GAMBLING AND THE LAW® GLRE v.19, No.1
Rose/Casinos Coming to Cuba – Again
© Copyright 2015, all rights reserved worldwide. Gambling and the Law® is a
registered trademark of Professor I. Nelson Rose, www.GAMBLINGANDTHELAW.com.
Published in Gaming Law Review and Economics, Vol. 19, No. at p. ___ ( 2015).
Gambling and the Law®:
Casinos Coming to Cuba – Again
“[T]oday, as in 1961, Cuba is governed by the Castros
and the Communist party. We cannot keep doing the
same thing and expect a different result.”
President Barack Obama1
Diplomatic relations have been restored and the U.S. embassy in Havana and the
Cuban embassy in Washington, D.C., are being reopened. Travel restrictions have been
eased, though Americans without relatives in Cuba still have to be part of educational or
similar programs to visit the island nation. But Pres. Obama has done as much as he can
on his own. It may be difficult for Americans to travel to North Korea or Iran. But Cuba
is the only country in the world where American tourists and businesses bars are barred
not by a declaration from the U.S. State Department, but by an act of Congress. So Cuba
will remain off-limits until Congress passes another act.
Unfortunately for both Americans and Cubans, Congress is unlikely to act, until
well after the 2016 election.
The problem is purely political. The Cuban revolution of January 1959 led to the
communist dictatorship of Fidel Castro and the nationalization of all private industry and
property. The wealthy ruling class left with whatever they could carry. Many ended up
in the U.S., particularly Florida. They naturally hated Castro. For five decades, these
Cuban refugees determined the direction of American policy.
Cuban-Americans still exercise power much larger than their numbers. Florida is
a notorious swing state in presidential elections. And voters with ties to Cuba have the
money and numbers to swing the state. Or at least they did, when they were all unified in
their hatred of Castro.
But to the children and grandchildren of those original imigrants to the U.S. the
bad old days are sometimes only stories. And other Cubans have come to America,
including 125,000 in the Mariel Boat Lift of 1980. Many have family members they left
1
https://www.whitehouse.gov/issues/foreign-policy/cuba.
Page 1
GAMBLING AND THE LAW® GLRE v.19, No.1
Rose/Casinos Coming to Cuba – Again
behind. In fact, it is probably the billions of dollars Americans send their relatives in
Cuba that kept that country from complete economic collapse.
Cuba’s problem are not entirely the result of the U.S. embargo. I was fortunately
to be able to travel to Cuba, legally, a couple of years ago. What I saw was not only a
land frozen in 1959, but what happens to an economy when it is led by men who are
completely nuts.
We had a walking tour of Havana, led by an old revolutionary who had become a
professor of architecture. He was practically in tears over the state of decay of what were
once magnificent buildings. The problem, he explained, was that after the Revolution,
Castro declared that everyone now owned the apartment they lived in. Only nobody
owned the building, not even the government. Since the average income is $30 a month,
tenants/owners could not afford to fix the roof when the buildings began to deteriorate.
Every day in Cuba buildings simply collapse due to lack of upkeep.
And the new owners could not even sell their apartments. It is against the law to
buy or sell real estate. So people actually get married and then divorced so that they can
legally transfer property.
Cuba is a massive island, by far the largest in the Western Hemisphere south of
Canada. At 760 miles in length, it is longer than Florida. It is also the most populous,
with 11 million people.
Historically, it has always been of great strategic importance. It is not a
coincidence that Columbus spent so much time sailing around Cuba during his voyages
of discovery to the New World. The prevailing currents and tradewinds forced most
shipping within range of the island.
Cuba has always been tied politically and economically with the United States. At
its closest point, Cuba is only 90 miles from America. Miami is as close to Havana as it
is to Orlando.
Prior to the development of air travel, Cuba's ties were mostly with the Southern
states. The island's economy boomed during the 18th and 19th century, built on sugar
produced by slave labor. So, it was naturally drawn to the Confederacy. It is interesting
to think how the U.S. Civil War would have turned out, if plans to buy Cuba from Spain
and make it a state in the 1840s had been successful.
But times are about to change. First of all: Fidel Castro is gone.
He may not be dead. I was told by both American and Cuban experts that he is
beyond retired. His image may be everywhere, but he no longer has a living influence.
Page 2
GAMBLING AND THE LAW® GLRE v.19, No.1
Rose/Casinos Coming to Cuba – Again
Fidel has become to Cuba what Mao is to China.
His younger brother, Raul, is still alive, but is 83 years old. He has called for term
limits, including his own. He will not run for reelection as President in 2018.
