Inside Asian Gaming

January 2009 | INSIDE ASIAN GAMING rate of 15 percent. That equates to an average additional annual tax bill of £200,000, with some casinos paying considerably more. There was also the introduction of a new 50 percent top rate on casinos with annual revenues of more than £10 million, which has not only impacted larger casinos but possibly has deterred operators from taking up new licenses. Analysts at Panmure Gordon said after the budget was passed: “The increased level of duty will probably cause some small marginal casinos to close. In addition, some planned new casinos are not likely to be built now.” The removal of Section 21 machines and the introduction of the smoking ban in July 2007 have seriously impacted both the casino and bingo sectors and have been disastrous for Rank, which operates in both. Gala Coral also operates casinos and bingo halls but has a large betting shop estate and has benefitted there from the proliferation of fixed odds betting terminals, which have been offering £500 jackpots since the Act came into force. Some casino operators believe they are losing machine players to the betting shops and they are lobbying for either FOBTs or the return of Section 21 machines. The BCA also wants Government to allow casinos licensed under the old 1968 Gaming Act to be transferable between local authorities. This, they argue, would allow operators flexibility without increasing the total number of licenses. Currently, if a casino is losing money the operator will close it down. The operator can apply for a new license elsewhere, but that is a slow process and uncertain. The association met with Government last July, and it was agreed that the situation would be reviewed in six months. The BCA also won a review of the machine rules. Government, in the meantime, is reviewing the impact of FOBTs in betting shops. Lawyer Richard Jukes, an advisor to the BCA, said that although the industry was “having a torrid time” he was hopeful that Government would listen to the industry and act appropriately.“We enjoy a good relationship with Government and are engaged in a close dialogue. However, the difficulties we face are very real and very marked, and we will continue to lobby for changes to taxation, which the industry cannot currently sustain.” There is also talk of consolidation and mergers. Harrah’s Entertainment, which paid around £300 million for London Clubs in 2006, is reported to have been in talks with Rank and Gala about selling LCI. However, neither Rank nor Gala would appear to be in a position to expand their operations through acquisitions at present. Rank announced that in the first six months of 2008 revenues fell to £275 million from £285 million in the same period the previous year, while operating profit fell from £47.9 million to £28.9 million. Gala Coral operates 28 casinos and 156 bingo halls and more than 1,600 betting shops. The company is not listed so is not required to publish results, but the private equity owners have admitted that they invested an extra £125 million into the business last April amid fears that it was on the verge of defaulting on its banking covenants. Another major operator is Genting, which operates 46 casinos under the Genting Stanley brand. Genting’s head of strategic investments and corporate affairs, Justin Leong Ming Loong, has said: “We take the view that things are going to get worse before they get better in the UK. In the UK you get periods Feature 41