Inside Asian Gaming

March 2008 | INSIDE ASIAN GAMING 43 Briefs Death Knell for UK Supercasino Last month, the UK government gave the go-ahead for the development of sixteen small- and medium-sized casinos across the country, but according to the Financial Times , only a few of these are expected to actually be built, with operators concerned that many of the sites would generate poor returns. Culture Secretary Andy Burnham finally officially scrapped the supercasino planned for Manchester, while giving the go-ahead to 16 second and third-tier casinos in locations such as Leeds, Milton Keynes and Newham in east London. Mr Burnham told MPs there were concerns about the “negative impact” of a Las Vegas-style resort in Manchester, but said the eight large and eight smaller casinos did not “pose the same level of risk”. They would have to provide “non-gambling areas” and observe new restrictions, including a requirement to close for six hours a day. The government hopes the restrictions will counter the notion it is bringing in 24-hour gambling.The new regime,includingmeasures already announced such as banning free drinks and the use of credit cards, created the “toughest regulatory controls for gambling in the world”, said Mr Burnham. A fall-off in demand and the smoking ban have compounded the blow dealt by the introduction of a 50% tax on revenue at large high- roller clubs last March.The operators are reeling,and not only do they view most of the 16 new casinos as uneconomic, but also fear the impact the capacity increase will have on their existing venues. In January,Ladbrokes said it was no longer interested in acquiring any of the 16 casino licences Gala Coral is reviewing the future of three of its casinos and contemplating closures. Both Genting, which owns Stanley Leisure and is building a stake in the Rank Group, and Harrah’s, which bought London Clubs International two years ago in order to gain a foothold in what then looked like a market with great potential, have made large losses on their investments. Las Vegas Sands Corp had previously jockeyed for position to bid for a UK license by wooing national and local politicians, but now wants no part of a market of “lousy little casinos,” according to the company’s chief operating officer, William Weidner. MGM MIRAGE had long since turned its attention from the UK to Asian and other markets, after concluding promised casino potential in the UK would never materialise. Newham and Leeds are seen as the pick of the 16 new casino licences, while the operator of the Milton Keynes licence will enjoy a monopoly. But many of the 16 are in or near existing casinos, and would-be operators would think twice about taking on a rival in a flat market. Finally, rather than offering relief, the government appears more likely to add to the burden of ailing UK casinos. During his announcement of the approval of the 16 new casinos, the culture secretary added that hewas disappointed at the level of contributions made by operators to the Responsibility in Gambling Trust, which helps problem gamblers, and said he would introduce a statutory levy unless those contributions increased substantially by the end of the year. Storm Set to Move Out of Russia According to a Bloomberg report, Storm International, Russia’s largest casino company, will open gambling venues in Costa Rica and Armenia this year and may abandon its home market because of restrictions, according to Storm CEO Michael Boettcher. Russian President Vladimir Putin is forcing casinos out of Moscow and St. Petersburg to reduce gambling, exiling them to four regions outside the two biggest cities.This is bound to halt an unbroken ten- year run of growth in Russia’s casino revenue, which has swelled to as much as US$7 billion. “If the law doesn’t change, we’ll leave Russia,” said Mr Boettcher, a 60-year-old Briton who said he founded Moscow-based Storm 16 years ago with two blackjack tables and a roulette wheel.“Most staff, certainly the management, will come with us,”he added. Gambling mushroomed after the Soviet Union collapsed in 1991, with casinos appearing in Russian cities and slot machines installed in Moscow’s underground rail network. In 2006, President Putin, who declared that dependency on gaming was akin to alcohol or nicotine addiction, put forward a new law—which takes effect from July 2009—to restrict casinos in the country to four regions: the Pacific coast, the Baltic enclave of Kaliningrad, Siberia’s Altai region and around the Azov Sea in the south. The areas are too far from Moscow to draw gamblers, according to Mr Boettcher. Storm plans to open a renovated casino in the Armenian capital of Yerevan by May and will invest US$300 million developing a hotel, concert and exhibition halls, a shopping centre and restaurants. In Costa Rica, the company is refurbishing a hotel and building a casino, both scheduled to open by July. Storm’s revenue has risen by as much as 25% annually in the past seven years and climbed 40% in 2007, Boettcher said, without giving figures. The company has five Moscow casinos including Jazz Town, which has its own music club, 30 gaming tables and a leather- furnished VIP room. In view of the coming restrictions, Storm will turn its Moscow properties into stores, offices or hotels and is diversifying into business jets and yacht-chartering for millionaires in the Russian capital. Storm is also building a resort in Sochi, the host city of the 2014 Winter Olympics. Get away from it all in Siberia’s Altai region