Britain could end up with too many casinos

City analysts fear the rush to build a new network of casinos across the UK could initially lead to oversupply.

In the past few days Britain’s operators have made applications to build more than 90 new casinos to add to the 140 already operating.

They are taking advantage of legislation which paves the way for 17 new casinos plus one Las Vegas-style supercasino. However, operators have also hurriedly put in dozens of applications under the old 1968 act which remained in force until the end of April.

The Gambling Commission is currently examining 62 applications, while 31 have been given the go-ahead and passed on to local magistrates‘ courts for the final hurdle.

One casino executive said: „There has been a bit of madness recently. The question is how many of those 93 will eventually get through.“

Liverpool based Stanley Leisure, Britain’s biggest operator with 44 outlets, is sure to be heavily involved in the process and is keen to be the company chosen to build the first super-casino.

The Commission has not refused a single application in the last five years but it has warned that might change. Previous applications have been from established and well-known operators while many of the new applications are from less well-known companies.

Analysts said operators expecting the wave of new outlets to encourage a big increase in the popularity of casinos may be in for an initial disappointment.

Charles Wilson at Bridgewell Securities said: „There is a danger of oversupply if a lot of these number come through, but eventually demand will catch up. Probably there will be a mismatch in some places.

„Increasing advertising will be the key but it will still take people time to realise they can plan a night around a casino.“

Paul Leyland at Arbuthnot Securities agreed, saying demand was likely to take some time to grow.

He said: „The new wave of occasional customers to these venues is interesting, but the real cash comes from hard gamblers and there’s a limited number of them.“

However, he also warned that some of the new casinos approved under the old act might find themselves close to each other.

„That mean they will be competing viciously,“ he said. A new fund has been launched by Scottish Widows Investment Partnership (SWIP) allowing investors to put funds into UK-listed property companies.

The fund, which will be benchmarked against the FTSE/EPRA and NAREIT UK index, will take advantage of the introduction of Real Estate Investment Trusts (REITs) in January next year.

The SWIP UK Real Estate Fund will be managed by Nigel Bolton, head of European equities and manager of the SWIP European Real Estate Fund.

It has been designed to complement its direct property fund, the SWIP Property Trust. The latter provides 100% exposure to the UK direct commercial property market and produced returns of 17.8% over 2005.

Mr Bolton said: „Property shares have outperformed the wider UK equities market over the past few years and the much anticipated introduction of REITs in January will have a significant impact on the property investment market in the UK. We could potentially see London becoming the REIT capital of Europe.“