The UK's Gambling Bill, which it was hoped would usher in a
process of industry deregulation, was finally printed on 18th October
In early November 2004 Ministers tabled amendments to the
Bill, such that the numbers of "super-casinos" being built would be
limited initially to eight - supposedly, so that their social impact
could be monitored. This was confirmed on December 16 2004 by Richard
Caborn, the Minister for Sport and Tourism who announced that the
Government would now also be limiting the number of new large and small
casinos to eight.
On 5 April 2005, in a desperate measure to save the Gambling
Bill before Parliament dissolved for the General Election, the Culture
Secretary Tessa Jowell announced that in fact there would now only be
one regional super casino built in the UK, although the Gambling Bill
would contain a provision allowing a future government to raise the
number of regional casinos back up to eight, if there were to be an
affirmative vote in both Houses of Parliament.
In March 2006 it was reported that Richard Caborn, the
minister responsible for gambling deregulation, had privately told Rank
Group that he wants eight resort-style regional casinos across Britain.
Rank's outgoing chief executive, Mike Smith, said: "Caborn wants eight
but will settle for four."
In March 2007 the Government announced changes to gaming duty
bands and rates, increasing the effective rate of duty on
the majority of casinos to 15 % in line with the rate applied to other
parts of betting and gaming, and introducing a new top rate of 50% to
ensure that "this vibrant and expanding sector continues to make a fair
contribution to tax receipts".
On July 11 2007 it was reported in the Times that Gordon Brown had killed off the chances of a super casino opening in Britain. The newspaper said that it understood from government sources that the plan for regional casinos was "dead in the water".
The following article outlines the plans and strategic posturings of
those gaming companies, many who had hailed from the US, that had expressed an interest in
playing a part in the newly deregulated UK casino market.
In October 2003, MGM announced that it
had entered into a joint venture with the Earls Court and Olympia Group
company to build a casino and entertainment complex at the Olympia
Exhibition Centre in the heart of London; under which MGM would hold a
82.5 percent stake in the project. Whilst in November 2003, it said
that it had formed a joint venture with Newcastle United to develop a
casino and entertainment complex next to the club's stadium.
The Chief Executive of MGM, Terry
Lanni, was quoted in November 2003 as saying;
"We see the U.K. as being a
significant market in which we will be able to utilize our depth of
knowledge and experience to develop large-scale gaming, leisure and
Whilst Lloyd C. Nathan, Managing
Director, MGM Mirage Development, Europe, was also quoted at the time,
"Should the proposed
deregulation create an attractive environment for investment, we will
be looking to own or operate a number of large-scale casino operations
in the United Kingdom, each of which will require an individual license
from the Gaming Board. The fact that Metro Casinos has been granted
this Certificate of Continuance following our acquisition of a minority
stake potentially stands us in good stead for the future."
In April 2004, MGM and British
developer Peel Holdings Plc announced that they were considering
building four U.K. casino and entertainment complexes worth more than
$1.1 billion. High on their list of targets, were plans to build a
£250m gambling emporium next to Manchester City's new
football stadium (for which, they face competition from a team
consisting of Caesars Entertainment and Quintain Estates and
In June 2003, Gala Group announced that
it was teaming up with US gaming giant Harrah's to open eight
mega-casinos across the country. The casinos would be between 30,000
square feet and 50,000 square feet, Las Vegas-style gaming halls that
would have included tables for games such as roulette and black jack as well
as slot machines. Some were also likely to include hotel facilities,
typically with up to 300 or 400 rooms for casino guests.
Outside of the Gala deal, Harrah's have
declared an intention to open two or three mega casinos; with
London, Glasgow and Blackpool allegedly key target areas. It had
planned, that each casino, would cost around £500m to
build, would have 500 bedrooms, 100,000 sq ft of gaming space, and a
multitude of restaurants.
In December 2004, Harrah's chief executive Gary Loveman was
quoted as saying; 'We would like to think that we have a good chance of
getting three of the Super Casinos...."
Kerzner International Limited also
signalled its intention to enter the UK market. Having first acquired a
gaming license in respect of an undeveloped property located in the
town centre of Northampton; where, subject to approval, it intended to
develop a new 30,000 sq ft gaming facility; the company announced in
September 2003 that it had signed an agreement in principle to build a
£210 million (US$348 million) casino and resort hotel at the
Millenium Dome in London. A company spokesman said at the time: 'We are
monitoring a number of opportunities in the London area. We hope to
become a big operator in London."
