Abstract
I. Introduction
Cuba is unique among the nations of the world in that it sits just 90 miles off the coast of the United States of America, the nation that ranks second on the planet for money spent on tourism, 1 and yet only a few select categories of American citizens are allowed to travel to the island. 2 However, a recent thaw in the Cold War Era freeze in relations between the two nations 3 has led to easier and cheaper ways for permitted Americans to travel to Cuba. As a result, cruise ships and commercial flights have taken Americans directly from the United States to Cuba and the associated effects of this new travel—decreased costs in transportation to the island, but increased costs of hotels and transportation on the island—have demonstrated that the future of an island known for political revolution will be found in economic evolution.
It is presumptive to expect a complete normalization of relations between the United States and Cuba or the free travel of citizens between the nations. However, a review of commercial flights and cruises to the island, as well as hotel, restaurant, and entertainment availability, all reveal that a rapid modernization of the island's tourism infrastructure would be necessary to accommodate any substantial increase of tourists. Ultimately, the reintroduction of gaming to the island as a part of integrated resorts—immense resort properties that include hotel rooms, restaurants, entertainment, shopping, convention space, and casinos—as well as a strong and appropriate regulatory system are Cuba's best bet for a future as a robust and prosperous tourist destination.
This article focuses on three components of the tourism industry in Cuba, which would be critical to the reintroduction of gaming to the island: air, sea, and land. The interplay between the three serves to foster the nascent revitalization of a once thriving Caribbean tourist destination and each has a direct tie‐in to the success of a reintroduction of gaming to the island. Air and sea travel would be necessary to expose the island's gaming industry to the global population beyond the island's 11.2 million citizens, of whom 8.6 million are over 20 years old. 4 Furthermore, sea‐based travel, specifically in the form of cruise ships with onboard casinos, create several opportunities to generate income for the island. The land component involves either reopening closed casino floors in the still‐existing hotels, which housed them when gaming was last allowed on the island, the creation of new casinos—ideally as a part of integrated resorts, or a combination of the two models. Additionally, regulations over the industry would need to be created to address concerns that existed even at the time casinos were last permitted on the island, but in a manner that takes advantage of modern technology and global efficiencies that have come about over the last half‐century.
II. Air
On June 10, 2016, the U.S. Department of Transportation issued an order to allow six U.S. airlines to fly scheduled commercial flights between the United States and Cuba. 5 On August 31, 2016, a 51‐minute flight changed 55 years of history as JetBlue Airways Flight 387 brought 150 passengers from Fort Lauderdale, Florida, to Santa Clara, Cuba, and relations between the two countries into the modern era of air travel. 6 While traveling to Cuba from the United States, even upon a commercial flight, remains governed by the U.S. Department of Treasury Office of Foreign Assets Control and requires passengers to fall into one of twelve categories authorized by the Treasury Department, 7 the lower costs of commercial air travel allows those who fall into one of the twelve categories to fly directly to Cuba at half the price of a charter flight. For decades, charter flights were the only way to fly from the United States to Cuba, 8 but the availability of commercial flights, even if only available to a select few, shows those who are still grounded in both countries that relations are beginning to normalize.
After JetBlue's historic flight to Cuba, other U.S. airlines followed and each landing represented a milestone in its own right. On November 28, 2016, American Airlines Flight 737 became the first regularly scheduled flight between Miami and Havana. 9 It landed on the same runway at José Martí International Airport where Air Force One had touched down during President Barack Obama's historic visit to the island eight months earlier. 10 For the previous 25 years, it was also the main airport where charter flights aboard leased planes from American Airlines—a company which could not lawfully operate its own planes to the island—had landed. 11 In 2015 alone, there were 1,200 charter airline flights between the United States and airports throughout Cuba, which flew American Airlines planes. 12 From November 2016, through January 2017, additional commercial flight routes opened from airports across the United States to airports across Cuba. 13 , 14 , 15 , 16 , 17
Despite the regularity of aviation milestones, the reality became that the flights did more to transport the two countries through history than passengers between the two countries. While planes offered the ability to travel from airports throughout the United States on frequent and predictably scheduled flights at a relatively low cost, the demand for the flights was eclipsed by the supply. For example, American Airlines had two flights daily from Miami to Holguín, Varadero, and Santa Clara, and daily service to Camagüey and Cienfuegos. 18 But out of 46 American Airlines flights from the United States to Cuba during one week in October 2016, 38 were more than half empty and some carried as few as 12 or 13 passengers, according to Cuban Customs records. 19
Shortly after the fanfare of celebrity passengers 20 and celebratory water cannons, 21 it became apparent that even legacy air carriers and their computer algorithms 22 could not accurately predict the demand for flights to Cuba. The decades‐long prohibition on flights to Cuba and the constraints on their reintroduction created a unique equation that even 50‐plus years of computing technology could not solve. As American Airlines CEO Doug Parker said, there was “no data to give you any idea as to what the level of demand was going to be [for flights to Cuba].” 23 Beginning in May 2017, Frontier Airlines, American Airlines, JetBlue Airways, and Spirit Airlines all reduced seating capacity or entire flights between the United States and Cuba. 24 , 25 , 26 , 27 , 28
Changes to the limitations on who could fly to Cuba from the United States were also made. One example is the October 18, 2016 announcement by U.S. Customs and Border Protection that the U.S. Department of Homeland Security had determined that 19 C.F.R. Part 122, Subpart O, was no longer necessary to regulate air travel to and from Cuba. 29 (Subpart O had set out document, clearance, and specific entry airports for flights to and from Cuba.) 30 However, like the commercial flights themselves, these changes simply eased the burden of travel for those who could have otherwise traveled to Cuba in years past and had little effect on the number of people who traveled there.
