Only a handful of the 16 small casinos given the government go-ahead on Tuesday are ever likely to see the light of day, because of serious doubts harboured by operators about their likely returns.
Andy Burnham, the culture secretary, finally killed off the supercasino planned for Manchester but gave the go-ahead to 16 second and third-tier casinos in locations such as Leeds, Milton Keynes and Newham in east London.
He told MPs there were concerns about the “negative impact” of a Las Vegas-style resort in Manchester, but said the eight large and eight smaller casinos did not “pose the same level of risk”. They would have to provide “non-gambling areas” and observe new restrictions, including a requirement to close for six hours a day.
The government hopes the restrictions will counter the notion it is bringing in 24-hour gambling. The new regime, including measures already announced such as banning free drinks and the use of credit cards, created the “toughest regulatory controls for gambling in the world”, said Mr Burnham.
Operators began to feel the force of the restrictions last March when Mr Brown slapped a 50 per cent casino tax on big high-roller clubs. Gala is reviewing the future of three of its casinos, while Genting, the Malaysian gaming operator that bought Stanley Leisure, and Harrah’s, the US operator that bought London Clubs International, have made large losses on their investments. Ladbrokes said last month it was no longer interested in acquiring any of the 16 casino licences.
“The gambling industry is suffering from a high level of taxation,” said Brigid Simmonds of the Business in Sport and Leisure consultancy. “With the consumer drop-off and the smoking ban as well, you have to wonder what the appetite is for building new casinos under the current tax regime.”
Casino operators still have to prove to local councils there is demand for new venues. Given consumer softness in the market, “the demand test is harder to get over now than it was a year ago”, said an industry insider.
Newham and Leeds are seen as the pick of the 16 new casino licences, while the operator of the Milton Keynes licence will enjoy a monopoly. But many of the 16 are in or near existing casinos, and would-be operators would think twice about taking on a rival in a flat market.
A report on Tuesday from the Department for Communities and Local Government said the benefits from casino-led regeneration was not much different from “alternative, but equally effective, projects”, such as retail, commercial and housing development. These projects did not carry with them “the specific social costs associated with problem gambling”, the report said.
Manchester city council, which estimates that the super casino would have created 3,500 jobs in the deprived east of the city, said it would examine the announcement in detail before deciding whether to seek a judicial review over the decision not to proceed with the supercasino.
The government sought to soften the blow for Manchester by announcing regeneration measures, including GBP 10m funding from English Partnerships, the national regeneration agency, for sports venues in the city.
The culture secretary added he was disappointed at the level of contributions made by licensed operators to the Responsibility in Gambling Trust, which helps problem gamblers, and said he would introduce a statutory levy unless those contributions increased substantially by the end of the year.