kahlon has also proposed increasing the applicable tax rate on lottery winnings. Currently lottery winnings below 50,000 shekels ($13,000) aren’t taxable but Kahlon wants the limit to be lowered to 5,000 shekels. He estimates that this would add up to 200 million shekels ($52 million) to the state coffers.