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19/07/2004 No.29
he Good Gambler
The Editor or one of our professional correspondants make regular contributions to coverage of the gambling world.
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Kirk Kerkorian
Sands Macao Casino
Sheldon Adelson
Sol Kerzner
Steve Wynn
Casinos on the edge of change

The big wide world has been advancing quickly whilst the UK Government continues to pontifficate on the subject of Gambling Legislation and more specificly, Casino Legislation.

Over in Las Vegas the 87 year old Kirk Kerkorian is about to take over the Mandalay Resort Group for $7.9 billion and at last be in control of over half the 75,000 rooms on the Strip. In 1993 he open the world's largest hotel on the Strip, the 5,034 room MGM Grand and in 2000 he took away the Mirage Resorts from Steve Wynn for another $6.4 billion. The new MGM-Mirage-Mandalay Group has however had its position as the largest casino operator in the world taken away this week by the new boy in town.

Nobody knew who Gary Loveman was until as this week. A professor at Harvard Business school he has now taken to help running Harrah's Entertainment as Chief Executive and his idea was not to allow MGM to take the position of No. 1 for long. This week Harrah's will buy Caesars Entertainment for $9.25 billion put their position in concrete as there is really no left to buy, except one.

Sheldon Adelson runs Las Vegas Sands Inc., a private company about to go public. LVSI owns The Venetian mega-resort and has also just opened the Sands Macao casino in May and the Waldo in July in China's only legal gambling district. Macao gets 70% of its tax revenue from the gaming industry and these 2 new ventures have increased that by 32% in the first 5 months of the year. The LVSI company could float for $4 billion although Adelson's policy of banning unions may make the properties he runs to hot to handle for potential buyers. Adelson's unpopularity due his hard line approach has made him inclined to move around with a team of ex-Mosad bodyguards.

These changes don't seem at first glance to affect the UK casino market but the UK government has proposed new changes in the likely Gambling Bill scheduled to be debated in October that will invite big US corporate raiding at the expense of the existing British players such as Stanley Leisure, Grosvenor and Gala.

Traditional thinking in the city was that relaxing the laws governing casino ownership would allow non-UK firms to buys casino operations in the UK and so the price casino stock soared, even as their performance tanked. Now however the bright sparks in the governement have come up with a three tiered casino system. The are to be Small, Large and Regional Casino definitions and only the Regional Casino type (a resort style casino) will be allowed to have Slots with unlimited jackpots. These are the sure-fire fantasy hooks that bring punters to the big casinos and pay for range of alternative entertainment which the government has prescribed in the Bill as necessary part of obtaining a license.
All this indicates that now US giants have no need for the backward and small UK casino chains but are able to launch straight in on their own platforms with resort style casinos and actually damage the profitability of the existing chains. Protests are being lodged right now by the UK chains but they will have a hard time of it.

Someone already pushing into the market is Sol Kerzner. Kerzner International, long since extracating itself from Sun City in South Africa, is now in the Caribbean, Mauritius, Dubai and the Maldives and will be here soon. More than a year ago, in April 2003, his company had beem given permission to build a casino in Northampton but the Gaming Board has been investigating Sol and his company as to whether they are fit and proper. Only now have they said yes. Not only that but last week it was announced that Sol Kerzner has just struck a £550m deal to turn Greenwich’s empty Millennium Dome into a gambler’s paradise, with gaming tables, 900 slots machines and a 600-bed hotel. What’s more, pending legislation that will deregulate gaming later this year, Kerzner is also poised to put a £200m resort casino into the middle of Glasgow’s new SECC Clydeside development.

There however some already here. Isle of Capri Casinos of Biloxi, MS, USA has bought two-thirds of Blue Chip Casinos. They have just opened the Roman themed Rubicon in Wolverhampton with one already in Dudley. Further more the Sorrento Casino will open on Walsall in September and there are plans for an ocean liner themed casino called The Queens in Warley.

But all the major foreign operators want in, including the French group Accor which runs more than a third of France's casinos and even Hilton International which just 4 years ago sold all its UK casinos to Gala for £235 million.

Finally the new fad in casino planning is to have a casino at a sporting venue. Gala plan a casino at the Wloverhampton race track, West Ham are in talks with Sands Inc. (LVSI) for a casino in their football ground as too do Rangers in Scotland and Sheffield footballers can look to partnership with Sun International.

We're all looking to October to shed some light on what exactly the government has got planned. Until next time....