SUBMISSION 17
Memorandum submitted by Leisure Parcs
THE CASE FOR RESORT CASINO HOTELS
CREATING A WORLD-CLASS DESTINATION THAT CAN
ACT AS A CATALYST FOR ECONOMIC REGENERATION AND SOCIAL RENEWAL
1. THE CHALLENGE
TO UK TOURISM
1.1 The number of UK residents' visits abroad
during the twelve months to February 2002 was recorded as 59 million,
28 per cent more than five years ago, whilst the number of overseas
residents' visits to the UK has fallen eight per cent since 1997
to 23 million.
1.2 The economic impact in the UK of this
growing disparity between outgoing and incoming tourism has been
a substantial increase in the deficit on the travel account of
the balance of payments.
1.3 As of February 2002, the deficit stood
at £14.9 billion, up 27 per cent compared to 2001 and, disturbingly,
an increase of 211 per cent when compared to 1997. (National Statistics,
April 2002)
1.4 Relatively cheap and rapid air travel
has brought global competition to areas of the UK where the tourism
product has received little innovation and investment in recent
years. This is particularly the case for many of our seaside resorts.
1.5 The Department for Culture, Media and
Sport (DCMS) recognises this and in its 1999 strategic report
on UK tourism, "Tomorrow's Tourism", identifies
the regeneration of traditional seaside resorts as a key objective.
In particular, the report highlights the need for resort towns
to be radical in their approach in order for them to be allowed
to play to their strengths.
1.6 In February 2001, the English Tourism
Council (ETC) published "Sea Changes—Creating World-Class
Resorts in England" which specifically advises a holistic
approach to the renewal of the tourism experience in seaside resorts
and underlines the importance of identifying a catalyst to act
as a major draw.
1.7 The development of resort casino hotels
in the UK could act as a catalyst for the creation of a world-class
tourism resort that could offer UK residents an exciting short-break
destination as an alternative to spending their money abroad.
In turn, the creation of such a resort would deliver widespread
economic regeneration and social renewal.
2. RESORT CASINO
HOTELS
2.1 Resort casino hotels are large indoor
resort complexes of international quality that offer a range of
leisure attractions and facilities including restaurants, shops,
hotel accommodation, conference and exhibition space, entertainment
venues and gaming, which is the economic driver, brought together
by careful design to deliver a seamless, entertaining tourism
experience.
2.2 Covering several acres, these complexes
are often architecturally impressive and operated with an overt
sense of theatre. Invariably they form the focal point of a resort
destination that is attractive to both national and international
tourism not least because of the wide range of additional attractions
and activities available in the resort and the surrounding region.
2.3 Under current legislation it is not
possible to present casino gaming in this way.
3. THE GAMBLING
REVIEW BODY
3.1 Chaired by Sir Alan Budd, the Gambling
Review Body (GRB) was required to make recommendations having
regard to:
". . . the desirability of creating an environment
in which the commercial opportunities for gambling, including
its international competitiveness, maximise the UK's economic
welfare." (2.1)
3.2 The Gambling Review Report, which specifically
notes Leisure Parcs' ambitions for the regeneration of Blackpool,
recommends to the Government that resort casinos should be permitted.
3.3 The GRB was also charged with making
recommendations having regard to the social impact of gambling
and the costs and benefits to the UK. Sir Alan's team was particularly
concerned to encourage ". . . a cautious approach to relaxing
the controls on gambling." (14.19)
3.4 Referring to the social consequences
of a proliferation of casino slot machines the report notes that:
". . . in Australia radical change to gambling
legislation resulted in a rapid proliferation of gambling opportunities.
We think that the Australian experience offers reinforcement for
a cautious approach." (14.20)
4. "A SAFE
BET FOR
SUCCESS": THE
GOVERNMENT'S
RESPONSE
4.1 In its response to the Gambling Review
Report the Government echoes the GRB's concern for caution and
acknowledges that:
"Experience around the world suggests that
over-enthusiastic deregulation can cause real social and economic
problems from which it is hard to rein back." (1.4)
4.2 Nevertheless, the Government clearly
recognises that gaming generally is a legitimate form of entertainment
and therefore regulation should not be such that it constrains
the UK's ability to compete with the rest of the world:
"The overall impact of these changes would
be to create a regulatory framework environment within which—commercial
and planning considerations permitting—it would be possible
to establish in Great Britain "resort casinos" of the
type seen elsewhere in the world, for instance in Las Vegas or
Atlantic City." (4.29)
4.3 The report goes on to note that:
"The creation of resort casinos is not a
specific policy objective of these changes. The extent to which
schemes of this kind are promoted and taken forward will be primarily
a matter for the private sector, subject to local authority approval."
