Even for the world’s richest there is an absolute superlative, and Monte Carlo has been for decades the place with the most billionaires per square meter. Statistics of 2014 indicated that one third of the Monaco city-state population (editor’s note: Monte Carlo is an administrative subdivision, the exclusive neighbourhood in Monaco) is made of millionaires, competing with Geneva or Zurich. However, the tiny state in the south of France has not always been the paradise we all know today.
It has not begun to bloom until the end of the 19th century when the first casino emerged. From then onward, the entire state of Monaco has seen a historic development that few countries were able to match. And the Visionary was Prince Rainier III from the Grimaldi family, which has ruled the Principality since 1297, with minor interruptions.
The most important tourist attraction in Monte Carlo is its casino of the same name. First opened to the public a century and a half ago, the Monte Carlo Casino is a publicly owned company in which the Government as well as the Royal Family are very interested. Arguably, the most significant contribution to the development of the City is attributable to Prince Rainier III, who ruled Monaco for 56 years. He was responsible for reforming the Constitution and for extending the economy beyond the traditional casinos and gambling. The gambling industry currently generates a mere 3% of the state budget each year. By the time Rainier became King in 1949, the casinos generated over 95% of the annual revenue of this nation.
According to the chronicles, by the time the Prince came to the throne, its state was poverty-stricken largely as a result of the Second World War, after it was occupied by the Italian fascists. Those with a passion for gambling, European aristocrats mostly, found themselves poorer after the war. To take advantage of the predicament of the Mediterranean state, other gambling centres opened as its direct competitors, many of them successful. To cut their losses, Rainier decided to promote Monaco as a tax haven, free of taxes, with real estate opportunities and international tourist attractions.
The relationship with Onassis
The first years of his reign have caused the Greek tycoon Aristotle Onassis to become involved. In 1953, the ship owner Onassis purchased the shares of Société des Bains de Mer (SBM) which owns the Casino, the Opera and the Hôtel de Paris in Monte Carlo through his companies based in the tax haven of Panama, and assumed control of the organization. The takeover was initially hailed by the Prince because his country needed investments, but the relationship between Rainier and Onassis was to become sour in the years that followed due to the boycott of France ruled by Charles de Gaulle and its tax haven status of which the French rich took advantage.
Rainier and Onassis did not see eye to eye as far as Monaco’s future was concerned. Onassis wanted this country to remain an exclusive resort, while Rainier wanted to build more hotels to attract many more tourists. As a result, Onassis became reluctant to build hotels without any security from the Prince that there will be no dwelling units to compete with him. The Greek tycoon ultimately approved to build two hotels and an apartment building. When he no longer agreed with the security required, Rainier used his veto right to cancel the entire hotel project and publicly attacked SBM on TV, accusing them of “bad faith”.
The relationship between Rainier and Onassis remained tense until 1966 when the Prince approved a plan to issue 600,000 new SMB shares, which caused Onassis to become, from majority shareholder (with 52% of the company), a mere shareholder holding one third of said company. Onassis appealed the measure at the Supreme Court of Justice, but lost the appeal. Following the decision, Onassis sold all of its SMB shares to the state of Monaco for USD 9.5 million (the equivalent of USD 271 million as of 2015) and left the country.
Société des Bains de Mer
Société des Bains de Mer still provides dwelling, entertainment and gambling services, among others. SMB manages and owns casinos, hotels, restaurants, bars, nightclubs and golf clubs. 52 of its 58 properties are in Monaco.
Prince Rainier had a passion for gambling since he was young. Even by mid 70s, the casinos and even the gambling industry were still an integral part of the Monte Carlo way. Rainier III managed to transform Monaco in a city that is a magnet for money and celebrities, due in part to the small taxes charged by the state.
The gambling industry is still a hallmark in the economy of the City, one that is capable to attract tourists, even if its revenues can hardly match those of its glory days. But when you say Monte Carlo, you say casinos, and this will remain a fact, regardless of the whims of time.
By Paul Dan