Since taking over from Fidel in 2007, Raul started introducing reforms. He had to.
When the Soviet Union collapsed in 1991, Cuba lost its primary means of support.
The country lost up to 80% of its imports and exports. The Cubans calls the devastating
economic depress that followed the "Special Period." Recovery has been slow. Without
the economic aid supplied by oil-rich Venezuela, people would still be eating household
pets. But Venezuelan aid is over due to the passing of Hugo Chavez and the nearcollapse of that country’s economy.
Cuba is a country where nuclear physicists drive taxis, because they can make
more than their $40 per month government salaries. The average Cuban does not have
access to the Internet. The government has published a list of only 100 for-profit
businesses that are allowed in the country.
Since there are no opportunities, young adults flee the country. Many are willing
to risk their lives on Styrofoam rafts to try to get to America. Marrying tourists is a
another, slightly less risky strategy.
Change is coming to Cuba. The big questions are whether it will be slow or fast,
peaceful or violent.
The old men who have led Cuba for the last 56 years – there have been 11 U.S.
Presidents since Fidel took over – are survivors. They know how to hang on to power. If
a charismatic leader arose who might one day challenge the Castro brothers, he was sent
to work in the sugar fields. So, there is no caudillo (strong man) to lead a second
revolution.
But the old men also have to keep the disappointment and anger of the general
population under control. They are understandably scared by what they saw happen to
dictators during the "Arab Spring."
Under Fidel, Cuba had adopted the exit policies of the old Soviet Union and East
Germany: The few Cubans, such as artists and athletes, who were allowed to visit other
countries had to leave behind their spouses and children, to be held hostage to ensure
their return. On January 14, 2013, the government began allowing most Cubans to leave
the country, without having to get approval or pay $400 for a visa. Most importantly,
they now do not forfeit their right of return.
This turned out to be like the fall of the Berlin Wall. Average citizens visiting
Page 3
GAMBLING AND THE LAW® GLRE v.19, No.1
Rose/Casinos Coming to Cuba – Again
countries with more than four state-controlled television channels, let alone access to the
Internet, were more frustrated upon their return, with their lack of just about everything.
Cuba is locked into 1959. The U.S. embargo, and the failures of communism,
have prevented new developments. Even the cars and buildings are the same. And this
may provide the solution to Cuba's problems.
Classic 1950's Fords and Chevys are everywhere. Imagine the reaction of a guy
making $20 a month, after trade reopens with the U.S.: "I won't give you more than
$40,000 for your car."
During the 1950s Cuba was one of the leading gaming and tourist destinations of
the world. It started in the 1920s, when Havana assumed a role later taken by Las Vegas:
a vacation spot where Americans could party in ways not allowed at home. But it was
not the gambling as much as it was the booze. America was in the midst of the disastrous
experiment known as Prohibition, which also created modern organized crime. Cuba
flourished with nightclubs, bordellos and casinos.
World War II was a minor interruption. Then the partying was reborn. Havana
became so notorious, that in 1950 a Broadway musical, "Guys and Dolls," could be built
around its reputation. The audience knew why Nathan Detroit (the Frank Sinatra
character in the 1955 film) bet Sky Masterson (Marlon Brando) that Sky could not
convince the Salvation Army "doll" (Jean Simmons) to go with him for "dinner in
Havana."
But it looked for a while like the good times might be coming to an end. Cuban
casinos had become so crooked that Americans were beginning to stay away. They were
saved when Fulgencio Batista became dictator in 1952.
In an ironic twist, Batista called upon the mob, particularly Meyer Lansky, to
clean things up. And they did. It is hard to believe organized crime syndicates would run
completely honest games. But Lansky realized they could make more money with
magnificent hotel-casinos then if they cheated everyone.
Throughout the 1950s, the American and Cuban mob families opened luxurious
casino resorts, each one bigger and more successful than the last. The money poured in.
Batista got a cut of everything.
Three recent books, OFFSHORE VEGAS: HOW THE MOB BROUGHT REVOLUTION TO
CUBA; HAVANA BEFORE CASTRO: WHEN CUBA WAS A TROPICAL PLAYGROUND (great
photos); and HAVANA NOCTURNE: HOW THE MOB OWNED CUBA...AND THEN LOST IT TO
THE REVOLUTION, may overstate the importance of organized crime in the Communists
coming to power.
Page 4
GAMBLING AND THE LAW® GLRE v.19, No.1
Rose/Casinos Coming to Cuba – Again
The economy under Batista was not that bad. Cuba had a large middle class.
Lansky was, in fact, originally reluctant to open casinos, because labor unions were so
strong.