The policies governing travel and trade between the United States and Cuba are dynamic and were once again updated on June 16, 2017, when President Donald Trump issued a National Security Presidential Memo, which directed the creation of restrictions to “channel funds towards the Cuban people and away from [the Cuban] regime.” 31 A stated policy of President Trump's Memo was to “ensure adherence to a statutory ban on tourism to Cuba.” 32 As a result of the Memo, on November 8, 2017, the U.S. Department of the Treasury's Office of Foreign Assets Control and the U.S. Department of Commerce's Bureau of Industry and Security announced amendments to the Cuban Assets Control Regulations and Export Administration Regulations, which were intended “to channel economic activities away from the Cuban military, intelligence, and security services, while maintaining opportunities for Americans to engage in authorized travel to Cuba and support the private, small business sector in Cuba.” 33
The changes went into effect on November 9, 2017, and put new restrictions on who could travel to Cuba from the United States, including how and which visitors could travel under the people‐to‐people nonacademic educational travel category. 34 The changes also included a list of Cuban stores, hotels, and travel agencies that Americans are prohibited from visiting or dealing with. 35 In the first quarter of 2018, Cuba had a seven percent decline in tourism, which was attributed in part to the new restrictions as well as other factors, like the devastating effects of Hurricane Irma. 36 , 37
The policy update is the latest, but certainly not the last, version of the regulations that will govern travel and trade between the United States and Cuba. Moreover, the ever‐changing policy is a barrier to long‐term planning and investment as well as a reminder of the unique relationship that exists between the United States and Cuba. Until a long‐term policy determination is made, tourists visiting the island and investors who plan on creating the infrastructure to support their visits can simply await new changes and react accordingly.
Ultimately, the expansion of flights demonstrated that air travel could be a demand‐elastic mode of transportation from locations throughout the United States to locations throughout Cuba. However, the ever‐changing regulations make it the category over which Cuba has the least power. Of the three components of the Cuban tourism industry that would have an effect on the reintroduction of casinos, the practical limitations of Cuba's power over air is limited to granting permission for planes and passengers to enter the country and building the infrastructure to allow more or bigger planes to land at existing or new airports. 38 But, these powers have little practical effect in the face of the Office of Foreign Assets Control limitations, which still exist. For now, and into the foreseeable future, these limitations are an insuperable barrier to large scale commercial flight operations between the United States and Cuba.
III. Sea
While air travel represents an affordable and efficient mode of commercial transportation to bring people to Cuba, sea travel can also bring people to the island and, in some instances, serve the dual purpose of bringing casinos to the island too. While the proximity of the two nations creates the ability for personally owned watercraft or ferries to bring passengers from the United States to Cuba, cruise ships will likely be the most popular sea‐based mode of transportation to the island. As compared to personally owned watercrafts or ferries, cruise ships making port in Cuba could provide the advantage of offering overnight accommodations, the opportunity for passengers to make additional port calls in multiple coastal cities around Cuba over multiple days, and the ability for passengers to visit Cuba as a part of a multi‐stop tour of the Caribbean. Passengers traveling to Cuba aboard any seafaring vessel will be potential customers of land‐based casinos, should casinos be allowed to reopen on the island. But unique to cruise liners is the potential for Cuba to grant the ability for passengers to gamble aboard a ship while in Cuban waters or even while docked at a Cuban port.
