EIGHT years after taking over the Coral Cliff Gaming lounge, Supreme Ventures (SVL) has closed its doors for good.

The Montego Bay operation, which was rebranded as Acropolis last March, previously underwent restructuring, having closed its accompanying hotel and restaurant business in January 2009, but failed to make the cut as the lottery company continued to rationalise its video lottery terminals (VLT) operations.

Since entering the gaming lounge business in 2005, the lottery company managed to return an operating profit in only one year — 2007, when it earned $36.9 million — but the losses incurred by its gaming and hospitality segment over the past eight years surpassed $1 billion last September.

“You have to have a stomach for long-term investment if you are going to be in this business,” said Supreme Ventures CEO Brian George, particularly as the costs associated with setting up lounges are very high and it takes a considerable length of time to see a profit.

The lottery and gaming company has been fine-tuning its VLT operations towards making profits on a consistent basis.

In late 2009, the company closed its gaming lounge located at the former Wyndham Kingston Hotel in New Kingston and, for some time now, has exited the food and beverages business.

Supreme Ventures closed the restaurants at Acropolis Barbican and Acropolis May Pen, which was downgraded to a betting lounge (a location with less than 20 seats) in 2011. It also entered into an arrangement with KLE Group — the operators of Fiction and Famous night clubs, as well as Tracks and Records — for the entertainment company to handle food and beverage for the Odyssey Gaming Lounge when it opened last February.

At the same time, Supreme Ventures has been expanding its VLT network — it opened its Portmore gaming lounge in mid-2010 and Acropolis Cross Roads in April 2012.

But the market is highly competitive and has been challenging, to say the least.

At the beginning of 2013, there were over 600 premises operating gaming machines, of which 27 were classified as gaming lounges. Also, at that time, there were seven new applications being processed for gaming lounges and 188 for betting lounges, of which 80 were issued.

All of those operators have been impacted by challenges posed with a reduction in disposable income, while facing further challenges in patronage, resulting from the smoking ban in enclosed places.

“The current economic challenges, in addition to the significant increase in lottery gaming taxes that have had an adverse effect on the company’s profits, has forced the company to further streamline operations to improve profitability in 2014,” said George.

And while Supreme Ventures focuses on making its gaming lounges profitable, it plans to restructure other aspects of its business as it faces challenges from other fronts.

“Another significant area of reduction in 2014 will be in sponsorships and donations,” said George, in a press statement issued by the company last week. “In 2013, the unclaimed prizes of over $180 million (which included a Super Lotto Jackpot not claimed) that supported SVL’s corporate sponsorship and donation programmes, was required to be paid over to the BGLC under new conditions of its gaming licence.

“This was in addition to the over-$800 million paid to the CHASE Fund, the over-$1.3 billion paid in lottery and gaming taxes and over-$360 million paid for Betting, Gaming and Lottery Commission (BGLC) fees.”

SVL said that it continued to honour the sponsored events and donations it committed to during 2013, in spite of the removal of unclaimed prizes, but added that it cannot continue to sustain these levels of corporate sponsorships and donations in 2014 while investing in the future growth of the business.