In September 2004, Kerzner announced its intention to invest
£160 million in a complex at the SECC in Scotland; billed as
the nation's first destination resort casino.
In October 2003, Isle of Capri Casinos
Inc, the Mississippi-based riverboat operator, with annual revenues of
$1.2bn (£663m), received regulatory approval to own casinos
in the United Kingdom, announcing that it intends to acquire a
two-thirds stake in U.K. casino developer Blue Chip Casinos Plc,
before the end of the calendar year. Isle of Capri also has plans to
build a resort development next to Coventry City's new football
In February 2004, Tim Hinkley, the
president of Isle of Capri Casinos, called upon the UK Government to
cut the tax currently charged on casinos revenues, from 40% to 15%;
"It [UK tax] is too high,"
Mr Hinkley said. "The numbers only work if you can get a decent return
on investment. We think tax should be no more than 15 per cent of
In what was the clearest indication
yet, of a broader land grab strategy, MGM Mirage and BLB Investors, a
U.S. group including golf courses-to-hotels firm Starwood Capital,
Bahamas resort owner Kerzner International and leisure firm Waterford
Group, staged a bidding war for the UK listed gaming group Wembley,
which owned a number of greyhound reactracks, many of which would make
perfect locations for casinos.
In January 2004 MGM had announced that
it would buy UK gaming firm Wembley Plc for about $493 million.
However, on April 20, BLB said that it would pay 860 pence per share in
cash for Wembley ($553 million), and MGM dropped out of the race;
consideration, the board of MGM Mirage has concluded that the price
offered by BLB Investors is in excess of the price which MGM Mirage is
prepared to offer."
IN July 2004, BLB announced that it too was to withdraw its
offer for Wembley PLC; citing concerns over the company's Rhode Island
dog track. The fact that MGM and BLB were prepared to go after Wembley
was sufficient to indicate that the industry had entered a land grab
In February 2004, MGM said that it was
entering into a deal with British Land to develop a £250m
leisure complex next to British Land's Meadowhall shopping centre in
In January 2004 it was announced that
Accor Casinos was to merge with Lucien Barrière to create
one of Europe's biggest gaming operators. The agreement was based on the
combination of the casino and hotel assets of SHCLB, SHCD, Accor
Casinos, and their respective subsidiaries. SHCLB, which will be
renamed Groupe Lucien Barrière , will be transformed into a
"simplified joint stock company", with the with the Barrière
family owning 51% in the Group, with Accor holding 34% and Colony
Capital holding 15%. Pro-forma for the transaction, gross revenues for
the Group were approximately EUR900 million for FY2003.
It was also announced in January 2004
that the British nightclub operator Luminar Plc was in talks with Accor,
about creating a joint venture to introduce gaming facilities into
25-30 of Luminar's clubs. In May 2004, the pair said that they would
acquire acquire a building in Leeds, with the object of transforming it
into a casino and thus establishing the first step towards other future
Also in April 2004, Harrah's
Entertainment Inc. Chief Executive Gary Loveman, was quoted on
Bloomberg Television as saying; "Legislation before Parliament would
deregulate the industry and allow Harrah's to build U.S.-style casinos
in the U.K."
In July 2004 a consortium lead by
Kerzner International Limited and Manchester-based Ask Developments
unveiled plans for a £260m Las Vegas-style casino and leisure
complex in the east of Manchester. The 80,823 sq m complex complex,
was to include a casino with 1, 250 slot machines and 50 gaming tables,
a 10-storey, 150-room hotel and a swimming complex, with artificial
beach and wave machine 4,000-seat arena and ice rink.
There were also strategic
manoeuvres within the UK market itself. Stanley Leisure, for example,
consoliated its position as Britain's leading casino operator
with the acquisition of the Tower Casino Group for £44.3m
(US$67.6 million) in cash and shares. This acquisition brought
Stanley's total number of casinos to 40, including three in London.
And, in November 2003, Stanley opened
the UK's biggest casino in Star City, Birmingham. The 68,000 sq ft
casino, branded 'Stanley Star City Casino', is arranged over several
main and mezzanine floors and boasts 40 gaming tables, a 12,000sq ft
main gaming floor and hundreds of slot machines.