In the modern era of cruising, ships traveling to the Caribbean from embarkation points throughout the United States, including Florida 39 , 40 , 41 , 42 and beyond, 43 sail along the eastern and western shores of Cuba and sometimes even circumnavigate the island. 44 Until recently, these ships were banned from visiting Cuba under the 1960 trade embargo, 45 but, beginning in 2016, limited permission was given for some ships to visit the island. 46 If ships departing the United States were given unrestricted permission to visit Cuba, it would be a common sense stop for nearly all Caribbean cruise itineraries. Docking in Cuba would allow for even the most seasoned American cruise passengers to see an island that has been off limits to them for more than half a century.
When reviewing global cruise tourism destinations in search of a model, which Cuba could use for itself as it once again welcomes cruise ships from America, Bermuda leads the pack. Ostensibly the two islands are quite different: Cuba is 42,426 square miles 47 and Bermuda is 20.54 square miles, 48 Bermuda has a parliamentary representative democratic dependency 49 and Cuba is a communist nation. 50 Cuba has a gross domestic product (GDP) per capita of $11,600 51 compared with Bermuda's $96,018. 52 And the two islands are decades apart in their levels of infrastructure modernity. However, the similarities between the two nations are strong in the areas which affect cruise tourism: both islands could serve as first‐stop, last‐stop, or only‐stop destinations for single point embarkation/disembarkation cruises from the United States, 53 both have rich and unique cultures and architecture, and both have one major and multiple secondary sea‐accessible cities.
Size, wealth, and even location can be put aside when comparing the two nations for the purposes of a path forward for gaming in Cuba. Cuba could generate revenue, increase tourism, and phase in gaming to the island by following the two‐step process which brought modern gaming to the Bermuda. First, Bermuda allowed restricted shipboard gaming on cruise ships while in port and then it legalized gaming in island casinos. The first step of allowing ship‐based gaming was regulated in a manner which did not compete with tourism attractions and businesses on the island, but rather enhanced the ability of those businesses to make money by encouraging potential cruise passengers, and the ships that carry them, to come to the island. The restricted gaming in Bermudan ports was legalized in October 2013, by the Cruise Ship (Casinos) Act 2013. 54 The Act restricts casino operations to ships porting overnight in certain docks around the island and only permits the casinos to operate from 9pm to 5am. 55 Bermuda Tourism Minister Shawn Crockwell said allowing casinos to operate in port would economically benefit the island through fees charged to ships and also benefit the ships themselves by increasing shipboard revenue. 56 In addition to time and place regulations, Crockwell spoke of restrictions on who could gamble aboard ships, saying, “The use of the casino is to be limited to passengers on board the ship only. No local residents or visitors to the ship will be allowed to participate in casino activities.” 57
Beyond simply limiting islanders' access to cruise ship casinos, the Bermudan government also researched what affect the casinos would have on the retailers, restaurateurs, and entertainers on the island. Minister Crockwell said, “Our research has indicated that the majority of visiting cruise passengers return to their ship by 9pm and, by this time, most of our retail shops are closed.” 58 The timing, however, is conducive to traditional shipboard gambling since the hours that the casinos are permitted to operate in Bermudan ports are also the hours that ships are traditionally in transit with their casinos open. Bermuda is a rare place where most ships visit for more than a day—including ships from New York and Boston that have one‐stop itineraries. 59
The Cruise Ships (Casinos) Act 2013 excludes smaller ships capable of berthing in Hamilton and St. George's, with a passenger capacity not exceeding 2,000, from the licensing fee. 60 According to Minister Crockwell, “In our discussions with the operators of these smaller, and often older ships, they have shared with us that they are at a competitive disadvantage … Not charging them a [licensing] fee will assist in placing them in a more competitive position.” He added that ships carrying fewer than 2,000 passengers were exempt from the licensing fee because Bermuda had failed to attract smaller, high‐end liners in the past, and that the exemption could encourage more visits. 61 (See Appendix for Licensing Fees for Cruise Ship Casinos in Bermuda Ports.)
Unlike in Bermuda, gambling aboard ships while in port in Cuba remains illegal, but cruising to the island from the United States no longer is. Carnival Corporation's 700‐passenger ship, Adonia, became the first cruise ship to sail to Cuba from the United States since 1960 when it docked in Havana on May 2, 2016. 62 Royal Caribbean Cruises' first ship to arrive at the island was the Empress of the Seas, which docked in Havana for an overnight stay on April 23, 2017. 63 Norwegian Cruise Lines' May 2, 2017 docking in Havana by the Norwegian Sky was the company's first visit to the island. 64 Additionally, other brands operated by Royal Caribbean Cruises and Norwegian Cruise Lines have also sailed to Cuba, including Azamara Club Cruises, 65 Oceania Cruises, and Regent Seven Seas Cruises. 66 Each of these ships presents an opportunity for Cuba to show a holistic approach to its tourism industry by taking advantage of the resources of the visiting ships and using those resources to compliment what tourists can do on the island.
