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Arnold M. Knightly

Las Vegas companies undeterred by U.K. vote

30 March 2007

LAS VEGAS, Nevada -- Las Vegas gaming operators said Thursday that they expect casino-style resorts will eventually be built in the United Kingdom despite a parliamentary vote against expanded gaming.

The House of Lords on Wednesday voted 123-120 against a plan to award Manchester the country's first and only super-casino.

The vote also killed plans for 16 smaller casinos that would have been built around the United Kingdom. Most members of Parliament favored approval of the smaller casinos but the fate of those were tied to the controversial super casino.

The country's House of Commons approved the proposal during a simultaneous vote 274-250, but the other house's vote leaves the future of expanded gaming in temporary limbo.

Las Vegas Sands Corp. was initially tied to the Manchester casino in 2005 when it had a development agreement with the Manchester United soccer club.

The deal fell through when the club was bought by interests based in the United States.

Despite this second set back, the company remains interested in breaking into the British market when the opportunity becomes available.

"We think it's a good market," Las Vegas Sands spokesman Ron Reese said. "We'll remain interested and will follow the process and continue to look for opportunities to exercise our business model of a multifaceted, destination resort."

MGM Mirage spokesman Alan Feldman said he is confident the United Kingdom will eventually return with the "right kind of legislation" to allow large casinos.

"I think what will happen eventually is government will renew its analysis of this," Feldman said. "It is going to continue to see world casino development and a moment will come when cooler heads will prevail."

Feldman said he was not surprised by the vote denying Manchester the casino.

"By the time this particular vote got to the Parliament, I don't know that it is such a bad thing that it got defeated," Feldman said. "The concept of the single casino located in Manchester was, quite frankly, a little odd.

"Unfortunately, the whole thing got politicized. When that starts to happen, all bets are off."

Feldman added that London probably would have been a better "market-based" choice for the regional casino and that a city such as Manchester would be better suited for one of the smaller casinos.

Harrah's Entertainment officials declined to comment on the vote. It is the only one of the three major local gaming companies that currently holds gaming interest in England.

In December, the company completed its $570 million acquisition of London Clubs International, which includes seven small casinos in the country.

The company was outspoken when United Kingdom Finance Minister Gordon Brown earlier this month introduced a plan to tax large casinos at a rate of 50 percent, well above the current rate of approximately 25 percent.

Jan Jones, Harrah's senior vice president of communications and government relations, told Reuters last week that Brown's announcement "seemed to come out of nowhere" and "that kind of environment makes an investor nervous."

Parliament can consider an amended version of the plan but concessions and amendments to the legislation may take a month or more to agree upon.

Manchester, an industrial city 195 miles northwest of London, was the surprise recommendation of the independent Casino Advisory Panel in January, beating out Blackpool and London.

Bloomberg News contributed to this report.