Civic groups and some investors are concerned by the rapid pace of casino construction.
It’s no secret that the casino market in the US is saturated. As more and more states expand casino licenses to raise tax revenue, more casinos are competing for a static market. Gone are the days when a single casino or gaming city could pull in visitors from far and wide, and casino profits are declining nationwide. Nowhere is this more evident than in the former East Coast gambling hotbed of Atlantic City, which is now crumbling amid competition from casinos in nearby Pennsylvania, New York and Delaware.
Recent casino development projects across the pond have led many to wonder if the British casino market is heading down the same road. Both land-based and online casinos in the UK enjoy a lot of popularity. So much so that casinos are sprouting up everywhere. Brits love to gamble, but this may be a bit too much.
Since British gambling laws were revised in 2005 to allow for the construction of large and super casinos the country has seen a number of high-profile new projects. There are now reported to be 140 brick-and-mortar casinos in operation, 45 of which are owned by the Genting company. Aspers currently owns Britain’s two largest casinos.
The 2006 law
In 2006 the Labour government passed a law creating three classes of casino: small, large and regional, or “super.” Large and regional casinos became legal for the first time. A super casino is defined as having a minimum 5,000 square meters of gaming space, and cannot host more than 1,250 gaming machines. A large casino has a minimum area of 1,000 square meters and can host a maximum of 150 gaming machines. A small casino cannot host more than 20 gaming machines.
The government agreed to issue only 19 additional licenses (including eight for small casinos), and only one for a super casino. This is relatively modest, as Las Vegas has 30 casinos which would be classified as super. The government originally stated the intention to issue 40 such licenses, but revised the number downward amidst pressure from the public.
Britain’s first “super” casino opened in Stratford in 2011, the Aspers Casino Westfield. It is estimated to serve 25,000 customers weekly, offering table games like blackjack, baccarat and British poker rooms as well as slot machines. Aspers later received a license for a second super casino, opening the smaller (but still gigantic) Milton Keynes (MK) last year. More than 12,500 people visited the MK in the first four days after opening. Aspers has also stated its intention to build a third at the Royal Pier in Southampton, which would make it owner of the UK’s three largest casinos.
The Southampton project
• Large and super casinos were first legalized in 2006 by the Labour government
• The UK currently has two super casinos and there is proposal to build a third
• Despite rapid growth, don’t expect the market to become saturated soon
Aspers executives have been excited about developing the Royal Pier in Southampton for some time. They see a super casino (which would be closer in size to the MK than the Aspers in Stratford) as part of an integrated resort project which could revive the economically depressed area. The casino as well as restaurant and bar facilities could compliment other leisure-related projects on the Royal Pier.
Local politicians generally look upon the project favorably, seeing it as an opportunity to boost employment and bring in tax revenue which could fund important public services. Proponents often point to the fact that the Aspers in Stratford employs 560 people and the MK casino 250.
Too much too fast?
Not only are the new casino projects unpopular with many church officials, civic organizations and concerned citizens, but some voices in the industry argue that expanding too quickly can put profitability at risk. This is certainly happening in the US, but is it happening in Britain, one of the world’s biggest gambling nations?
Aspers is associated primarily with large and super casinos, but they also received one of eight new small casino licenses in 2005. They opened such a venue at Wind Street in Swansea in 2007, hoping to attract 10,000 customers weekly. Five years on, things had been looking down for some time and Aspers announced its closure.
According to chief operating officer Richard Noble, “the company came to the conclusion that the business would continue to run at a loss and it was not viable in the long term.” While the Swansea case certainly doesn’t speak for the entire casino market it the UK, it was disappointing as it opened with such optimism.
Some view the proposal for a super casino in Southampton with caution, arguing that Britain already has enough casinos. Critics have pointed to the fact that original 2006 law only provided for one super casino, and now the country has a second and may add a third. In addition, online casinos in the UK are legal and enjoyed by millions of Britons. Some see them as competition for the fledgling casino industry.
British casino investors have nothing to worry about. While saturating the market is always a possibility, new large and super casinos have only been cropping up for about five years. There are only two in the entire country, compared to thirty in Las Vegas alone. And given how much Brits love to gamble, the saturation point is a long way off.
With regards to the gambling news created by the super casino in Southampton, given the lack of competition in the area and the Royal Pier’s potential as a tourism and leisure destination the project looks more likely to be a success than a failure. And the GBP 330 million price tag for the project is not particularly high compared to other large resort casino projects worldwide.