The cruise ships which have visited Cuba already, as well as all of those that may sail there in the future, offer the island an opportunity to temporarily import a casino. Allowing these imported casinos to operate in port would make Cuba unique among the more than three‐dozen major cruise ports in the Caribbean. 67 Additionally, with each docking, Cuba can reproduce the benefits of the Bermudan gaming regulations—revenues from fees charged for the permission and the incentive for additional ships to come into port. Cuba can also incentivize ships to visit specific ports by having a different fee schedule for each port or category of port around the island. Payments from the casino operators could be processed by Cuba in the manner already used to process other port fees; Cuba would only have the minimal costs of whatever inspections it may require to verify compliance with its act by ships in port. Additionally, the regulation of casino operations, adjudication of player disputes and casino security would all be handled by cruise ship personnel. Of the three components of the Cuban tourism industry that would have an affect on the reintroduction of casinos, the sea offers Cuba a middle ground in power through its ability to declare when, where, and if shipboard casinos can open while in the island's territorial waters or while docked in its ports.
IV. Land
The expanded flights and cruise options to Cuba from the United States as well as the prospect of unrestricted travel between the two nations brings about the questions of where will those flying to Cuba stay and what will those who visit do. Certainly, Cuba's rich history, architecture, food, culture, and geographic diversity are all draws to the island. But the country lacks the modern hotels and tourist attractions associated with international travel destinations that have come about over the last half century. When travel to Cuba from the United States was restricted in 1963, some of the most popular tourist attractions of today had just opened, including Disneyland in 1955 68 and Universal Studios Hollywood in 1962. 69 Golf Digest had not even started ranking courses, 70 and Caesars Palace on the Las Vegas Strip and the Sydney Opera House in Australia were both under construction. 71 , 72 Additionally, Cuba needs to modernize and add to its portfolio of hotels in order to accept the predicted influx in tourists and satisfy the demands of modern travelers. Integrated resorts serve to satiate these needs and are the best option to modernize the tourist experience in Cuba.
A. Accommodations and activities
In 2016, there were about 61,000 hotel rooms in Cuba, according to the tourism ministry, of which 65 percent carry four‐ and five‐star ratings. 73 About 15,000 of those rooms are in Havana. 74 Additionally, despite Cuba's history of limited and restricted Internet access, a robust independent lodging marketplace, which is more commonly associated elsewhere around the globe with Internet based companies such as Airbnb, has developed on the island. There are currently more than 12,000 homes offering desirable lodging and gastronomic services to travelers from abroad. 75 Granma, the official newspaper of the Communist Party of the Cuba Central Committee, reports, “The non‐state sector plays a key role in [the plan to create accommodations for the influx of tourists to Cuba], featuring as an attractive complement to state offers.” 76 For perspective, that same year, there were 149,339 hotel rooms in Las Vegas 77 and 63,850 hotel rooms in Singapore, 78 and in 2015, the last year with statistics available, there were 29,725 hotel rooms in Macau. 79
As the airline industry learned, it is impossible to accurately predict how many people will travel to Cuba. However, even with the limitations placed on which United States citizens can travel to Cuba, there is no question that a trend can be observed. It shows that Cuba has seen tremendous growth in the number of people visiting the island. Table 1 shows the number of tourists visiting Cuba from 1995 to 2016 and it reveals how the island has seen a nearly 500% increase in the number of tourists during those two decades.
