Austrian roulette: how to earn $7 billion on casinos and gaming machines

A native of Vienna Johann Graf did not want to work in his father's butcher shop and opened his own business, having risen from the import of slot machines to the creation of the casino empire.
28.08.2015
RBC
Origin source
In the Forbes list of billionaires for 2015 the Austrian Johann Graf is on the second line among the richest people of the country, second only to the creator of the Red Bull Dietrich Mateschitz. In the global rankings businessman took 208 th place, the state of its publication in the beginning of March is estimated at $ 6.6 billion. And by the end of August, the state of the Count increased to $ 7.4 billion, showing Forbes «counter" in real time. According to the Bloomberg Billionaires Index, the Austrian has a wealth of $ 7.8 billion.

Source Graf income - Novomatic group of companies, in which the businessman while not occupy positions of leadership, but the founder and holder of 100% of the shares. In addition to two separate branches in Switzerland, the "core" of a corporation is the Austrian Novomatic AG, which concentrate the main business graph - from casinos and lotteries to control the production and sale of gaming machines. Total revenue of the whole group in 2014 was € 3.8 billion turnover of the Novomatic AG grew by 17% year on year, to € 1.98 billion, net profit - up to five times, up to € 276 million.

Successful entrepreneur Johann Graf, which in Russia is sometimes called "Count Johan", was born on January 31946 in the north-western outskirts of Vienna, which at that time was already half a year in the American occupation zone. In 1955 his parents moved to the other side of the capital, in the commercial suburb of Perchtoldsdorf, where his father opened a butcher's shop with the inn. This coincided with the end of the Allied occupation of Austria (Perchtoldsdorf was in the Soviet zone). In nine years, Johan grew up under the care of grandparents, in a studio apartment with minimal amenities.

A few years later at the insistence of his father, he began to study at the butcher's, to continue the family business. With his zeal, diligence and commercial vein Johan to 23 years became the youngest master butcher Austria. However, to his work, he always skeptical. "I went through the city by bus, I came into the shop and worked so that sometimes sales grew five times - recalled Johann Graf in 2008. - But my father salary is not appointed, and indeed parents said no thanks. I knew from the beginning that it will not always continue. And the father, it seems, knew about this. "

Techniques of youth

Much more interesting Johan showed to the equipment and machinery. I love this he instilled own grandfather, an auto mechanic and owner of a well-groomed to shine Opel Kapitän. The first in the life of a businessman serious source of income is also associated with the technique: in the 20 years he bought with borrowed money the British sports car the Jaguar, long ride on it, and then posted an ad in the newspaper and sold the car for a higher price. Subsequently, the young businessman was repeatedly carried out the transaction under the scheme.

Soon Graf met a young electrician Gerhard roamers, who sought to create their own business, too. In 1974, at the age of 28 years, Johan finally left the store with his father and his new friend founded Brodnik & Graf GmbH. At first the company imports into Austria through Belgium American pinball machine. "Then I was a complete newbie, my knowledge about slot machines did not extend beyond the desktop football," - says Graf. Start-up capital of the company amounted to 50 thousand. shillings (about € 3,600, at the rate of conversion of shillings in the euro when joining the euro zone in Austria).

Turn "startup" in the large enterprise Austrians helped the two circumstances. Firstly, they were able to go directly to the British manufacturer JPM slot machines and become its official representation in Austria. It replaced a complicated import chain, used originally. Second, the end of the 1970s, the game industry began the transition from electro-mechanical machines to fully electric. Sensing the "wind of change", and Count Brodnikov updated by a team of specialists, electricians and began to develop their own machines.

One-armed bandits

The first slot machines (also known as "mechanical slots") appeared in New York in 1891. The principle of the game remained the same for decades: A player pulled the handle machine spins the three reels. After a few seconds drums symbols drawn on them stopped at an arbitrary position. If the characters turned out to build a certain combination, the player is the winner. For the distinctive design machines called "one-armed bandits."

The revolution in the gaming industry took place in 1976 with the appearance in Las Vegas the first video slot from producer Fortune Coin, completely based on the electronics - it is on this model focused initially Brodnikov and Graf. The development of computer technology has allowed constantly create new types of gaming machines. The availability of the rules of the game determined the popularity of video slots: by 2005 in the United States of the total revenues of the gambling industry at $ 48 billion, about 70% came from slot machines.

By 2014 (according to their own data Novomatic) revenues in the global game industry reached $ 456 billion. Thus, the entire group of companies Johann Graf takes exactly 1% of the global market with an annual turnover of € 3.8 billion (or $ 4.62 billion at the exchange rate December 31, 2014).

Two ambitious businessman and could not get along in the same enterprise, and in 1980, Graf emerged from the joint business by founding a new company Novomatic. As billionaire says, the idea of ​​the name came to him when he was walking through the center of Vienna and noticed advertisements Novotel hotel chain. Originally, he had planned to name the company Intermatic. T HimselfRafa was then already 34 years.

Drang nach Osten

Using their own experience of previous years, Earl has hired a team of specialists who have begun to develop new slot machines. Also in 1980, was born the line of machines Admiral - then the name does not occur again in the history of Novomatic: from the name of its own casino network to the street admiral Strasse, which is the headquarters of the group in the Viennese suburb of Gumpoldskirchen.

