Israel Shuts Down State-sponsored Slot Machines

Treasury conditions extension of license for lottery monopoly Mifal Hapayis on shuttering gambling machines.

Mifal Hapayis slot machines
Ofer Vaknin

Israel’s 500 slot machines and 150 keno machines fell silent at midnight on Saturday, in a victory for Finance Minister Moshe Kahlon and his crackdown on state-sponsored gambling.

The Mifal Hapayis national lottery had no choice but to turn off the automated games of chance, after negotiations with the treasury to renew its operating license failed to yield an agreement, even though the two sides extended their discussion into New Year’s Eve.

Finance Ministry officials agreed to extend the organization’s license for another 48 hours in order to wind up talks, but only on condition that the slot and keno machines were switched off immediately.

Mifal Hapayis slot machines
Ofer Vaknin

Kahlon lauded the decision. “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 any anymore,” he said in a statement. “I am hurt by the thousands of families that have lost their property, their money, their homes and even their families,” he added.

Treasury officials used their power as the government body responsible for licensing Mifal Hapayis’ operations – which includes the national lottery and sports betting – to force it to drop the machines, which are the same as those found at any Las Vegas casino.

But the machines are big moneymakers for Mifal Hapayis, which is demanding compensation for the 800 million shekels ($208 million) it says it stands to lose without them. Profits from the lottery and slot machines are split between the treasury and local governments, who use it to build public facilities.

The Union of Local Authorities backed Mifal Hapayis’ estimate over lost annual revenue. But Finance Ministry officials said the real figure was less than 250 million shekels, because it is offering the company the chance to conduct extra lotteries.

Mifal Hapayis says it wants to hold 14 more lotteries annually, on top of the two weekly draws it currently holds.

The two sides have also agreed on various cost-cutting measures. Although the final terms have yet to be reached, Mifal Hapayis has agreed to reduce its stake of 7.5% of earnings (about 750 million shekels each year) to 7%. Whatever the losses are, sources said it was likely they could be shared on a 75-25 ratio between the treasury and local governments.

Israelis buy lottery tickets at Mifal Hapayis kiosk in Tel Aviv's Allenby St. in 1952.
David Aldan, GPO