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Kahlon’s Drive Against State-sponsored Gambling Encounters Setbacks

Judge orders slot machines back on while lawmakers object to plans to end betting on horses.

Mifal Hapayis slot machines
Mifal Hapayis slot machines Ofer Vaknin

Finance Minister Moshe Kahlon’s campaign to put an end to the “dirty money” generated from slot machines operated by the national lottery was dealt a blow on Sunday when the High Court of Justice ordered the machines reactivated a week after they were shut down.

Shutting down slot and keno machines is part of a campaign by Kahlon to end state-sanctioned gambling that he and experts contend hurt Israel’s poorest families the most because they are the most likely to bet money.

He is likewise determined to put an end to off-track betting on horses by the state lottery monopoly Mifal Hapayis, and restrict the monopoly’s ability to advertise.

But Kahlon is arrayed against powerful interests and is vulnerable to charges that he will depriving community centers and schools, and forcing gamblers to bet illegally. Most of Mifal Hapayis’ hundreds of millions of shekels in revenues goes to community projects and creates hundreds of jobs, which makes it popular with politicians.

The petition to the High Court was made by a group of 150 Mifal Hapayis franchisees, who argued that the ordered at-midnight December 31 closing down the country’s 650 or so slot and keno machines was done without any prior notice and is needlessly depriving them of income.

In a surprise decision, Justice Yoram Danziger agreed to let the machines continue operating for now and asked the treasury and Mifal Hapayis to respond to the petition by January 25.

Ruth Barak, the attorney representing the franchisees, said she is seeking a year’s delay before the machines are deactivated to prepare themselves for the loss of income. “If they continue operating a few more months it won’t be a national disaster. Against that, all the franchisees rely on lotteries for their income,” she said.

Kahlon vowed to fight the decision. “I’m very sorry about the decision,” he said. “Nevertheless, I have no doubt that we will succeed in convincing the judges that in an ethical society with values, there is no place for slot machines placed in areas closest to society’s weakest populations that destroy families and people’s lives.”

In practice, however, Kahlon may have to compromise. One possibility is that the treasury will compensate franchises who agree to shut down their slot machines immediately, but it doesn’t seem they are likely to agree. In the end, the machines may continue functioning for another six months or a year.

Meanwhile, Kahlon’s other drive against legalized gambling also looks to be running into trouble.

Culture and Sports Minster Miri Regev succeeded in getting the ban of betting on horses through Mifal Hapayis’ Toto sports betting unit pulled from the Budget Arrangements Law. She was helped by the fact that the government would have had to pay compensation to the British company that had been contracted to provide the service.

But on Monday Kahlon’s efforts to get the ban legislated through a separate law ran into problems in the Knesset Reform Committee.

MK David Biton (Likud) led the charge, saying estimates that had been given to him talked about a loss of 200 million shekels ($52 million) annually in Toto revenues from horse racing, and said he opposed banning betting on horses immediately.

MK Yoav Kish (Likud) backed Bitan. “I don’t see a way of cancelling betting on horses before the end of the contract [with the British company] in August 2018,” he said, adding, “I do support not renewing the contract after that date.”