Business Analysis: Opposition mounts to gaming industry free-for-all

After years of deliberation and in the midst of a sudden torrent of opposition from the media, politicians, religious and social care groups, the Government will finally unveil its plans for allowing Las Vegas-style casinos in Britain today.

After years of deliberation and in the midst of a sudden torrent of opposition from the media, politicians, religious and social care groups, the Government will finally unveil its plans for allowing Las Vegas-style casinos in Britain today.

Opposition to the Gambling Bill has been growing in recent weeks amid fears that hundreds of gambling outlets will be built across the UK, taking money from the vulnerable, poor and desperate, leading to widespread problem gambling. Critics of the Bill fear the Government is being dazzled by the prospect of multibillion-pound investment in Britain's run-down town centres and some contend that the developments could become the home of illegal immigrant labour and organised crime. Research by KPMG predicts that one in three adults will visit a casino once the law changes, and the gambling industry will swell to £2.5bn by 2009 from £690m in 2003.

Even one of the architects of the Gambling Bill, published today, has joined the chorus of opposition, urging the Government to rethink proposals to stop widespread building of large-scale gambling resorts. John Greenway MP, the chairman of the joint scrutiny committee, wants the Government to increase the minimum floor space dedicated to non-gambling activities to 4,000 square metres per site. He also says the Government's plans to restrict lucrative, high-prize slot machines to large-scale, regional casinos is misguided, as it has fuelled greater interest in these casinos than would otherwise be the case.

Stanley Leisure, for example, a UK gaming company, announced yesterday it has planned a mega-casino in the grounds of Leeds football club. Mr Greenway says if companies such as Stanley Leisure were allowed to put a small number of high-prize slot machines into their existing casinos,it would dampen down the craze for mega-casinos. "Most casino operators don't want to build places that hold 1,250 slot machines. They maybe just want a few in their estate. If that happened, we would have less of a push for these huge casinos, and more, smaller casinos," he said.

Kerzner International, run by the South African casino magnate Sol Kerzner, MGM Mirage, Las Vegas Sands, Isle of Capri, Sun International and Caesars Entertainment are just some of the exotic overseas operators wanting to mesmerise UK punters with slot machines.

The casino industry, however, has its own equally evangelical message about developing better leisure facilities for UK consumers, creating jobs and providing facilities to the community. It says fears that hundreds of Las Vegas-style casinos in every town are overblown and operators will be restricted by simple economics. Most predict only 20 to 30 such casinos could survive. Rob Haworth, of the property consultants Jones Lang La Salle, said: "To build casinos of the size the Government wants, and to provide the regenerational facilities that must be an integral part of the plans, requires significant investment of about £150m. Companies are not going to spend that kind of money all over the UK."

In order to build these casinos, they must offer significant other leisure facilities to regenerate the area. Some of the plans already announced include swimming pools, community football and Astroturf pitches, ice rinks, theatres, performance spaces, and conference facilities. Rodney Brody, of Las Vegas Sands Inc, said: "Local councils are coming to us, telling us what they need but can't afford. We can provide it for them as part of a complex."

The developments, according to the casino industry, are not casinos. No, they are entertainment complexes, of which sitting slot machines are only a part. Most of the operators plan to build centres where the gaming area accounts for only one-third of the entire development. MGM Mirage claims more than 50 per cent of its revenues comes from non-gambling activities. Lloyd Nathan of MGM Mirage said: "People can come to one of our entertainment venues ... and never go near a slot machine."

The industry also rejects accusations that more casinos will lead to more problem gambling. "There are already a multitude of ways to gamble in Britain," Mr Brody said. "There are betting shops on every street corner. You can even play the Lotto on your mobile phones. In every society, there is a tiny percentage of people who have a problem. But the idea that there are thousands more problem gamblers out there, sitting around at home waiting for large casinos to be built before they gamble, is not much in evidence."

He points to research done of the local population of Las Vegas. The 1.5 million permanent residents of Las Vegas have access to 10,000 more slot machines than anywhere else, but the prevalence of problem gambling is the same as most other areas - between 1 and 2 per cent of the population. "More slot machines do not necessarily mean more problem gambling," he said. The 1,250 slot machine cap has already been tightened up from original plans that suggested up to 2,000 machines could be installed in large-scale casinos.

Of the plans announced, overseas operators have pledged in excess of £2bn to develop inner-city areas. Each complex would create about 1,500 permanent jobs, with potentially another 2,000 jobs per development in construction. MGM Mirage is planning developments in Liverpool, Salford, Sheffield, London, Newcastle and Glasgow. If all its developments transpire as planned, it will invest more than £1bn in the UK and will create 30,000 jobs. "Most of the jobs we create are entry level jobs, ie, you don't have to have any previous experience. We will provide all of the training."

The ultimate responsibility for allowing Las Vegas-style casinos lies with regional planning authorities, another concern to critics of the Bill as there will be little in the way of national guidance. But regional and local authorities say they are best placed to know what their region needs. Tom Russell of East Manchester Regeneration Company, a not-for-profit organisation that works in partnership with the Government and Manchester City Council to develop the derelict area where the 2002 Commonwealth Games were held, said protecting the community played a large part when deciding to build a casino in the area. It has chosen Kerzner International, which is also planning a development at the Millennium Dome, to build a casino and leisure complex. "The casino is only 8 per cent of the total development. It will create 1,500 jobs in the local community, and I can't think of another type of development that will bring those sorts of benefits to us," Mr Russell said.

The Gambling Bill was the creation of not only a cross-party, but also cross-House committee, so the Government must have thought it was odds-on for an easy ride through Parliament. Unless the growing backlash can be quashed, the Government could have a tougher-than-expected fight on its hands to get the Bill through.