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Best of Liz Benston

Gaming Guru

Liz Benston

U.K. Experts Wary of Casino Boom Prediction

5 October 2004

nly a fraction of the 40 or so casino projects proposed so far by U.S. operators and others in the United Kingdom will likely get built if the gambling laws are rewritten as planned to allow more casinos, a group of British experts told casino managers at the Global Gaming Expo in Las Vegas.

That's because experts estimate that the country can only accommodate up to 25 or 30 "regional" casinos -- the largest envisioned by the British government and the closest to approximate destination casino resorts in the United States.

"There are a number of deals that are never going to happen, quite frankly," said Julian Harris, a U.K.-based attorney specializing in international gaming law.

Many projects were announced when talk of unlimited gambling and unlimited jackpots was at its peak, he said. But last month the British government took a more conservative stand on gambling expansion by passing on some recommendations made by Parliament.

Over the past several months many deals -- some involving U.S. companies including MGM Mirage and Venetian resort owner Las Vegas Sands Inc. -- have been announced in Britain even as several factors such as the role of local governments and casino tax rates remain undecided.

"It seems that every football club, every exhibition center in London, every large bingo hall will have a casino," said Ian Gosling, vice president and chief executive of Hyatt Regency Casinos in Greece. "There will be some new casinos. But I think a lot of it is newspaper talk."

American casino companies haven't been overly successful operating casinos abroad in recent years, in part because their brand names and popular themes don't translate into other cultures, panelists said. It may also take more time than expected for American companies to acclimate to the British regulatory system and structure, they said.

More than 30 proposals emerged from various casino operators to take over a state-run casino in Greece in 2002 but American operators dropped out of the running in part because of the regulatory hoops involved in the process, Gosling said.

Besides the tax rate, concerns about problem gambling may ultimately limit the size and scope of the casinos that are built, said Iain Wilkie, a partner with Ernst & Young specializing in European hospitality, leisure and gaming sectors.

"If you bring in more slot machines you're going to have more problem gambling," Wilkie said. "There's a proven link there."

The British "like their slot machines" and have shown a propensity to play low-prize slots, he said.

Anton Kaszubowski, a U.K. casino consultant, said there appears to be "significant opposition" to relaxing casino laws but a large percentage of the British population also remains undecided.

While they may not be big gamblers, U.K. residents have indicated in polls that they would go to major casinos for other forms of entertainment and would gamble while they participate in other activities, Kaszubowski said.

The public isn't necessarily demanding American-style casinos, he said.

Gosling said it's likely that British casino-goers will be "price-sensitive" and will look for deals rather than spend money across all of the profit centers of the typical casino resort.

Casinos may therefore try to lure customers with low-denomination slot machines, he said.

Gosling called penny slot machines "the most deadly weapon inside a casino" and said casino operators "have to protect this local customer" from becoming addicted.

Australia is an example of a country in which large numbers of people play penny slots and where a greater number of people have become hooked on the machines as a result, he said.