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Best of Liz Benston

Gaming Guru

Liz Benston
 

Park Place Postpones UK Deals

14 November 2003

LAS VEGAS -- While its competitors in Las Vegas are inking deals with British casino companies to develop potential casinos in the United Kingdom, Park Place Entertainment Corp. is taking a different approach.

The company expects to wait at least six months before making any major announcements about potential development deals in Britain, a senior development director at Park Place said Thursday. That's when the company expects several key elements of an expected bill aimed at deregulating 1960s-era gambling laws to be clarified.

"It's our position that there are some fundamental things that have to be resolved in the bill" before investing in Britain, said Peter George, senior vice president of development and managing director of international operations.

Fundamental uncertainties include what kind of tax structure will be implemented and how the additional casinos planned under deregulation would be licensed, George said.

"We're watching the legislation closely, participating in the discussions on the legislation and looking at potential sites, he said. "We're not high profile but believe me, we're not just waiting for this thing to happen."

Competitors Harrah's Entertainment Inc. and MGM MIRAGE aren't waiting to see the final deregulation bill before signing deals with U.K. partners to build both major casinos as well as smaller, suburban gambling halls. The companies have instead made those deals contingent upon the legalization of favorable gambling rules.

Also Thursday, Harrah's confirmed it has signed a deal with Scotland's economic development agency to develop more than 100,000 square feet of casino space at the site of a former oil terminal near Glasgow, Scotland.

The casino complex would incorporate bars, restaurants and accommodations at a former Esso oil terminal now owned by ExxonMobil. Scottish Enterprise Dumbartonshire, which includes the region near Glasgow, will compete with other developers to buy the site from ExxonMobil.

Harrah's Entertainment spokesman Gary Thompson declined to further discuss the company's plans, which were first reported in a U.K. real estate publication. "We haven't made an announcement yet," he said.

The terminal has been closed for years and is being eyed by the government as a site for a potential resort that could bring jobs to the region.

The agreement marks the latest of several deals to emerge since the British government announced plans to liberalize its gambling industry. Plans call for the development of additional casinos beyond designated zones as well as Las Vegas-style casino floors with jackpot slot machines. Other Las Vegas interests, including Mandalay Resort Group as well as casino resort developers Steve Wynn and Sheldon Adelson, also have expressed interest in Britain.

Harrah's in June announced a separate agreement with bingo operator Gala Group Ltd. to invest as much as $1 billion to build from eight to 10 regional casinos across Britain ranging from 30,000 square feet to 50,000 square feet.

Last month, MGM MIRAGE signed an agreement with a special events company to develop a casino in part of an exhibition hall in London. The deal would give the company an 82.5 percent stake in the project and involves an initial investment of about $254 million.

The company has also acquired a 25 percent stake in a British casino operator that is building a casino in Bristol and has plans for others in the area.

Harrah's and MGM MIRAGE say they want to strike up relationships with key U.K. partners that will enable their companies to move quickly should liberalized gambling laws emerge. Both companies also are exploring the development of several major destination resorts in the country.

Before the bill makes it to the U.K.'s legislature, it must first go to a committee that will mark it up with changes and then receive the go-ahead from the country's gambling oversight agency -- a process that may take several months, George said. Parliament may not sign off on the bill until mid-2005 or later, he said.

Besides not knowing how much the new casinos would ultimately be taxed, operators are in the dark about how local planners would work with regional development authorities and national regulators to approve casinos, he said.

Also undecided is how many casinos will ultimately get built and where, he added.

"There will be more casinos. At the same time the government has said 'no' to a proliferation of casinos and a proliferation of (slot) machines," he said. "That's one of those things that's going to (spark) a lot of debate and discussion."

Park Place has been monitoring the deregulation process for at least two years and is actively sniffing out potential casino sites, though it has held off from official announcements, George said.

The company last year eyed the London exhibition hall site that MGM MIRAGE recently identified and is reported to have examined the Millennium Dome, a vacant exposition center in London, for a potential casino.

Appointed by Park Place in 2001, George was formerly chief executive of U.K.-based Hilton Group PLC, which runs Hilton hotels outside the United States as well as the Ladbroke chain of betting shops and regulated gambling websites.