(4.30)
4.4 We contend that there is a profound
need for the Government to examine fully the economic and social
costs and benefits that can accrue from the introduction of resort
casino gaming in a purposeful manner.
4.5 With this in mind we are pleased that
the Government appears to have reserved its position with regard
to resort casino development by stating:
"(We) will naturally be watching any such
developments with interest, and will wish to ensure that any wider
public policy considerations, for example, in relation to tourism
or regional economic development, are properly taken into account."
(4.30)
4.6 Certainly the language used by the Government
reflects the key arguments that our proposals have relied upon.
However, there is a clear requirement to construct a definition
of a resort casino, identify where best to locate them, linked
to demonstrable benefits to the UK as a whole in terms of tourism
and regional economic development, and define an appropriate tax
regime.
5. DEFINITION
OF A
RESORT CASINO
5.1 Whilst the GRB attempted to loosely
define what would constitute a resort casino the Government's
response does not explore this critical issue, nor does it specify
a formula for determining the number of casino slot machines available
to casinos generally.
5.2 Both the GRB and the Government have
expressed serious concern about a proliferation of small casinos
and the potential social problems associated with slot machines.
5.3 We contend that the salient issue in
this regard is not so much the proliferation of casinos but rather
the proliferation of high-payout slot machines.
5.4 The GRB was concerned that casinos should
be required to offer a balance of gaming and other activities
so as to avoid the development of "slot-machine only casinos".
It specifically recommended a formula that links the number of
tables to the number of slot machines that a casino may make available
and defines a threshold above which the number of slot machines
would be unlimited:
"We suggest that the maximum should be determined
by a ratio of eight machines to each table, but that where the
number of tables exceeds eighty there should be no maximum on
the number of gaming machines." (22.47)
5.5 The adoption of this formula would act
as a clear distinguishing characteristic differentiating a resort
casino from a domestic casino.
5.6 However, we believe that other criteria
should also be incorporated to differentiate the resort casino
concept and therefore agree with the Government's response:
"There should be objective criteria governing
the number of gaming machines available in individual casinos.
The Review Body suggested limits based on numbers of gaming tables,
but there may be other ways of achieving an appropriate balance
between machine and other types of gaming, and we will be giving
this further consideration in consultation with interested parties,
including the Gaming Board." (4.27)
5.7 We propose that the ratio of tables
to machines suggested by the GRB is adopted and that the following
facilities must be made available as a minimum requirement for
unlimited slots to be permitted:
— 500 bedrooms of international quality.
— 2,000 square metres of conference/exhibition
space.
— 5,000 square metres of gaming space
offering a range of gaming products including table games, slot
machines, sports betting and number related games.
— 2,000 square metres of leisure/retail
space including restaurants and shopping.
— Significant provision for live entertainment.
6. LOCATION OF
A RESORT
CASINO
6.1 We believe that the location of resort
casinos should be linked to wider public policy considerations.
That is, the allocation of a licence for a facility that by definition
would be permitted to offer unlimited numbers of casino slot machines
must satisfy local, regional and national authorities that the
overall development would accord with relevant public policy.
6.2 For example, if the regeneration of
seaside resort towns and the development of tourism are priority
public policy issues, the location of such attractions might reasonably
be restricted to towns or regions that face extreme circumstances
in relation to such issues.
6.3 The clear benefits to the Government
of restricting the number of licences available in the UK for
such development would be the increased value to the operator
of acquiring a licence, which would more likely result in world-class
attractions in terms of both scale and quality, and the maximisation
of the positive impact on economic regeneration and social renewal
in those areas of greatest need.
6.4 This approach is endorsed by Peter Collins,
director of the Centre for the Study of Commercial Gambling at
Salford University who points out that every other country that
has been successful in using gaming as a tool of economic regeneration
has restricted the location of such facilities in one way or another.
6.5 The challenge to local and regional
authorities that might seek to establish a so-called "designated
area" will be to convince the Government that mechanisms
are in place to ensure that resort gaming will be used in a socially
responsible way for the benefit of tourists and residents alike.
6.6 The Casino Reinvestment Development
Agency (CRDA) in Atlantic City is, we believe, an international
example of best practice and therefore merits careful examination.
6.7 Funded by a levy imposed on the casino
operators, the CRDA is empowered to maintain public confidence
in the casino-gaming industry as a unique tool of urban redevelopment
in Atlantic City and to directly facilitate the redevelopment
of economically blighted areas throughout the State of New Jersey.
