Anti-smoking laws the odds against us, and taxes stacking say casino operators

With the smoking ban, higher taxes and Government U-turns, the odds look to be stacked against casino operators like Liverpool’s Genting Stanley.

But its top man, Peter Brooks, says he is determined the business will defy those odds and hold on to its position as the UK’s leading casino operator.

It’s a tough time to be in the casino business, an industry which is not always the most popular in the press or with some of the nation’s self-appointed moral guardians.

Genting Stanley, formerly known as Stanley Leisure, is now being buffeted by the effects of the smoking ban, increased gaming duties and the Government’s change of heart over plans for more casinos – not to mention the effects of the current economic downturn on consumer confidence.

Mr Brooks joined the company in January last year. His job title is executive deputy chairman of Genting Stanley, but he is in effect the Genting group’s most senior UK executive.

Mr Brooks may joke that he “takes his life in his hands” when he takes on vocal critics of casinos, but he knows the industry has to fight hard to overcome the negative images people have of it.

That has, he says, not been helped by the length of the Government’s review of its plans to allow new casinos and the concerted campaign against those plans in some parts of the media.

Mr Brooks says the first criticism he always faces is that casinos are linked to rising crime – fears he is quick to dismiss.

He said: “When people apply for a gaming licence for a casino, the usual public bodies have a right to object.

“As far as I’m aware, there’s never been a police objection to a casino licence.

“The reason for that is the regulatory regime – casinos are very tightly regulated and tightly run. Disorder is very rare.”

The other criticism casinos face is that they contribute to problem gambling. Again, Mr Brooks says criticism of casinos in particular is misplaced.

Mr Brooks says Genting Stanley works with charity Gamecare to ensure it operates responsibly, and says all staff are trained to notice any “problem” customers. But, he says, casinos are again being unfairly targeted.

“Every problem gambler is one too many,” he said.

“Yes, some people who use casinos have a problem with gambling. But some people who go to pubs have a problem with alcohol.

“In a recent survey, something like 68% of the adult population gamble. Of that population, somewhere between 0.5% and 0.6% have a problem. Of that problem gambling, the percentage that is attributed to casino table games is about 5%.

“Casinos make a very small contribution to problem gambling. And yet the spotlight is on casinos.

“There is a perception that casinos are unsavoury and unsafe places. But people who actually go to casinos are surprised by what decent places they are.”

Genting Stanley now runs 46 casinos in the UK, more than any other operator. Its casino revenues in the UK in 2007 stood at GBP 230m with net profit of some GBP 22m.

Its contemporary “mass market” brand is called Circus while its more traditional casinos have been grouped together under the name Mint and its upmarket casinos are called Maxims.

Circus opened a new casino in Liverpool’s Queen Square last year.

In London, Genting Stanley has five casinos, one of which has been rebranded as Mint while the others have retained their historic brands.

The company has three casinos in glitzy Mayfair, including Crockfords, the world’s oldest private gaming club.

Stanley, like other leading players in the gaming industry, is now able to advertise its casinos. That, said Mr Brooks, meant the company had to introduce more consistent branding across its estate to take advantage of those new promotional opportunities.

Two years ago, Genting Stanley announced plans for a GBP 135m investment in its estate. Mr Brooks says that figure has now come down although the company is still pumping money into its estate.

After law changes in 2005, the Government announced plans to allow more casinos to open in the UK.

The Government had planned to allow one so-called “supercasino” to be built, with Manchester being chosen as the preferred location.

This February, however, the whole “supercasino” plan was scrapped by the Government.

It was confirmed that, subject to Parliamentary approval, 16 other casinos would still be built in towns including Hull, Swansea and Southampton. The gaming industry was left stunned by the apparent U-turn.

Mr Brooks said: “It’s no secret that there’s been a lot of critical comment on the Government’s role in this process.

“We have had a great deal of confusion, uncertainty and delays.”

The casino plans had been seen as a way to regenerate the communities in which they stood but those hopes, Mr Brooks said, proved to be a “mirage”.

Until Parliamentary approval is given for the eight “large” and eight “small” casinos still planned by the Government, Mr Brooks says there are no formal opportunities available to his company. But he says Genting Stanley is watching closely so it can take advantage of any opportunities when they do become available.

“We are the number one operator,” he said. “We will certainly want to expand or maintain that position.

“We will look to participate whenever it makes sense for us.”

Mr Brooks says an “illogicality” in the legislation means those planned small casinos may, in fact, prove too expensive to operate.

He said: “In the case of a large casino you’re allowed to have up to 150 slot machines. But to have that 150 you have to have at least 30 tables. The ratio of tables to slots is 1:5. In the case of small casinos, you’re allowed up to 80 slot machines but you have to have 40 tables. That’s a ratio of 1:2.

‘IT’S much more expensive to provide table games than to operate slot machines because of a combination of space, fit-out costs, and labour costs.

“When you ally that to the various down-turn aspects of the economy and the enormous raise in gaming duty in March, 2007, then the economies of the small casino are much more uncertain.”

In the Budget that year, the lowest 2.5% rate of gaming duty was abolished with a new minimum set at 15%.

Accountancy giant Deloitte said those new bandings were expected to help revenues from gaming duty rise by more than 20%.

Mr Brooks would not disclose how much the gaming duty increase had increased costs at Genting Stanley, only saying it was “substantial”.

He said: “It was a huge hit for us. I’d been in post for eight weeks but was completely derailed for another six to eight weeks working on how to deal with this extra bill.

“It was a huge shock but we have to be grown up. Nobody is saying that at this point, when casinos are not everyone’s favourite child, that it’s going to be rolled back.

“There’s a general feeling out there that casinos are a licence to print money. They might have been in the distant past but they’re not today. It’s a very tough industry.”

The smoking ban has also had an effect on all casino operators, as customers are forced to inter- rupt their gaming for a smoke.

Mr Brooks said international research showed that takings should return to pre-ban levels within three years of the law being introduced, although he said he expected it would take longer in the UK.

“We’re seeing in Scotland now some signs of that coming back.”

“There’s no escaping the fact that it means people going outside.”