Inside Asian Gaming

INSIDE ASIAN GAMING | January 2009 40 T he 2005 Gambling Act came into force in September 2007 and therefore has been in place for over a year. Now would seem an appropriate time to review its impact on the UK gambling sector in general and the casino sector in particular. The Act came after several years of consultation with various interested parties and followed the publication early in the decade of a report headed by economist and banker Sir Alan Budd which contained 175 recommendations for reforming Britain’s 40-year- old gambling laws. Many of the recommendations were finally incorporated into the Act. The main change was the creation of the UK Gambling Commission to oversee the regulation of all gambling. The commission is paid for by the industry. The Act also allowed for the expansion of the casino industry by creating a “regional casino”, as it was officially known (or a “super casino”, as it came to be called), which would contain up to 1,250 unlimited-prize casino-style slot machines, and 16 new smaller casinos. However, the super casino, which finally was designated for Manchester, was voted down in the House of Lords in the spring of 2007 and dropped by the new Labour Government of Gordon Brown that summer. It was a disappointment for the city of Manchester. But it also raised questions about other provisions of the Act and Government policy. Specifically, because the super casino was considered an experiment, a brake was put on further new licenses so that its impact could be viewed in isolation. Some now argue that the absence of the super casino removes the need to inhibit growth in the sector. But such is the state of the UK casino market at present that even if the industry were allowed to expand it is doubtful that it would want to. In fact, since the Act came into force, nine casinos have closed, and there are doubts about the openings of some of the 16 smaller casinos. The closures and the absence of new openings are considered visible signs of an industry in serious decline. However, the current malaise in the sector is not just an unintended consequence of the Act but the result of a combination of factors, some of which have been exacerbated by the Act. For example, the downturn in consumer spending would have affected casinos irrespective of the regulatory framework in which they operate. But the granting of new licenses in places where casinos already exist can only have an adverse affect on those existing casinos. The British Casino Association, which represents around 75 percent of UK operators, including Rank’s Grosvenor Casinos, Genting Stanley and London Clubs International, says there are four main reasons for the industry’s problems: the licensing regime, tax increases in the last budget, the nationwide smoking ban and the removal of Section 21 machines from casinos. The BCA argues that new license holders will enjoy “inherent commercial advantages over current licences in terms of greater machine numbers, sports betting and, in the case of the eight ‘large’ casinos, bingo.”The BCA says it is in favor of growth in the sector, but it shouldn’t be achieved in a way “that prejudices the commercial viability of the existing casino estate.” Then there is the tax issue. In his March 2007 budget, then- Chancellor Gordon Brown abolished the 2.5 percent and 12.5 percent rates, assessed smaller casinos and replaced them with a flat bottom Changing Face of Reform Since coming into force in September 2007, UK’s Gambling Act has given...and taken away