6.8 Whilst we note the Government's reluctance
to accept our proposals for a "pilot scheme" in Blackpool,
or anywhere else for that matter, we believe that such an approach
does accord with the cautious approach to liberalisation recommended
by the GRB.
6.9 A "pilot scheme" would permit
the Government to test the principle of casinos offering large
or unlimited numbers of gaming machines in a controlled and measured
way; a strategy that would be supported by many including Gamcare,
the national charity dedicated to promoting responsible gambling
and helping those with addiction problems.
6.10 Paul Bellringer OBE, director of Gamcare
has said:
"We support the notion that because a resort
casino is breaking the mould of the way we have done it in this
country before, it should be tried out in one area only. And Blackpool,
with its unique makeup seems to be the ideal place for this to
happen."
7. TOURISM AND
REGIONAL ECONOMIC
DEVELOPMENT
7.1 As we have argued, we believe that the
issue of UK competitiveness in tourism is an essential consideration
in determining where resort casino hotels might be located and
we believe that seaside towns offer the most appropriate context
for such development.
7.2 Indeed, Professor Bill Eadington of
the University of Nevada advocates that the economic benefits
associated with casino gambling are likely to be greatest, and
the social costs lowest, when casinos are built in a destination
resort environment as opposed to an urban setting. ("Contributions
of Casino-Style Gambling to Local Economies", 1998)
Blackpool
7.3 Blackpool has a celebrated reputation
for innovation and, when necessary, reinvention. The opening of
Blackpool Tower in 1894, the five miles of Illuminations, the
Golden Mile, the first electrified tramway system are all examples
of the ways in which Blackpool has continuously developed exciting
new attractions to compete with its rivals.
7.4 However, relatively cheap and rapid
air travel has brought global competition and a lack of investment
in the product offering over a sustained period has caused serious
decline:
— Visitor numbers to Blackpool have
halved in the last decade to 10 million.
— The number of hotels in Blackpool
has fallen by 30 per cent since 1996.
— Blackpool is the 32nd most deprived
area of the UK and generates the fifth lowest GDP in the North
West.
— Unemployment in Blackpool ranges
between nine per cent and 14 per cent.
7.5 Leisure Parcs' vision is to develop
a 1,000-bedroom resort casino hotel in Blackpool at a cost of
£150 million. By creating new jobs and increased economic
activity resort casino hotels can act as a powerful economic engine
driving widespread regeneration across the North West.
England's Northwest
7.6 Pion Economics (2000) estimate that
a single resort casino hotel in Blackpool could create 3000 new
jobs and bring £78 million of additional income to the regional
economy.
7.7 The longer-term development of several
such complexes in Blackpool will stimulate very substantial levels
of investment in other important areas of the local and regional
economy including housing, transportation and telecommunications
networks, utilities and essential services infrastructure together
with suppliers and other support services, which we believe will
create as many as 25,000 new jobs.
7.8 We estimate that the total investment
in Blackpool and the surrounding region could reach £1.5-£2
billion over the next decade by securing gaming as the core economic
engine.
7.9 With direct access to excellent road,
rail and air communications including its own airport, together
with the international gateways of both Manchester and Liverpool
airports, Blackpool is ideally placed geographically to cope with
the physical expansion that such potentially massive redevelopment
will require.
7.10 This in turn will lead to much higher
levels of investment in skills training at all levels of the local
and regional workforce creating significant opportunities for
the unemployed, underemployed and those currently reliant upon
seasonal jobs, as well as strengthening the traditional skill
base of the resort.
7.11 Our proposals will enable local and
regional educational facilities, particularly those specialising
in tourism, hospitality, the performing arts and construction,
to further their academic and vocational reputations by developing
skills that can lead to a meaningful career in the hospitality
industry located in England's Northwest.
Local, Regional and National Support
7.12 The proposals for Blackpool have the
support of the local community and many regional and national
agencies with an interest in tourism and urban renewal. They have
also captured the imagination of both the general public and the
national media:
— The Blackpool local community supports
resort casino hotel development, with 71 per cent support showing
in opinion polls (SWR Survey, February 2001).
— Following his recent visit to Las
Vegas and Biloxi (on the Mississippi Gulf Coast), the Bishop of
Blackburn, the Right Reverend Alan Chesters has declared his support
for the use of gaming to regenerate the town of Blackpool.
— Chief Superintendent Mike Cunningham
of Blackpool Police has also visited Atlantic City, Las Vegas
and Biloxi; he shares the Bishop's view that with careful management,
resort casino hotel development can act as an effective catalyst
for economic and social renewal.