1995–2015 statistics from International Tourism, Numbers of Arrivals,
Estimate from Cuban Ministry of Tourism published in Granma—The Official Voice of the Communist Party of Cuba Central Committee: Katheryn Felipe González, Cuba's Dynamic Tourist Sector in 2016,
At the October 2016 South American Hotel Investment Conference in Guayaquil, Ecuador, Cuban Vice Minister of Tourism Luis Miguel Díaz Sánchez discussed how there is currently sufficient capacity for tourists visiting the island. However, he also revealed that the country is working to address the need for rooms as the island becomes more popular. Díaz Sánchez said, “Tourism is increasing from last year by 17% already, but occupancy doesn't exceed our supply. … Occupancy is still about 62% of our capacity, and it's still seasonal. … So it's a reality, but we are not concerned about it yet.” 80 Díaz Sánchez also spoke of the need for the island to add to its list of activities and not just its portfolio of rooms. Although not intended to encourage the development of integrated resorts per se, he spoke of non‐hotel development that is commonplace in integrated resort construction by saying development does not just mean hotel rooms, but, “It's golf courses, theme parks and water parks, as well.” 81
Despite Minister Díaz Sánchez's assessment that there are sufficient rooms on the island, the increased demand for these rooms is driving up prices. Hotel rates saw significant increases as commercial flights between the United States and Cuba resumed, though the rates began to decline in 2017. 82 The biggest capacity shortage has been in Havana, which has seen an increase in tourists from other nations in addition to the United States. 83 Furthermore, the recent downward trend in hotel prices has been attributed to visitors staying outside of Havana hotels, in hostels or houses in the city or hotels outside the city to save money. 84 One factor affecting hotel investment in Cuba is that there are no 100% foreign‐owned hotels in Cuba. 85 All are either owned by the Cuban government or are run as joint ventures between the government and foreign companies. 86
Outside of the hotels and accessible to tourists coming by plane and ship alike is the history and natural beauty of Cuba. Cuba boasts 253 protected areas, 257 national monuments, seven UNESCO World Heritage Sites, six Biosphere Nature Reserves, and thirteen Fauna Refuges, among other popular tourist zones. 87 As Director General of Development at the Cuban Ministry of Tourism Alexander Sierra Bouza says, “It is our rich and well preserved cultural, historical and natural heritage, that define us and make us unique in the region, not to mention throughout the Americas.” 88 Certainly, the heritage that Director Bouza speaks of will be a draw to the island, but it will not satisfy the spectrum of demands of modern tourists. Those visiting Cuba can shop for amazing art at the open‐air market of Almacenes de San José or cigars throughout the country, including at factories, which produce multiple brands under one roof, but the kind of shopping expected by modern tourists is still virtually nonexistent. Furthermore, while the dancing in Cuba is second to none, seeing a New‐York‐style show or Vegas‐style headliner is next to impossible. The demand for all of these needs—hotel rooms, restaurants, shopping, and entertainment—and the future of Cuba's tourism lies in an integrated resort.
B. Integrated resort
“Integrated resort” is a term first coined in Singapore during that nation's final push to legalize casinos which resulted in the construction of Marina Bay Sands and Resorts World Sentosa. Integrated resorts build upon the transformative design of the Mirage in Las Vegas, which was the first casino to “direct attention away from the [act of] gambling.” 89
Integrated resorts bring together world‐class entertainment, cultural experiences, shopping, dining, convention space, and gaming in one complex at a scale that had never been seen before. Attempts to reintroduce gaming to Singapore began in the 1960s and continued into the 2000s. However, the concept for the integrated resorts which were ultimately built was only introduced in the last iteration of casino designs presented in that country. 90 Because building an integrated resort requires the construction of all of the component parts in a synergistic manner and costs billions of dollars, the task would be all but impossible for all except a few companies. Prime Minister Lee Hsien Loong of Singapore said, “So you have shows, you have family entertainment, you have food, restaurants, art, all sorts of things and in the middle of course you have [a casino].” 91 “Integrated resorts are not for amateurs. Anyone can build a casino. But true IRs are the most complicated leisure entertainment product ever brought to market.” 92 Furthermore, “Singapore is a notable success in that it has established a statutory and regulatory environment for two very large integrated resorts.” 93 Similarly, in Cuba, the creation of statutes and regulations would be necessary to limit how many integrated resorts could be built, list the amenities that each resort must have, and govern the gaming and non‐gaming operations of each resort.
Beyond Singaporean integrated resorts serving as a model for Cuba because of the manner in which they offer a total and immersive resort experience, they also should serve as a model because of their ability to bring a travel destination into the modern era. Marina Bay Sands was created upon reclaimed land, heavily governed in its design, and conceived with a completed image and narrative in mind. 94 While the reclamation of land may be unique to Singapore, its guiding principles of taking something which did not exist and transforming it into a narrated concept—the government required that the resort have a minimum amount of rooms and world‐class entertainment, cultural experiences, shopping, dining, convention space, and gaming—is applicable to Cuba, which is recapturing its history as a tourist destination.
