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What is the future for casinos in the UK?

The Gambling Act 2005 was intended to modernise gambling in the United Kingdom by replacing the anachronistic 1968 Gaming Act with legislation better suited to the 21st Century. The 1968 Act had placed tight restrictions on the number of casinos and these were limited to specific “permitted areas.”

In the months leading up to the 2005 general election the media and the incumbent gambling industry led a campaign against the Gambling Bill, focused on so called “Las Vegas style super casinos.”

Up until that time, grandiose schemes for the redevelopments of places like Blackpool and the O2 Arena in London had been promoted for large-scale, resort-type casinos.

By the time the legislation received royal assent in April 2005, it had been stripped of its boldest attempts at liberalization and the possibility of opening casinos across large areas of the country was removed, as was the ability to transfer existing casino licences from one region to another.

As a result of these changes many large towns (and Boroughs within London) are still unable to see casinos locating within their area and many of the old licences are dormant and remain parked, waiting to see whether liberalization and change will follow.

Prior to the introduction of the Gambling Act 2005, there were 53 permitted areas where casinos could be licensed. These were prescribed by Regulations which came into force back in 1972. The demographic landscape of a huge number of areas had changed over this period, but the permitted areas did not, and as a result the casino sector stagnated. There are a total of 186 1968 Act licences which are “frozen in aspic” and cannot be increased. The last record showed that 146 of these licences are currently being operated, with the other 40 parked and dormant.

16 Local Authorities were granted new licences under the 2005 Act. 8 large and 8 small casino licences but no “super casino” envisaged in the preamble to the legislation. The large and small casinos were given greater flexibility in their public offer than their predecessors under the 1968 Act.

When the National Casino Industry Forum gave evidence before the CMS Select Committee, they raised issues of “portability” of the 1968 Act licences- the ability to move licences from where there was over-provision to areas which wanted a casino but could not have one. This issue gained some sympathy from the Committee, who stated that “we recommend that any Local Authority be able to make the decision as to whether or not they want a casino.” They went on to say “…as a step towards this, we recommend that existing 1968 Act casino licences are made portable, allowing operators to allocate to any Local Authority provided that they have the consent of that Local Authority.”

This seemed a very sensible solution to the problem of dormant licences. Many London Boroughs, unable to have a licence as they were not part of the permitted area scheme of the 1968 Act, and indeed large growing population centres outside of London, were keen to have a casino in their locality. A further benefit would be that the overall number of gambling permissions across the country would not increase but would, instead, see a redistribution of already-granted licences.

Local issues could be dealt with by way of:

  • Local Authority approval;
  • planning permission; and
  • a premises licence issued under the Gambling Act 2005 by the Licensing Authority for that area.

This was immediately attractive to the industry. The number of operators of casinos has diminished due to independents selling to bigger operators and the coming together of the Gala and Grosvenor Estates of casinos.

What we have seen to be particularly successful in London is the siting of quality casinos within 5 star hotels and a good example of this is the licence that was granted to the Park Lane Casino in the Hilton on Park Lane.

Many operators of London 5 star high-end luxury hotels are keen to have a casino licence. For example the City of London and Camden, as well as others, wish to have the ability to have (a) casino(s) in their authority areas. However, without the introduction of portability of licences, this is currently precluded. There is a history of licences which have operated in the permitted areas which were granted where the premises have now closed, trapped in areas where the supply side is saturated, the local demographic has changed or there has been some other factor, for example the grant of a 2005 Act licence. This, in many areas, has eroded the economic basis for their development. Licences are “locked in” while other interested Local Authorities are “locked out”, which is causing the market to fail. There are 13 licences granted under the 1968 Act which have never opened.

It would seem sensible to allow the portability of licences – with no increase in their total number – as demand for casinos in other, currently non-permitted areas would generate investment, jobs and tourism and local demand is currently unmet because licences are not portable.

Of the 16 new licences granted as a result of the 2005 Act, 10 of them were in existing permitted areas. In real terms, therefore, there is now only an increase of 6 new areas where casinos can be licensed. This is not what the 2005 Act set out to achieve.

While the Government seems to have more significant pressing issues to deal with than the casino sector, there does not seem to be much prospect of an introduction of a scheme of portability. This issue appears to have gone off the political agenda. Most of the casino industry, and many Local Authorities, would be keen for this to gain traction. It would present a great opportunity for dealing with so many dormant licences.