The Malaysian owner of Britain’s biggest casino operator says it has lost almost GBP 130 million as a result of a rise in gaming duty and the smoking ban in England.
Genting yesterday reported an 897.3 million ringgit (GBP 129 million) impairment loss against the value of the Stanley Casinos business it bought 14 months ago for GBP 639 million, or just over GBP 700 million, including debt.
The company said: “The impairment is largely attributable to the increase in gaming duty rates [from] April 2007.”
Echoing comments made by many of its rivals, Genting complained that the duty increase “took the UK gaming industry by surprise as it was made without any prior consultation and indication”.
It said that profits had also been adversely affected by the introduction of the smoking ban in England on July 1. Genting did not break down the reduction in profits resulting from the duty increase, although it is likely to have been higher than the £8 million decline predicted by Rank Group, the second-biggest operator.
Stanley, whose portfolio of 46 casinos includes Britain’s oldest, Crockfords in Mayfair, contributed revenue of 376.3 ringgit in the three months to September 30.
Many of its 41 casinos outside London trade under the Circus, Maxims and Mint brands.
When it took Stanley private last year, Genting said it saw the company as “a platform for expansion in the soon-to-be deregulated UK gaming industry”.
However, delays to plans to award 17 new casino licences under the Gambling Act have been delayed by the controversy surrounding the single supercasino envisaged under the new legislation.
Genting had also hoped to acquire London Clubs International (LCI), in which it held a 29.8 per cent stake. LCI opted to accept a USD 669 million (GBP 325 million) takeover by Harrah’s Entertainment, the Las Vegas gaming behemoth, just a few weeks after the Stanley deal.
Harrah’s, itself the subject of a recommended USD 27.8 billion takeover by Apollo Management and TPG Capital, the buyout firms, that is due to be completed next month, has yet to post a writedown on the value of its British casino business.