Still, most Cubans never shared the wealth they saw all around them, and
corruption was rampant. The result was revolution.
When news hit the streets on New Year's Day, 1959, that Batista had fled the
country, angry crowds poured into the casinos, destroying everything inside.
Cuba's 1950's hotels are still standing. More importantly, so are its casinos.
Although now dark and empty, nothing else has changed; even the chandeliers are the
same. You swear you hear the ghost whispering of long-gone slot machines and crap
tables, when you walk around the Riviera casino.
Many of the bars and nightclubs are still open. The largest showroom of them all,
the Tropicana with its multi-level, outdoor stage, sells out every night. The extravaganza
features statuesque showgirls with feathered headdresses and sexy dancing, or at least
what would have been considered sexy in 1959.
Before the Revolution, Havana competed with Las Vegas and Monte Carlo as the
gambling and entertainment capitol of the world.
Fidel Castro, through his hand-picked provisional president, Manuel Urrutia,
closed the casinos immediately after seizing power on January 1, 1959, just as he
canceled the national lottery. But this threw thousands of Cubans out of work. They
made their complaints public, marching through the streets in protest. Castro's own
economic advisors told him that the country's economy would collapse unless the casinos
were reopened.
They proved to be right, but too late. Castro relented and allowed the casinos to
reopen. But tourists, especially Americans, stayed away in droves. And the economy did
collapse.
The Soviet bloc never could supply enough tourists to make up for being isolated
from the U.S. I remember seeing faded posters for Havana vacations in a tourist bureau
in Prague, shortly after the Velvet Revolution. But the other store windows were
practically empty, since there was little to buy and few people had any money, or the
right to fly over the barbed wire and minefields that had surrounded Communist
Czechoslovakia.
The fall of the Iron Curtain shows what we can expect for Cuba: A combination
of two of the greatest expansions of legal gaming in the last 40 years.
Page 5
GAMBLING AND THE LAW® GLRE v.19, No.1
Rose/Casinos Coming to Cuba – Again
The dissolution of the Soviet Union and the replacement of communism with
capitalism lead to an explosion of casinos throughout Eastern Europe and Russia.
And the death of the dictator Francisco Franco led to an explosion of slot
machines and other legal gaming throughout Spain.
Although Franco was strongly anti-communist, the comparison with Castro is apt.
The Iberian peninsula and Latin America have a long tradition of strongmen, "caudilhos"
in Portuguese, in Spanish "caudillos." Franco ruled from 1936 to 1975, and even called
himself "Caudillo de España, por la gracia de Dios;" which Wikipedia translates as
"Leader of Spain, by the grace of God."
Castro has been the caudillo since 1959, first as Prime Minister, then President and
now as First Secretary of the Communist Party of Cuba. Due to illness, he turned over
much of his power to his younger brother Raúl, on July 31, 2006.
Raúl has shown some independence. He doesn't really have what it takes to be a
caudillo. So he might start true liberalization as soon as the sickly Fidel. Raúl is also in
his 80's, so both Castro brothers will probably be gone within the next 10 years.
The caudillo tradition seems to be coming to an end. The U.S. will drop its
economic embargo when democracy and capitalism come to Cuba, in whatever form they
take. In fact, as we know from Macau, democracy is not the essential part of the
equation. China is still Marxist, but it is hard to call it communist.
The initial breakthrough will probably take place on cruise ships, with casinos,
returning to the Port of Havana. Initially, gaming will only be permitted on the high seas.
But it is a short step from there to allowing the casinos to be open while the ships are
docked.
Bingo machines are sweeping Latin America. These are often called Class II. Of
course, there is no Class I or Class III, since the categories were created by, and apply
only to, the U.S. Indian Gaming Regulatory Act. But, it is an easy way to distinguish
these gaming devices from true slot machines, at least for political cover.
True casinos, with true slots and table games, are also common in much of Central
and South America. But even more so in the Caribbean. A free Cuba will quickly allow
casinos to reopen, in high-quality hotels designed for, and possibly even limited to,
tourists.
At the moment, Cuba has no legal gambling. But other communist nations have
had casinos and lotteries for decades.
Casinos in particular were seen as a way of extracting hard currency from tourists
Page 6
GAMBLING AND THE LAW® GLRE v.19, No.1
Rose/Casinos Coming to Cuba – Again
and from the underground economy. I played in a casino in Hungary when it was still
communist, with all transactions in Deutsche Marks (this was before the euro). Gaming
was often limited to resorts, with locals barred from betting, or even entering.
The Socialist Republic of Vietnam still has casinos. Surprisingly, so, too, does
North Korea.
