Memorandum from Kerzner International
UK (DGB 34)
Kerzner International UK Gaming Division is
supportive of the general direction and content of the proposed
Bill.
We are in full support of a well-regulated environment
that encompasses stringent licensing criteria, effective protection
of the vulnerable, and the maintenance of a crime free industry.
The Draft Bill has gone to great lengths in this regard. The company
has been working with various officials within the Department
of Culture Media and Sport, as well as contributing to various
industry discussions regarding the proposed draft legislation
and preceding position papers. Given this and the request for
brevity we will therefore restrict comments in this submission
to new or substantive issues raised in The Draft Gaming Bill and
The Policy, with specific reference to Casinos.
1. LICENSING
GAMBLING PREMISES—ITEM
3.71 IN THE
POLICY AND
CLAUSE 168 IN
THE DRAFT
BILL
The Policy states "There will be a route
of appeal to the courts where an applicant or another local business
or resident disagrees with an authority decision to grant or refuse
a licence or with the conditions on it. Rights of appeal will
be available with respect to all licensing authority decisions."
We are concerned that allowing any person/company
(potentially a rival casino operator) who makes representations
to the Local Authority Gaming Committee the right to appeal against
a decision to grant a casino licence would inevitably slow down
the licensing and development process significantly.
Currently the only person/body who can object
to the grant of a gaming licence is the Gaming Board.
2. REGIONAL PLANNING
BODIES—ITEM
5.16 IN THE
POLICY:
The Policy states, "The Government proposes,
therefore, that Regional Planning Bodies will set out planning
policies for leisure developments of regional significance, including
casinos, which identify suitable locations within the region that
would optimise their contribution to tourism and regeneration."
We are concerned that although Regional Planning
Bodies will set out the planning policies for such developments
they do not have the authority to grant permission for them and
Local Authorities are not bound by their decisions. This means
that there is potential for conflicting strategies between Regional
Planning and Local Authority levels.
3. CONTROLLING
THE EVOLUTION
OF GAMBLING
OPPORTUNITIES; SMALL
AND LARGE
CASINOS—ITEM
4.12 AND 5.13 IN
THE POLICY
AND CLAUSE
140 IN THE
DRAFT BILL
The Policy states, "There will be two types
of categories of casino premises.—`Small' with a total gaming
area (excluding other gaming facilities such as betting, bingo
and gaming machines) of between 5,000 and 10,000 sq ft) and, `Large'
(above 10,000 sq ft)."
Although there is a lot of talk of "Resort"
casinos, these are not referred to in the Bill, nor are they defined
in the Policy other than reference in Item 5.15 to the ".
. .the construction of major multi-purpose leisure developments
comprising, for example, casinos, hotels, restaurants, entertainment
and other facilities."
"Large" Casinos as defined with a
table gaming area of 10,000 sq ft and more than 40 tables do not
constitute major multi-purpose leisure developments per se.
This really begs the questions: Are all `large' casinos considered
multipurpose leisure developments? Are all `large' casinos of
regional significance (refer Item 5.16 of The Policy)?
4. CONTROLLING
THE EVOLUTION
OF GAMBLING
OPPORTUNITIES; NUMBER
OF GAMING
MACHINES—ITEM
4.13 AND 5.13 IN
THE POLICY
AND CLAUSE
140 IN THE
DRAFT BILL
The Policy states "Under our proposals
the new `small' casinos—along with casinos now in operation
that are below the new minimum size requirement—should be
able to install up to three no-limit machines for each gaming
table which is available for use. . .By contrast casinos in the
large category will, if they also have more than 40 gaming tables,
be entitled to offer an unlimited number of gaming machines"
We support clause 140 section 4, of The Draft
bill with regard to machines in casinos. We believe the increase
to three machines per table (Category A) will allow most existing
"small" casinos a significant increase over the existing
number of machines permitted as well as allowing higher machine
stakes and prizes into this environment.
We concur with the view that any increase in
this ratio will lead to an increased incentive to operate at this
end of the market and a greater proliferation of smaller casinos
and by consequence less "major multi-purpose leisure developments
comprising, for example, casinos, hotels, restaurants, entertainment
and other facilities". These are most likely to be small/medium-sized
operations in rented premises, without the regeneration investment
and job creation levels envisaged.
Allowing large "resort" casinos with
over 40 tables to have unlimited machine numbers is essential
in facilitating the extensive investments envisaged in "major
multi-purpose leisure developments comprising, for example, casinos,
hotels, restaurants, entertainment and other facilities"
and supporting infrastructure. Any limits placed on large casinos
with regard to machine numbers will have a direct impact on the
levels of investment affordable.
5. CONTROLLING
THE EVOLUTION
OF GAMBLING
OPPORTUNITIES; MACHINE
LINKAGE—ITEM
4.14 AND 4.15, 5.13 AND
5.15 IN THE
POLICY AND
CLAUSE 201 IN
THE DRAFT
BILL:
The Policy states, "Linking (gaming machines)
between premises would undercut effective controls over the availability
of machines which evidence from overseas suggests importantly
influence the incidence of problem gambling."... "These
arrangements would enable large casinos to make very substantial
jackpots available through linking machines on-site".