In October 2004 Stanley announced that it had bought the
rights to seven acres of land beside Leeds United's Elland Road ground.
The company said that it had plans to build a £125m complex;
which would comprise a 150,000 square foot casino, a hotel,
restaurants, bars, leisure facilities and designer shops.
Hilton Group announced that it had
plans to transform its coastal hotels in places such as Brighton,
Blackpool and Bournemouth into giant casinos with roulette tables, slot
machines and cabaret, whilst Trevor Hemmings made public his plans
to build a Vegas-style casino, hotel and retail complexe on the
seafront at Blackpool.
Rank Group had said that it would be
developing new sites to a 40,000 sq ft specification, through which it
would offer casino gaming, bingo and sports betting under one roof. The
company is also improving facilities at existing casinos and relocating
where necessary. They had relocated a total of
eight casinos, with plans in place for a further two in 2003. In
another new development, Rank announced in November 2003 that its
online division Blue Square, hopes to open its first betting shop, next
door to the Grosvenor Casino in London's Edgeware Road, in time for the
Cheltenham Festival in March 2004.
In May 2004, London Clubs
International, in association with Gerald Ronson, received planning
permission and gaming board consent to develop an £8m
gambling emporium in Glasgow, on the south bank of the Clyde. The
announcement trumped plans by the bigger MGM Mirage to develop a large
casino on the north bank of the River Clyde.
In September 2004 Kerry Packer
announced plans for a £50 million ($128.3 million)
development at Brierley Hill in the West Midlands. His company already
held licences for casinos in Newcastle and Swansea in equal
partnership with British entrepreneur Damian Aspinall.
Andrew MacDonald from Packer's
Consolidated Press Holdings (CPH), was quoted in the Australian Daily
Telegraph as saying; "With potential for the modernisation
of gaming laws that's been talked about for the last four years finally
coming close to the wire, we're starting to really ramp up our
efforts...The list is fairly extensive as to what we're looking at.
We'd take as many as we could, to be blunt....We'd just like to be a
player in this market and if it so happens that we end up being one of
the biggest and the best, then all the better."
The Weekend Australian reported that Packer, in
partnership with Damian Aspinall, was planning to sink an additional
£250million into building a further five casinos in Britain
and that he had already begun negotiations with planners and
authorities. It was also reported in the media that Packer was is in
talks over acquiring an 85,000sq ft site in Aberdeen and that he was
assessing locations in Glasgow and Edinburgh.
It was also announced in September 2004
that Caesars Entertainment, the US casino operator, was in talks with
Quintain Estates, the developer that owns the 42 acres surrounding the
new National Stadium at Wembley; with regard to the development of a
casino complex. During the month, Genting Bhd, the largest shareholder
in London Clubs International, strengthened its position in the UK via
the acquisition of the Maxims Casino in London, from Gala Group, for
10.5 million. And Sun International announced plans to invest up to £150
million in a US-style leisure complex in Scotland, with a casino,
restaurants, fast-food outlets and bars.
Las Vegas Sands has hired UK property agency Jones Lang
LaSalle to identify opportunities in Scotland; where it had plans to
build an entertainment complex, including a casino, hotel and
restaurants, next to Rangers' Ibrox stadium.
On November 23 Stanley Leisure Plc surprised many when it
announced that it was to join up with Malaysia's Genting Berhad to
develop Vegas style casinos.
Under the terms of the deal, Genting will raise its stake in Stanley to
ten per cent and the two companies will jointly control a company
established to build and run regional casinos in the U.K. Genting has
given an assurance that it won't bid for Stanley Leisure for at least
three years without a recommendation from the U.K. company's board or
unless another offer is forthcoming for the business.
Whilst nobody could have been certain how the licence granting
procedure would work, ambitious plans continued to be rolled out -
Rank Group, for example, submitted plans for a casino next to its
Mecca Bingo outlet in King Street, Oldham; Las Vegas Sands Inc
revealed plans for a £100m gaming and entertainment complex
at Sunderland's Stadium of Light; the owners of the Venetian in Las
Vegas, the Isle of Capri in New Orleans, and Aspinalls in London
all declared an interest in developing complexes in Middlesbrough; and,
in early December 2004, Ameristar Casinos said that it had entered into
an agreement with Bravo Netwrok to develop a $445 million casino
complex at Southampton's West Quay, which will include a
65,000-square-foot casino, dining and entertainment venues and a
200-room hotel and conference facility.