Lee Kah‐Wee, who researched integrated resorts in Singapore wrote, “The ring of developments around the edge of the waterfront was especially important, as this constituted the face of cosmopolitan Singapore in the new millennium, an image widely circuited in mass media to Singaporeans, investors and tourists alike.” 95 Both Marina Bay Sands and Resorts World Sentosa are popular choices as destinations for Meetings, Incentives, Conventions, and Exhibitions (MICE). 96
The Marina Bay Sands in Singapore has three 55‐story towers that hold a total of 2,561 rooms and suites and are capped by Sands SkyPark, which has gardens, an infinity edged swimming pool, restaurants, and an observation deck on the world's largest public cantilever. 97 The resort also has 1.3 million square feet of convention and exhibition space, 800,000 square feet of retail and dining space that includes 80 dining choices and 170 luxury and premium brands. 98 Furthermore, the resort has entertainment spaces which have hosted performers from around the world and a 50,000 square foot museum. 99 However, the casino is less than three percent of the resort's gross floor area (GFA). 100 Marina Bay Sands cost $5.6 billion, including land costs. 101
Resorts World Sentosa has a Universal Studios Theme Park, the Maritime Experiential Museum, six unique hotels, retail outlets, a casino, and celebrity chef restaurants. 102 The resort also has the most Michelin stars in one destination. 103 The casino floor is 160,000 square feet 104 of the 3.5‐million‐square‐foot resort, 105 making the casino 4.5 percent of GFA. Altogether, the resort has 1,800 guest rooms and had a construction cost of $4.3 billion. 106
The amenities offered by these casinos would be a draw if they were built anywhere; however, their ability to fill a void in Cuba would make them an ideal project for the island. Another advantage of an integrated resort in Cuba would be its scalability, which would be ideally suited for a country that is seeing an annual increase in tourists. As with the standard Las Vegas practice, the integrated resorts built in Singapore are designed to accommodate more hotel towers in the future. 107 The fractional percentage of square feet of the properties used for their casinos demonstrates the emphasis on the non‐gaming activities that was required for the construction of the resorts to be authorized. However, anyone involved in bringing such a project to the island must be made acutely aware of how necessary the gaming floor is. Despite the casino floors representing only a single‐digit percentage of the square footage of each of the properties, casino revenues account for the majority of the revenue in both of the properties. At Marina Bay Sands, casino revenue accounted for 72 percent of total revenue at the property in 2016. 108 At Resorts World Sentosa, casino revenue accounted for 71 percent of revenue at the property in 2016. 109 The disproportionately large share of revenue that was generated by the casino in each of the properties occurred while the hotels were at nearly full capacity. Marina Bay Sands averaged 97.3 percent occupancy in 2016 110 and Resorts World Sentosa averaged more than 90 percent capacity the same year. 111
C. Casino regulation
If Cuba were to decide to allow the construction of integrated resorts—inclusive of their casino components—a regulatory scheme for the casinos would need to be created. Like Singapore, Cuba would be reintroducing gaming to its territory and, like the jurisdictions throughout the world which have gaming, Cuba's primary focus in creating regulations would be to create fair gaming free of undesirable influences.
The regulation of gaming requires three elements: exclusion, fairness, and protection from undesirable influences. Exclusion consists of preventing certain people from gambling or entering the casino floor. Fairness consists of making sure that casino games are operated in a way that provides the appropriate house advantage for the respective game. Protecting the casino from undesirable influences consists of prohibiting certain individuals or entities from owning, operating, controlling, supplying, or working in a casino. Regulation generally also requires the appropriate payment of taxes.
i. Exclusion
Restricting who can enter a casino requires creating statutes or regulations that prohibit certain classes of people, such as minors. Additionally, a statute or regulation can prohibit gambling by those who self‐exclude themselves from a casino, those whose family members apply to have them excluded from a casino, or those who are excluded by a third party for reasons such as an undischarged bankruptcy or receipt of public assistance. 112 , 113 Furthermore, a casino can be required to bar those who have been convicted of cheating or other crimes, such as Nevada's infamous black book. 114 Ultimately, the reasons for prohibition from a casino can be endless—in Monaco, “l'accès aux maisons de jeux est interdit … aux militaires de tous grades, en uniforme” (access to gaming houses is prohibited [for] military personnel of all ranks, in uniform), 115 and in Macau, “禁止進入娛樂場 … 明顯處於醉酒狀態或受毒品作用影響的人” (it is forbidden to enter the casino [if] obviously in a state of drunkenness or under the effect of drugs). 116
ii. Fairness
Ensuring fairness in a gaming establishment is accomplished through a combination of inspections and licensure of suppliers and operators. At times, such licensing and inspections serve the dual purpose of protecting the industry from undesirable influence, such as with gaming product manufacturers. Scientific Games, which is authorized to sell, lease, or operate gaming products and services in approximately 450 jurisdictions worldwide,
117
faces specific regulatory requirements in nearly all of them. The Scientific Games annual report states:
Regulatory requirements vary among jurisdictions, but the majority of jurisdictions require licenses, permits or findings of suitability for our company, individual officers, directors, major stockholders and key employees. Our gaming hardware and software also must be approved either by a gaming authority laboratory or a private laboratory authorized by the gaming authority.
