Craig Hoy examines what the government’s plans will mean for the gambling industry

International casino operators are poised to place their bets on the UK market once the current draft gaming legislation reaches the statute book.

But the future may not be quite as glitzy as some predict for operators who see the UK as a relatively untapped market. With an estimated 400,000 gambling addicts, ministers are acutely aware that a marked rise in problem gambling could follow a wholesale reform of gaming laws. That has already led to the deregulation being watered down amid fears of families going hungry as mothers or fathers blows their household budgets chasing losses on big payout machines.

At the centre of the debate is the issue of balance, choice and just how “nannying” should the state be in areas such as gaming. When the government in Australia implemented a wholesale deregulation of gaming machines, allowing big jackpot games in pubs and clubs, there was an explosion in the number of addicts. The government is mindful of the Australian experience but is also keen to secure the jobs and regeneration associated with modern gaming.

Whatever happens, however, the general outlook for the industry is positive - even if excess is curtailed. Big operators MGM Mirage and Kerzner International are eyeing the market with glee, although church groups and those representing addicts say people must be put before profits.

The draft legislation delivered a minor blow to the industry. The government announced that “controls limiting high-stake, high-prize slot machines to only the largest regional casinos will not be relaxed”. That means that there are likely to be fewer than 100,000 Category A machines, which will offer jackpots of £1 million, across the UK as a whole.

The culture secretary, Tessa Jowell, is unlikely to yield to demands to increase the number of super-casinos nor allow smaller regional casinos to offer £1 million payouts. “We have relatively low rates of problem gambling in the UK and reform needs to be taken in steady steps, not giant leaps, if we are to keep it this way,” she said recently when unveiling the new laws.
It appears inevitable that by making casinos more visible and more accessible, and through the withdrawal of antiquated safeguards such as the 24 hour sign-up rule, more gamblers will mean more problem gamblers.

But it is the nature of the new casinos that unnerves some. The Methodist Church says ministers have to be aware that machine gambling is known to be one of the most likely triggers of wider gambling problems. “The Category A machines allow you to chase your losses, which is what makes them so dangerous,” Rachel Lampard, the secretary of parliamentary and public affairs at the Methodists has warned.

The industry is at pains to play the adult card. By behaving responsibly, and with the government recognising that punters have free will, it hopes for significant growth in UK gaming.

But there are competition issues to be addressed. With a larger number of casinos competing for punters, the UK industry may find its margins come under pressure. Leisure will prove to be a competitive market, with the UK casinos having to compete on a regional, national and international basis. Restricting Category A machines to a handful of casinos will distort the market, add some analysts who note that the losers here may not just be the punters. Firms who fail to secure the lucrative super-casino status could lose business.

The location of casinos could also “destroy the existing UK gaming industry”, some have warned. Locating the super-sized casinos in city centres could drive local casinos out of business, some in the industry note. The big boys will be in town and so will be the punters seeking the £1 million pay-outs.

And some of the biggest names in the market are preparing for an early swoop on the big prizes. Kerzner International, which masterminded South Africa’s Sun City resort, is leading the way with plans for a Las Vegas-style casino in a site next to the defunct millennium dome. Kerzner is also eyeing up sites in Manchester and Glasgow. Meanwhile, American firms are looking keenly at development near Wembley stadium and London’s Olympia conference centre. Newcastle and Sheffield are also being seriously looked at possible locations.

The industry, which is poised for good times to roll, needs good public relations if it is to win the argument outright. Ministers are happy to see an expansion in a casino culture which could bring 50,000 jobs and thousands of tourists to the UK. Trade unions have struck a positive note, but warn the industry will undermine its position if it pays poverty wages in a lucrative sector. There is also a huge inner-city regeneration tale to tell and big firms are promising big things in exchange for the liberalisation.

However the government has been repeatedly stressing the need to protect the vulnerable from the problem of addiction. To convince their many sceptics, the casinos will need to prove that deregulation will not lead to the explosion in addiction some have predicted.

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