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Arnold M. Knightly

Even with 'supercasino' out, Harrah's stays in U.K.

28 February 2008

UNITED KINGDOM -- Harrah's Entertainment on Tuesday said it will continue to pursue gaming opportunities in the United Kingdom casino market despite the government's decision to not approve plans for a "supercasino" in Manchester, England.

The British government announced Tuesday what had been rumored for weeks: It will license 16 casinos to be built in the United Kingdom but veto plans for a "supercasino" slated for Manchester in northwest England.

The announcement was met in the United States with enthusiasm by Harrah's, which owns 10 casinos in the U.K., and consternation by two other gaming giants -- Las Vegas Sands Corp. and MGM Mirage, which both said they would no longer pursue plans to build casinos there.

The government's decision means eight smaller casinos with 80 slot machines and eight larger casinos will up to 150 slot machines and prizes of up to 4,000 pounds (approximately $8,000) will be built around Britain.

Current law allows casinos to have only 20 slot machines, 40 electronic roulette games and unlimited table games.

Harrah's Senior Vice President Jan Jones said the company plans to seek some of the new licenses to develop Las Vegas-style casino resorts with restaurants, nightclubs, concert venues and other amenities, a concept new to the U.K.

Jones said 97 percent of U.K. residents have never been to a casino, which have always operated as private clubs.

Harrah's first entered the market in December 2006, paying $590 million for London Clubs International, which had six casinos in England, two in Egypt and one in South Africa.

The company has since added four more U.K. casinos, most recently the $50 million Alea Glasgow in Scotland, which opened earlier this month. Another casino is under development in Leeds, England.

The new casino plan has to be reviewed by both houses of Parliament, which cannot amend the order. None of the casinos will be allowed to operate more than 18 hours a day, according to Culture Secretary Andy Burnham.

This will be the second time the proposal suggesting 16 more casinos will try to make its way through Parliament.

An independent Casino Advisory Panel, formed after a new gambling law was adopted in January 2007, awarded the proposed "supercasino" to Manchester.

However, the House of Lords in March voted against the idea of a "supercasino," killing the plan for the 16 other casinos.

The idea of the "supercasino" is something that will probably come back around in a few years, Jones said.

"As customers and government become accustomed to a different kind of product, you never know if they won't have the political will to revisit the idea of a larger destination resort," Jones said.

The rejection of the "supercasino," which would have had 1,250 slot machines and only a few table games, will probably keep some companies away, analysts said.

"The traditional approach of building a large-scale casino to extend your brand into a new geography just isn't possible there," Deutsche Bank gaming analyst Bill Lerner said. "I can understand why MGM and Las Vegas Sands are really not interested."

Las Vegas Sands President Bill Weidner agrees.

He told Reuters two weeks ago that the proposed smaller casinos will appeal to operators already in the market but not large U.S. casino companies.

"If we'd known the game was stacked against us, we wouldn't have wasted jet fuel going over there," Weidner said.

Las Vegas Sands spokesman Ron Reese said Tuesday that Weidner's words two weeks ago still ring true.

MGM Mirage, which had expressed interest in bidding for the Manchester "supercasino," also has lost interest in the market.

"Given the current situation and these circumstances, we are no longer pursuing casino interests in the U.K.," MGM Mirage spokesman Gordon Absher said.

The industrial city of Manchester is threatening to file a lawsuit to overturn the rejection of a "supercasino." The city had projected the project would bring $519 million worth of investment and 2,700 jobs to the economically struggling region.

Lerner said the rejection of the "supercasino" is a blown opportunity for the U.K., considering Las Vegas Sands and MGM Mirage were poised to spend billions of dollars developing new projects.

Even with 'supercasino' out, Harrah's stays in U.K. is republished from