118
Scientific Games is subjected to such regulation and inspections in part because of the actions of others in Cuba during the 1950s in what is an example of fairness and freeness of undue influences overlapping. In 1952, Norman Rothman, who was allegedly involved in organized crime, 119 sued Dana C. Smith for stopping payment on a check used to pay a gambling debt in the Sans Souci casino in Cuba. 120 Smith had made out a check to cover his $4,200 gambling debt, but subsequently stopped payment on the check after declaring the game to be unfair. 121 Accounts of this debt and the attempts at collection were even reported in the Congressional Record, because of an alleged attempt by then California Senator Richard Nixon to intervene on behalf of Smith. 122
While there is overlap, there are also some forms of inspection that primarily focus on fairness, such as when a regulator inspects casinos. In Arizona, “the Department [of Gaming] inspects machine software, electronic monitoring systems and casino records to ensure correct operations and disbursement of required payout percentage.”
123
Additionally, inspections to ensure fairness are also delegated to casino personnel in a manner prescribed and overseen by the regulatory authority. An example of this method is the examination of dice in Ohio:
Each die shall be tested with a micrometer, balancing caliper used on a flat surface, and a steel set square to ensure that each die is compliant with the commission's specifications and that there is no evidence or tampering or other irregularity. These instruments shall be kept in a compartment at each pit which includes games using dice and the instruments shall be at all times readily available for use by the commission.
124
Cuba can also outsource its ability to ensure fairness of casino games by requiring manufacturers to submit their games to an independent testing lab. Globally, this is a popular method of outsourcing a critical regulatory function. The independent game‐testing laboratory Gaming Laboratories International operates in more than 475 jurisdictions around the globe. 125 Another game‐testing laboratory is BMM Testlabs, which operates in over 400 jurisdictions. 126 By using companies like these, Cuba can meet the global standard in game testing without the lead time, learning curve, and costs of creating a lab itself. Additionally, regulations could be drafted to align Cuba's requirements with that of another major gaming jurisdiction, such as Nevada, Macau, or Singapore, so that manufacturers would only have to pay for one of these location‐specific tests. The net effect is to lower the costs for manufacturers, which would create a more efficient system generally, as well as encourage entrance into the Cuban market specifically.
iii. Protection from undesirable influences
A particular focus in protecting casinos from undesirable influences is reviewing who operates and invests in casinos. Such a focus would surely be necessary in any effort to reintroduce gaming to Cuba because, historically, there was heavy involvement in the Cuban gaming industry by those who would now be considered undesirable influences. In the decades since the casinos in Cuba were forced to shutter, regulations in jurisdictions around the globe have been enacted to prevent such influences. However, like so much else on the island, it is necessary for Cuba to play catch‐up.
a. History
Someone who had one of the largest influences on casinos in Cuba and whose actions were one of the reasons for modern regulations on who can operate and invest in any casino was Meyer Lansky. Lansky spent his teens and early twenties, from 1914 to 1923, on Grand Street on the Lower East Side of Manhattan, which was an area rich with illegal casinos. 127 During those years, he learned about gambling and human nature and allied himself with Charles “Lucky” Luciano and Bugsy Siegel, who were operating growing gangs at the time. 128 As Prohibition began, Lansky began earning a reputation for running a straight, clean game; he earned money without cheating players. 129 Lansky successfully ran his first big operation in the resort town of Saratoga Springs and also got rich on bootleg liquor with his friends, including Luciano and Siegel. 130 Ultimately, he returned to concentrating on gambling when Prohibition ended in 1933. 131 That same year is when Lansky met Fulgencio Batista, who would later become president of Cuba. 132
Lansky ended up spending 1937 as well as the entire winter of 1938–39 with Batista. 133 In 1938, Batista allowed Lansky to run two casinos in Havana where he cleaned up the corruption that had been affecting the properties. 134 World War II prevented any money to be made from tourism but, after the war, Lansky returned to Cuba to build a gambling paradise. 135 Ultimately, and in part because he successfully routed out the corruption that was highlighted in the suit between Smith and Rothman, Lansky became special advisor to the president on gambling reform and was paid $25,000 a year. 136
Lansky began construction of the Hotel Habana Riviera in Havana in December 1956. 137 The hotel cost $8 million to build, but most of the money came from the Bank for Economic and Social Development, a state‐run development bank set up by Batista. 138 The hotel opened in December 1957 139 and was staffed by pit bosses and dealers from the United States who were “veterans of the working class of illicit U.S. gambling.” 140 The hotel made over $3 million in its first four months of operation. 141 Throughout the island, tourists spent $40,000,000 that year and that number was predicted to go up to “$100,000,000 annually … in less than five years,” according to Armando Meribona, who was vice president of the Cuban Tourism Institute at the time. 142 Havana had become the destination of choice for thousands of Americans, including the famous and tourists alike. Tony Bennett sang at the San Souci; Ginger Rogers opened the Copa; Nat King Cole played the Tropicana; Frank Sinatra and John Wayne were regulars at the Hotel Nacional. 143