In August 2006 London Clubs International was bought by US gaming giant Hurrah's Entertainment for £280m, whilst in Sepetmber 2006 Stanley Leisure agreed to a takeover offer from the Malaysian gaming firm Genting, in a deal that valued the UK casino company at about £639m ($1.2bn).
In october 2007, Rank Group, which had been one of the great plays on UK gambling industry deregulation announced 2% like-for-like growth in continuing group revenues for the 40 weeks to 7 October 2007. However, the company stated that total sales for the continuing group are 1% below the comparable period in 2006, with its UK retail businesses, comprising Mecca Bingo and Grosvenor Casinos, having experienced a significant deterioration in revenue in recent weeks.
Rank attributed the deterioration to a combination of the loss of Section 21 gaming terminals (as required by the Gambling Act 2005 from 1 September 2007) and the ban on smoking in enclosed public places, which came into effect across the whole of the UK on 1 July 2007.
In the five weeks following the removal of its Section 21 terminals, Mecca Bingo like-for-like revenue had declined by 19% across the UK with admissions down by 13% and spend per head down by 7%. Revenue in England and Wales fell by 22%, while in Scotland (where the smoking ban was introduced in March 2006) it was 6% lower than in the comparable period in 2006.
Rank said that in the 40 week period since the start of the financial year like-for-like revenue at Grosvenor Casinos had been in line with the comparable period last year, with a marginal increase in spend per head offsetting a 1% decline in admissions. During the last five weeks, however, revenue was down 9% with admissions 1% lower and spend per head down by 8%.
Rank said that for the first 40 weeks of the financial year revenue at Blue Square was 38% ahead of the comparable period in 2006. Rank Group shares which had been trading around the 3.50 mark during the height of the deregulation story, fell back below the 1.00 mark. A fitting testament, if one were needed, to the shambolic plans put in place for Casino UK by Tony Blair's Labour government.
In a House of Lords debate on Gambling on the 11 October 2007, Viscount Falkland stated;
"The noble Lord, Lord Faulkner, must have been a little ironic in asking the Government what guidance they will give to the commission. I do not expect him to be as vituperative as me or the noble Lord, Lord James, but there is nothing to make us believe that the Government will be able to lead; it is rather like expecting the blind to lead the partially sighted. The Government?s record on gambling and betting has been disastrous. The noble Lord, Lord James, gave us the example of the FOBTs, which are dishonest in themselves because they are gaming machines. People ask, ?FOBTs; What's that. They must be all right?it sounds complicated?. He explained that phenomenon well.
The noble Lord, Lord Faulkner, and I, together with the noble Lord, Lord Donoughue, who is in the Chamber, and the noble Baroness, Lady Golding, who will speak later, went to a great deal of effort of which we should be proud. However, the Government?s response was disastrous and a bad Bill appeared on the statute book. Many questions will have to be answered at a later stage. The Government completely failed to understand how regeneration could be achieved through casinos. They never even bothered to look at it. The whole idea of regeneration was knocked on the head?although very few people remarked on it?just before we had the famous vote in this House which was narrowly won by the Minister, whom I always admire for his tenacity in some of the briefs he is given and for the agreeable way in which he carries out his job. The Chancellor of the Exchequer, as he then was, suddenly put a 50 per cent tax on casinos, which really meant that regeneration was out of the window."
In late 2007 Genting said that an annual impairment review on its assets had indicated that it had suffered an impairment loss of RM897.3 million on goodwill arising from its acquisition of Stanley Leisure in 2006. The company said that the impairment was largely attributable to the increase in gaming duty rates by the UK government, effective from April 2007.
"The increase in gaming duty took the UK gaming industry by surprise as it was made without any prior consultation and indication. The smoking ban which came into effect in the UK from July this year has also adversely impacted the gaming business."
The 2005 Gambling Act, which had sought to propel the UK's gambling industry into the twenty first century, failed in almost every regard. It stands as testament to the ineptitude of a Labour government,
that was prepared to have its policies dictated to it by the Daily Mail.
To cite this article: Niall.O'Connor (2012) "UK Casinos...The shambles of deregulation". (Bettingmarket.Com).
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