In 1981, the company began to supply products outside Austria - in Germany, France, Switzerland and the Netherlands. After a year in Switzerland Novomatic opened its first overseas office, after that across the country began to emerge clubs with slot machines. "We were the first who began to put machines in Alpine sanatoriums" - said Graf. This Novomatic managed for several years to cover about 70% of poorly mastered the Swiss market.

Even during the period of joint work with Brodnikov Count realized how important it is to follow the trends in the industry and the news in general. For example, when in the 1980s the fashion included electronic darts, comanija urgently adjusted release target to meet the demand of European customers. In the words of the Count, the point was not only to catch the trend, but also to "quickly and correctly prioritize and then stick to them."

The ability to perceive trends and Earl in the shortest possible time to make a decision was useful to him in the late 1980s, with the fall of the "Iron Curtain." Already in 1989, Novomatic opens a production center in Czechoslovakia and penetrates in most of the former Eastern Bloc countries, including the Baltic countries for several years. In 1991, in partnership with the Prague authorities Concern opened Admiral Casino Colosseum, the largest casino in the Czech capital.

In May 1992 (according to other sources, 1993) on the same principle of public-private partnership has been opened the first casino group in Russia, in St. Petersburg. Initially it was called "Neva", and then took the name of the standard for Novomatic Admiral. As reported in "Novaya Gazeta", a co-founder of the Russian side made not the mayor's office, and the company "Neva-Chance", organized by the City Committee non Foreign Relations. According to the memoirs of Count, he often dined with President Vladimir Putin, who then headed the committee.

Business Johann Graf in figures

The $ 7.4 billion estimated state businessman Forbes magazine as of August 27, placing the graph on the 208th place in the ranking of the richest people in the world and the second - in the list of billionaires in Austria

35 years there Novomatic

More than € 3.8 billion was consolidated Group revenues in 2014 - a record number in its history

. More than 23 thousand people work in the Group at the end of the year - by 14.2% more than in 2013

230 thousand. Novomatic gaming machines used for games in real and online casinos and other segments of the entertainment industry in more than 80 countries around the world

13% takes on Novomatic gaming market in Austria (from online casino to sports betting)

More than 120 vintage cars, mainly "Jaguars", are in the private collection of Count

Sources: Forbes, Nachrichten.at, Prater, the company

expansion theory

The fall of the Iron Curtain mustachekorilo already rapid expansion of Novomatic. Such haste and insinuation Earl caused skepticism among many of his fellow businessmen. When in 2008 the Austrian business magazine Trend announced Johan Earl "Man of the Year", the journalists spoke with Leo Wallner - the director of Casinos Austria, the main competitor Novomatic. "Earl is a great entrepreneur, but we have him diametrically opposed vision of business - claimed Wallner. - It aims to maximize and optimize profits. We, for example, rather slowly expanded to the East: there are regulatory standards very different, not to mention the dominance of organized crime. "

Since its inception Novomatic competing with Casinos Austria - first as a monopolist, then already as an equal competitor. For Casinos Austria in 2014 a turnover of € 3.6 billion, which is already lower than that of the entire Novomatic Group of Companies. The point in the 30-year-old dispute was set in July 2015 - Novomatic bought 28.1% stake in Casinos Austria and has become the largest private owner of the network (the largest share of 33.2% belongs to the state corporation ÖBIB, control governmentgovernmental investments). A few days later the former head of Casinos Austria Leo Wallner died after a long illness.

"As at the time Niki Lauda, ​​Earl joined the fight against the monopoly of the powerful and, in his case, proved to be more considerate and more successful" - so the Austrian press described the struggle Novomatic with Casinos Austria for market share. At the time, the legendary Austrian racing driver Niki Lauda, ​​already completed a career confidently fought for control of "Formula 1" team of the Jaguar, but was defeated, and the team has bought another famous Austrian Dietrich Mateschitz, establishing in its place Red Bull Racing. Since the beginning of 2014 Lauda is the official envoy of the brand and Novomatic Group.

In addition Lauda, ​​with Earl collaborated many other public figures. From 1997 to 2003, a member of the Board of Directors of Novomatic AG was Johannes Hahn, the current European commissioner for EU enlargement. Since 2004, member of the Supervisory Board of the company is the former head of the Ministry of Internal Affairs of Austria, Karl Shlёgl. That same year, the chairman of the supervisory board Löwen Entertainment (Novomatic subsidiary) became Theo Waigel, the German Finance Minister in the government GelKohl mutations and one of the "fathers of the euro".

Over the past ten years Novomatic several times provided in the center of the scandal: because of suspicion of foul tuning machines, due to the indulging in gambling charges. In one case, the company has gone on pre-trial agreement, and the players returned € 4 million lost their money. The Count himself is fundamentally not gamble, comparing compulsive gambling addiction to tobacco and alcohol. For him, this is just business, and family: the eldest son of a businessman Thomas Graf works in the Novomatic technical director. "Will work Novomatic my younger two sons, they have to decide for themselves - says Graf. - It is important for me to sit in the manual competent manager, and it does not matter whether he is my son. "

Business