Saturday, August 09, 2003
Copyright © Las Vegas Review-Journal

Drive in U.K. seen to aid LV

Gaming concerns poised to act on more liberal rules

Las Vegas casino operators likely will be big winners in the United Kingdom's push to liberalize gaming regulations.

New proposals issued Friday should favor Las Vegas operators by encouraging larger casinos and allowing them unlimited slot machines, analysts said.

"Very large, resourceful casino operators in the U.S. are looking to capitalize on the market in the U.K. when it opens up. Whether that's in '05 remains to be seen, but we are encouraged by the development," said Joe Greff, gaming analyst at Fulcrum Global Partners, an independent Wall Street investment research firm.

Several Nevada gaming companies are forming ventures or buying licenses in the United Kingdom in anticipation of looser regulations.

Harrah's Entertainment and the London-based Gala Group in June entered into an agreement to jointly develop casinos across Britain.

Harrah's spokesman David Strow said the British government's "enlightened attitude toward liberalizing gaming laws is a key reason we entered into an agreement with the Gala Group to develop casinos in the United Kingdom. We look forward to parliamentary action on the government's proposals."

MGM Mirage previously announced a deal to buy a 25 percent share of Metro Casinos Ltd., a small British casino developer. MGM Mirage officials could not be reached for comment Friday.

"Clearly any of the changes being discussed are going to have positive effects for U.S. and Las Vegas gaming companies," said Deutsche Bank analyst Marc Falcone.

Casino entrepreneur Solomon Kerzner, who built the Paradise Island resort in the Bahamas and the Mohegan Sun, reportedly has bought a license to open a casino in Northampton and plans to develop casinos in the United Kingdom.

Sheldon Adelson, owner of The Venetian, has confirmed having conversations with British operators about developing casinos in the United Kingdom.

Park Place Entertainment Corp. and Las Vegas developer Steve Wynn also have been reported to be pursuing possible joint ventures for developments there, Falcone said.

Slot machine manufacturers, especially Reno-based International Game Technology and Las Vegas-based Alliance Gaming Corp., also stand to be big winners, Falcone said.

The British government said it will draft a gambling bill later this year, and it is expected to be passed next year with the first casinos operating under the new regulations opening in 2005.

Under proposed reforms, no small- or medium-size casinos would be permitted. Instead, all new casinos will be at least 5,000 square feet and feature at least 40 gaming tables -- as big as the largest of the casinos currently open. Strict limits on the number of slot machines and the prizes offered will be eliminated.

However, networking of slot machines between casinos to offer even larger prizes will be banned.

Other reforms include 24-hour operations and the scrapping of the 24-hour "cooling off " period between joining a casino and being allowed to gamble.

Gaming expert and University of Nevada, Las Vegas professor Bill Thompson said the British government's proposals reflect a new philosophy toward gambling.

"Part of that philosophy is to use gambling to attract tourism and economic development. It's the Las Vegas philosophy and Las Vegas is the model for gambling development all over the world," he said.

The British government is focusing on attracting gambling interests and tourists to areas such as Blackpool in the north of England.

"Blackpool is almost the Atlantic City of the 1970s -- decaying, decrepid. They want to use casinos to attract developers and tourists to reinvigorate areas like that," Thompson said.

British press reported Friday that the reforms are expected to turn Blackpool into the gambling capital of Europe with construction of Las Vegas-style casino complexes, complete with floor shows.

The British government closed gambling halls in the 1840s because of their corrupting influences but passed a charity law in 1960 to allow a lot of small, elegant operations.

"A lot of the casino operators who were thrown out of Cuba flocked to England and jumped on the charity law," Thompson said. England enacted very strict regulations in 1968 to clamp down on Cuban exiles, he said.

Government leaders 18 months ago started discussing liberalizing gaming laws as a tool for economic development.

"At some time, the U.K. will embrace gaming as it is in the U.S. and that is very encouraging," analyst Greff said.