But, quickly after the predictions for nine‐figure years for tourism, Fidel Castro came into power and the Cuban casinos were closed. Fidel Castro's revolution took power on January 1, 1959, and all casinos, including Lansky's Habana Riviera, were shuttered and the property nationalized. 144 Lansky himself was taken by surprise by Castro's success and initially fled the island only to return on January 6, 1959. 145 After protests by casino workers, Fidel Castro allowed the casinos to be reopened in February 1960, but then he closed them for good in October of that year. 146 The issue of compensation for the takings of these properties remains unsettled. 147 , 148
Lansky lost an estimated $7 million when his casinos were closed in Cuba. 149 Currently, his family members are fighting to collect from the Cuban government. 150 Lansky's grandson, Gary Rapoport, said, “At some point the Castro brothers will be off that island and things may change. I don't want that property going to anyone else. It belongs to my family.” 151 But it is unlikely that a Lansky heir will take over any of the casinos. Rapoport said, “I don't know if I want to run a hotel or any business in Cuba at the moment … [I] just want my family to be compensated for what was forcefully taken from us.” 152
b. Future
Due to a combination of advances in technology as well as the ubiquity of gaming throughout the globe, Cuba could parlay the efforts of regulators in other jurisdictions. They can prevent undesirable influences from having an effect on its casinos by creating streamlined applications and investigation requirements for those who are already licensed by other gaming jurisdictions. Such a system could be used for personnel who own or operate a casino as well as the companies which supply them. Beyond a particular set of questions that would address business relations with people or businesses specifically identified by Cuban regulators, it would only be necessary to have a limited review of a person like Sheldon Adelson, chairman and chief executive officer of Las Vegas Sands Corp., which operates casinos in Las Vegas, Pennsylvania, Macau, and Singapore. 153 Furthermore, only a limited review would be necessary for the key employees of a manufacturing company like Scientific Games, which is already regulated in 450 jurisdictions. 154
The basis for this streamlined process could include the use of the Multi‐Jurisdictional Business Form, 155 which is already accepted in 12 jurisdictions around the globe, 156 and a jurisdictional rider. However, the process should not be limited to simply making the submission of data more efficient; it should also include efficiencies in the investigation as well. To accomplish these efficiencies, the Cuban gaming regulators should partner with the gaming regulators in foreign jurisdictions to determine avoidable redundant investigative actions.
Cuba must still create a complete system for investigating people or businesses that are not already licensed in another approved jurisdiction. However, if Cuba permits the reintroduction of gaming on the island, the modernity of its casino industry should not be limited to its casino floors or resort amenities, but it should also be expanded to include the governing regulatory system. The last iteration of gaming on the island shows the need for a robust system of regulation and high barriers of entry for those who will work in, have control over, or invest in a casino. But Cuba can capitalize on the investigative work done by other jurisdictions, which would encourage entrance into the Cuban market by experienced and renowned casino operators and investors, by making the process more streamlined and less expensive. Ultimately, it is understandable that no jurisdiction would choose to rely wholly on the investigative work of another jurisdiction; however, the investigators and regulations that govern them should not exist in a vacuum.
V. Conclusion
If relations between the United States and Cuba become completely normalized and allow for the unrestricted transnational passage of citizens between the two countries, Cuba will face a tectonic shift in its national tourism. Ultimately, the path forward for Cuba can be guided by the actions and experiences of other nations, including the introduction of gaming in ports and on land, which can be done in a manner that will preserve the island's history and cultural identity. The modernization of commercial air travel to the island was an adequate demonstration of the logistical advances in air travel over the last half‐decade, but also proved to be supernumerary. Furthermore, each ship from the United States that has docked in a Cuban port has represented hundreds and sometimes thousands of passengers who had the ability to see Cuba's cultural, historic, and natural greatness. But each ship leaving port also represents a missed financial opportunity for the island, because on‐board gaming remains illegal while ships are docked in Cuban ports. Finally, Cuba itself remains a location that could benefit from thriving integrated resorts. They would offer restaurants operated by acclaimed chefs, millions of square feet of convention space, aquariums, museums, retail shops, amusement parks, and casinos. Integrated resorts, which draw tourists by using modern ideas and ingenuity of design, should be a cornerstone of Cuba's evolution into the twenty‐first century and are Cuba's best bet for becoming a robust and prosperous tourist destination.