High rollers gamble on gaming laws

30 March 2004
High rollers gamble on gaming laws

It has been a while since the UK's leisure agents had something to get excited about. But that time has come with the changes proposed by the UK's gaming legislation which have made the gaming sector "the hottest thing since the cinema market", according to Rob Howarth of Jones Lang LaSalle.

It is anticipated that the UK's strict gaming laws will be relaxed by late 2005. If this happens, the hard gaming area will have to be a minimum of 5,000 sq ft, and the amount of gaming tables and slot machines allowed will be increased.

This fact has had British and US companies falling over themselves to acquire as many large sites -60,000 sq ft-plus - as possible. Property agents have gone into a whirl as they hunt for possible locations, primarily in cities such as Manchester, Newcastle and Coventry and Birmingham. Previously there were only 53 designated towns and cities that were allowed casinos. But the freedom to open anywhere is among the proposals before the government.

These are recommendations from the Gaming Review Body, chaired by Sir Alan Budd. Budd also suggests the abolition of restrictions on building size, and the requirement for membership 24 hours prior to play. A joint report into the recommendations by the House of Lords and Commons will be published on 8 April.

If the recommendations are accepted, then all bets are on in this country, as the gaming industry will most certainly increase from the current crop of 126 licensed units. In addition to the existing casinos, it is estimated that the UK could see 10 regional casinos within the M25, 10 to 15 resort casinos, and 30 to 50 regional casinos.

It is a situation the Americans have been gearing up for for over two years, giving the British-based companies a run for their money. And it is a race nobody wants to be left out of.

Leading the American pack are the Missouri-based Isle of Capri chain (see case study), MGM Mirage and Harrah's Entertainment. MGM has already bought part of a small casino in Bristol and plans to develop a larger site in Newcastle. It has also bid £270m for dog track owner Wembley Plc.

On the British side, bingo operator Gala has teamed up with Las Vegas-based Harrah's to open eight properties, while Stanley Casinos is looking at several large sites around the North East. Independents such as Amaury Taittinger and Damian Aspinall are also looking to expand (see case studies).

However, most of the UK operators have put their acquisitions on hold, although negotiations are still going on, until the report is actually published. Although the operators are confident that most of the proposed changes will go through, they are still exercising caution.

How much tax? Until the report is published no-one can be sure what level of tax the deputy PM will set. At present, tax on casino revenue runs as high as 40%.

A report from market analysts Martin Info called a Guide to the UK betting and gaming market states: "Industry observers expect that interest in the UK market, from the likes of MGM and Mirage, will fall unless taxes are set below 20%."

Case study one: Allan Solomon, Isle of Capri

Case study two: Damian Aspinall, Aspinalls

Case study three: Amaury Taittinger, Leo Casino

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