— The North West Tourist Board, the
North West Development Agency, the Lancashire West Partnership,
the West Lancashire Chambers of Commerce and the Federation of
Small Businesses have all indicated their support.
— David Quarmby, chair of the British
Tourist Authority (BTA), Richard Tobias, chair of the British
Incoming Tour Operators Association (BITOA), the former Ministers
of Tourism, Janet Anderson MP and John Lee, and Paul Bellringer,
director of GamCare, have all pledged their support.
8. TAXATION
8.1 The Government's response document does
not address the issue of taxation rates in relation to gaming.
8.2 The levels of future investment in the
casino industry will be linked to the size of the available market,
access to that market, competition and taxation.
8.3 An analysis of international taxation
rates for gaming activity reveals that the level of taxation does
influence the size of investment and therefore the number of jobs
created and the overall economic impact of resort casino development.
8.4 In Nevada the rate of tax on Gross Gaming
Revenue (GGR) is six per cent and in New Jersey it is eight per
cent. In this environment investment levels in individual resort
projects can exceed $1 billion. In Mississippi the rate varies
between eight per cent and 12 per cent with the largest investment
being $700 million. Illinois and Indiana have tax rates of 20
per cent where investment levels are in the region of $125-150
million.
8.5 Conversely, the $1 billion resort casino
in New Orleans has experienced serious financial difficulties
with a tax rate of 20 per cent.
8.6 In the UK the current rate of 40 per
cent of gross gaming yield (ie table game stakes less winnings)
above £2.2 million is clearly not sustainable for a resort
casino operating in and competing with an international market.
8.7 The fee for licensing 2,500 machines
would be less onerous if the current fixed rate regime was retained,
however 17.5 per cent vat and corporation tax may, in themselves,
impact adversely on the potential for investment.
8.8 We are encouraged by recent changes
to betting duty and note that HM Customs and Excise has requested
examples of relevant international gaming tax regimes perhaps
indicating that the Treasury will be receptive to proposals for
change.
Unique Opportunity
8.9 Resort regeneration, urban renewal,
regional airports, social exclusion, vocational skills and international
competitiveness of the tourism product are current issues in the
UK. In addition, GDP is a key measure of the country's economic
health and England's Northwest remains relatively low compared
to other regions. Blackpool is tied to all these issues.
8.10 Resort casino hotels do present a unique
opportunity to tackle the UK's current tourism trade deficit of
£14.9 billion. Blackpool and England's Northwest are ready
and willing to embrace this opportunity and with it a powerful
catalyst for economic and social renewal.
Leisure Parcs Limited
Leisure Parcs Limited is a private company owned
by the family interests of its chairman, Mr Trevor Hemmings, Electra
and HBOS. It was formed for the express purpose of delivering
a vision of a rejuvenated Blackpool economically driven by resort
casino hotels and successfully competing on both a national and
international stage.
The Company owns a large number of key tourism
assets in Blackpool, which include Blackpool Tower and Circus,
Louis Tussaud's Waxworks, the Sea Life Centre, the Winter Gardens
Conference Centre, hotels, amusement arcades and the three piers.
The Company also owns piers in Eastbourne, Llandudno and Southsea.
Working closely with Blackpool Challenge Partnership,
the local strategic partnership of public, private and community
interests driving the town's economic regeneration, Leisure Parcs
is helping to inspire a vision of a vibrant, all year round, diverse
and quality driven resort that will appeal to visitor and resident
alike.
At the heart of this vision is the use of gaming
as a powerful economic engine to drive a spectacular and wide-reaching
regeneration programme that will be instrumental in ensuring Blackpool
achieves policy priorities set down by Government as outlined
not only by DCMS in 'Tomorrow's Tourism' (1999) and by DETR in
the Urban White Paper, but also in other key areas such as education,
housing, crime, health, transport and employment.
In August 2000, Leisure Parcs publicly launched
its proposals to introduce Resort Casino Hotels into Blackpool
as "a unique tool of urban redevelopment" identifying
Atlantic City as a potential model for the process of change but
using Las Vegas as the benchmark for how Blackpool might evolve
in terms of style, if not scale.
Leisure Parcs organised a successful fact finding
visit by the Blackpool Challenge Partnership, of which it is an
active member, to Las Vegas and Atlantic City in December 2000.
In May 2001 the Company published an independent
report examining the potential economic impact of its proposals
and in October 2001 submitted an outline planning application
for the construction on the Central Promenade, Blackpool of what
could be the first Resort Casino Hotel in the UK.
3 May 2002
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