And then, of course, there is Macau. The casinos there win more than all of the
privately owned casinos in Nevada, New Jersey, Mississippi and the rest of the United
States – combined.
Macau, like Hong Kong, is a Special Administrative Region of the People's
Republic of China. The PRC is still technically a communist country, although it would
be more accurate to describe it as Marxist: widespread free enterprise capitalism
flourishing under a totalitarian, one party dictatorship.
The bureaucrats who run Cuba can find a partial solution to the country's present
economic catastrophe and its pending political crisis by looking east – far east. Cuba
needs to pull a Macau.
Resort casinos create jobs and bring in much needed revenue. They could ease
Cuba's transition out of the economic stagnation created by pure communism, as they did
in China.
Of course, Cuba does not have hundreds of millions of middle-class residents with
few other legal outlets for gambling. In fact, the people are so poor that it is one of the
few countries where it actually is to the advantage of casino operators that locals would
not be allowed to enter.
But, Cuba already attracts large numbers of tourists from Canada, Europe and
Latin America; tourism is the nation's leading industry. The spectacular success of
Havana's casinos in the 1950's show what legal gaming could do, especially once
Americans can visit without restrictions.
The major problem is political. The Revolution unleashed a deeply buried hatred
of the casinos. The millions living in poverty resented the ostentatious displays of
wealth, well-known to be owned by Meyer Lansky and other leaders of American
organized crime. This antipathy was exacerbated by the non-casino slot machines that
were found all over the island. It was also common knowledge that the money from
those gaming devices, like the centavos deposited into the omnipresent parking meters,
ended up in the bank accounts of Roberto Fernández Miranda, the brother-in-law of the
dictator, Fulgencio Batista.
As T.J. English put it, "There were many reasons to dislike Batista – his shameless
Page 7
GAMBLING AND THE LAW® GLRE v.19, No.1
Rose/Casinos Coming to Cuba – Again
coup, violent repression, censorship, corruption, obsequious relationship with gangsters
and embezzlers – but in the end the hotel-casinos came to symbolize all of the above."
When Batista fled the island, the people took out their rage on these symbols, burning
slot machines and trashing parking meters. Symbolism works both ways. Castro's men
brought pigs with them from the countryside. They released them "in the lobby of the
[Riviera] hotel and casino, squealing, tracking mud across the floor, shitting and peeing
all over Lansky's pride and joy, one of the most famous mobster gambling emporiums in
all the world."
When asked about the Americans who ran Cuba's gambling, Fidel said, "We are
not only disposed to deport the gangsters, but to shoot them."
In the early 1960s, children could get cartoon trading cards with purchases of
Felices [Spanish for happy] Frutas's canned fruit. They would glue them into their
"Album de la Revolucion Cubana." One shows an angry crowd storming the Deauville
Casino, with this label: "El pueblo destroza algunos casinos y casas de juegos," "The
people destroy some casinos and gambling houses."
Still, this was half a century ago. Times change. Fifty years before Macau
became the top casino market in the world, gambling in China was punishable by death.
Cuba already has tourist zones, where locals are not allowed to enter, except for
work. Canadian tourists already fly directly to resorts on the southern coast of Cuba, just
to go to the beach. The natural spot for the first Cuban casino-resort is, ironically, the
Bay of Pigs. The scene of the disastrous failed invasion of 1961 is now a thriving resort,
especially for Europeans.
But there is another spot, where a casino would be even more of a positive
political statement by the Cuban government: Guantanamo Bay. It is isolated from the
vast majority of the population; at more than 500 miles from Havana, it is actually closer
to Miami. There are beaches and an airport and one of the largest sea ports in the world
for cruise ships, if the U.S. will allow free passage.
Cuba could set up another tourist zone, with legal gambling, on the Cuban side of
Guantanamo Bay. Local residents would be barred. But visitors from every other
country, including the United States, would be welcome.
Americans can travel to Macau without even having to get a visa. Wouldn't it be
great if Guantanamo Bay became better known for its hotel-casino resorts than for its
prison?
END
© Copyright 2015. Professor I. Nelson Rose is recognized as one of the world’s leading
Page 8
GAMBLING AND THE LAW® GLRE v.19, No.1
Rose/Casinos Coming to Cuba – Again
experts on gambling law, and is a consultant and expert witness for governments and
industry. His latest books, GAMING LAW IN A NUTSHELL; INTERNET GAMING LAW (1st
and 2nd editions), BLACKJACK AND THE LAW and GAMING LAW: CASES AND MATERIALS,
are available through his website, www.GAMBLINGANDTHELAW.com.
Page 9