Las Vegas on the Clyde

As the five-man Casino Advisory Panel took to the stage at Glasgow’s Hilton Hotel last Monday morning, Kirk elder Ken Rolwegan was preparing to make his protest. The panel, led by Professor Stephen Crow, was in the city to hear business and civic leaders argue why Glasgow should house Britain’s first Las Vegas-style supercasino.

But Rolwegan had other ideas. „The employment benefits are minimal,“ he thundered. „The staff get smart uniforms, but bad wages. It will cause more social problems because the staff are working unsocial hours. Where will profits go? To line the pockets of people outside our country.“

He may have a point. In the last six months, no fewer than nine casino operators have been targeted for takeover. Foreign bidders are lining up to take out British companies, including Stanley Leisure, which operates Britain’s largest gaming palace and already owns outlets across Scotland, and London Clubs International, signalling a growing interest from overseas in the liberalisation of Britain’s casinos.

And this takeover activity may be an indication of things to come. Should Glasgow win the supercasino prize – coveted by the city council and others – there are doubts over who would ultimately benefit. The winning operator is more than likely to be a foreign company and the tax take will go to the Treasury in London rather than remaining in the region.

Nevertheless, a huge campaign in favour of a supercasino is in full flight with several other cities – Blackpool, Cardiff, London, Manchester, Newcastle and Sheffield – all vying for the licence.

There are four possible sites lined up for a casino if the Scots city wins the bid: Glasgow Harbour, the SECC, Ibrox stadium, or next to the St Enoch Centre shopping mall.

Backers of the bid argue the supercasino would create more than 3,000 jobs, attract more than 650,000 visitors a year and bring GBP 215m to the city. Moreover, they say it would regenerate some of the poorest urban areas in Europe.

Those against argue that more people will be sucked into financial difficulties with the creation of a new giant regional gambling venue. Gambling advice charity GamCare says the total number of people approaching it for counselling rose 41.3% from 2004 to 6,563 in 2005. A growing proportion of those seeking help are women.

The battle for the project also comes against the backdrop of deregulation of the gaming industry in the UK, which has prompted the current wave of takeover bids for British companies.

Last week Harrah’s Entertainment, the world’s biggest gaming company and owner of Caesars Palace, dipped its toe into the newly deregulated UK market, agreeing to buy LCI for GBP 279.3m.

Analysts say the move by the Las Vegas-based operator could herald a „land grab“ by US gaming groups attracted by the UK government having given the go-ahead for bigger casinos. As one analyst said: „The Americans came in and took our hotels, they took Marriott from Whitbread and the Hilton hotels from the Hilton group, and now they are going to take our casinos – the deregulation is no coincidence.“

The UK‘s gambling market is currently busy reinventing itself as a clean, legal entertainment industry. Some 3% of the country’s population visit casinos, fuelling a sector that last year turned over GBP 4.3bn. Industry analysts say that in the next four years that percentage is likely to grow to 6%, also doubling turnover.

And as well as deregulation, moves such as the proposed legalisation of television advertisements for casinos and betting shops from next year have attracted interest from abroad.

„The attraction of the British market is deregulation,“ says one analyst. „It’s a major market that has not yet been exploited to its full potential. In the US, 9% of the population visit casinos. We still lag way behind that, partly because people still regard casinos as semi-legal, dirty and seedy. In the US it is much more of an entertainment-based product. But we are slowly feeling our way along the path that will lead to that [viewpoint].“

But it is not just the Americans who are moving in to the UK. Last week a little-known Malaysian outfit called Genting played its trump card, tabling a bid worth between 850p and 880p a share for Stanley Leisure, which is currently building a 30,000sq ft casino in Edinburgh’s Fountain Park. This offer would value the British company at just over GBP 600m.

In the past few months, Genting, which prefers to stay out of the headlines, has built up stakes in two of Britain’s largest operators. It owns 29.9% of LCI, which has a string of casinos in the capital and plans to open a new outlet in Manchester next month, and nearly 20% of Stanley Leisure.

Genting made its money by operating the Las Vegas of Malaysia, the giant gaming resort known as Genting Highlands, Malaysia’s only legitimate land-based casino. Founded in 1965 by Tan Sri Lim Goh Tong, the firm is now run by his son Tan Sri Lim Kok Thay. Last year the resort attracted more than 18 million visitors.

Genting also has interests in paper, cruise ships and palm plantations as well as casinos in the Bahamas and the Philippines.

On the other side of the gaming floor stands Gary Loveman, chairman and chief executive of US-based Harrah’s. Loveman has grown Harrah’s into one of the largest players in the US casino industry, owning more than four million square feet of casino space under such names as Bally’s, Caesars, Harrah’s, Harveys, Horseshoe, Showboat and Rio. Its operations include both casino hotels and riverboat casinos.

People close to Loveman, a former Harvard professor, say he has a formidable analytical mind that he applies to the gaming industry. He made his name in data mining, a practice which helps companies learn more about their customers and spending habits. It is an approach that has driven profits at Harrah’s, filling its casinos and hotels.

His break came when he masterminded the £4.9bn bid for Caesars Entertainment, which brought together the group’s upmarket brands with the mass-market properties of Harrah’s. Now he has his sights on the UK with his offer for LCI.

LCI fits well with Loveman’s business vision, catering for a full range of gamblers, from high-rollers seeking privacy and unlimited credit to tourists looking to have a quick flutter on the slot machines.

Genting has yet to play its card. City sources say it has a number of choices: it could block Loveman’s bid for LCI, buy Stanley Leisure and use it to buy LCI; agree to Loveman’s offer and use the proceeds to buy Stanley, or launch an aggressive counter-offer for LCI.

One commentator said: „It’s shaping up to be the sharpest game of poker in the city.“ And it is not hard to see why: the prize is bigger than any club in London because of the supercasino licence process.

However, analysts have said more supercasino licences could be made available from 2008 when the regime comes up for review. In May, Harrah’s said that, if the government announced new licences, it might build at Bowling in West Dunbartonshire, perched on the Firth of Clyde between Glasgow and Loch Lomond.

At the time, Andrew Tottenham, Harrah’s managing director of European development, said: „If the government’s casino advisory panel recommended more casino licences, even as few as four, then the Bowling destination resort stands a very good chance of getting one.

„The site is fantastic and one of the best in Scotland. The plan envisages around 400 four star-plus hotel rooms, with spas, swimming pools, restaurants, bars and entertainment areas.“

Meanwhile, sources close to the Glasgow supercasino bid said that last Monday’s meeting went very well. They are not cracking open the champagne just yet, but they remain quietly confident.

„Glasgow has a really strong case for regeneration,“ said one source.

„We have a number of very disadvantaged areas and we have worked very hard to find areas that would benefit the whole city.“

Its hand has also been helped by the scandal that has engulfed the Greenwich bid, which planned to use the Millennium Dome to house its casino.

Earlier this year it emerged that the Deputy Prime Minister, John Prescott, had stayed at the ranch of Philip Anschutz, the owner of Anschutz Entertainment Group, which bought the Dome in 2002.

But even if Glasgow wins the bid, the city council will then put the contract out for tender. The game of poker will continue.