We concur that linking gaming machines between
premises would lead to further proliferation in the number of
small casinos, the number of machines and mega jackpots potentially
available there and consequently have a negative impact on the
level of investment in "major multi-purpose leisure developments
comprising, for example, casinos, hotels, restaurants, entertainment
and other facilities".
6. CREDIT—CREDIT
CARDS—ITEMS
6.10 IN THE
POLICY AND
CLAUSES 16, 13 7-139 IN
THE DRAFT
BILL:
The Policy states, "Customers may also
use credit cards to place bets, to gamble on the internet. . .and
to withdraw cash from automatic tellers situated in casinos and
other licenced premises. Credit cards may not, however, be used
in gaming machines".
We agree that credit cards should not be used
in gaming machines. However, we believe customers should be able
to buy in at the casino cash desk with a credit card.
7. INDUCEMENTS—ITEMS
6.15- 6.20 IN THE
POLICY AND
CLAUSES 16, 13 7-139 IN
THE DRAFT
BILL:
The Policy states, "The Gambling Commission
will also have power, through its licence conditions and its codes
of practice, to place controls on the inducements to gamble that
may be offered by gambling operators".
We take note of the concerns regarding various
forms of inducements and the proposed control of these.
However, in respect of "major multi-purpose
leisure developments comprising, for example, casinos, hotels,
restaurants, entertainment and other facilities", we believe
consideration should be given to the specific inclusion of Hotel
Accommodation (or discounted Hotel Accommodation) in the definition
of permissible Hospitality, where such Hotel Accommodation is
clearly an integrated component of the `Resort Casino' offering.
In many instances a hotel room may be less of an inducement value
than a complimentary meal with wine/drinks, and may be a preferred
option for some customers".
8. PROTECTING
CHILDREN AND
YOUNG PERSONS—ITEMS
6.23 TO 6.26 IN
THE POLICY
AND CLAUSES
33 TO 35 OF
THE DRAFT
BILL
We are committed to ensuring that children and
young persons are not invited or permitted to gamble, however
further consideration may need to be given to issues of advertising
exposure and the definition of premises in a "major multi-purpose
leisure development comprising, for example, casinos, hotels,
restaurants, entertainment and other facilities.
9. OPERATING
LICENCES; INITIAL
DURATION—ITEM
3.18 OF THE
POLICY AND
CLAUSE 87 OF
THE DRAFT
BILL
The Policy states "Licences will be issued
for up to a maximum of 10 years duration, although the commission
may determine different lesser periods"
It is unclear why this is restricted to 10 years
and will have major implications for significant investment projects.
The company making a major long-term investment has no security
of licensure beyond 10 years, indeed it may even be a lesser period.
As these licences are subject to review (item 3.35 the Policy)
there seems no reason to place a time limit on them. Furthermore
it is inconsistent with premises licences which "will not
be time limited"(item 3.66 of the Policy).
10. OPERATING
LICENCES; NATURE
OF LICENCE—ITEMS
3.16 AND 3.17 OF
THE POLICY
AND 51 OF
THE DRAFT
BILL
In clause 51(4) (b) of The Draft Bill states:
"The Secretary of State may by order amend subsection (2)
so as to (a) add a class of operating licence, (b) remove a class
of operating licence, or (c) vary a class of operating licence".
We are concerned that The Secretary of State
will have the right to "remove a class of operating licence"
without consulting Parliament.
TAXATION AND
DUTIES
The Draft Bill and the policy are silent with
regard to the fiscal regime to be applied to casinos. Although
it is clear that this is the domain of HM Treasury and HM Customs
and Excise, two issues bear consideration by the committee.
Firstly the absence of any indication of the
considered policies on taxes and duties to be applied to the new
casino industry make it very difficult to assess or plan business
opportunities, and may well lead to significant delays or amendments
to development initiatives. It has always been clear that the
fiscal policy would follow the legal; given the advanced sate
of the Draft Gaming Bill and The Policy it would be most useful
to have at least some time-table concerning this and preferably
some indication of the policies under consideration.
Secondly the committee may wish to consider
the impact of VAT legislation on the new casino industry. Machine
income is currently subject to VAT and consequently any VAT on
what would be significant investment on construction, could be
recovered from it, however if machine win were to be amalgamated
with table win and attract gaming duty an operator would not be
able to recover the VAT from the gaming activity.
This would be a very heavy burden for new investments
and may lead to various distortions.
ABOUT THE
COMPANY
Kerzner International Limited is a leading international
developer and operator of premier casinos, resorts and luxury
hotels. The Company's flagship destination is Atlantis, a 2,317-room,
ocean-themed resort located on Paradise Island, The Bahamas.
Atlantis is a unique destination casino resort
featuring three interconnected hotel towers built around a seven-acre
lagoon and a 34-acre marine environment that includes the world's
largest open-air marine habitat. The Company also developed and
receives certain income derived from Mohegan Sun in Uncasville,
Connecticut. Following the completion of a $1 billion expansion,
the Native American-themed Mohegan Sun has become one of the premier
casino resort destinations in the United States. In its luxury
resort hotel business, the Company operates luxury resorts primarily
under the One&Only brand. The Company manages nine resort
hotels in The Bahamas, Mauritius, Dubai, the Maldives and Mexico
and has entered into an agreement to develop and manage a tenth
property in the Maldives. For more information concerning the
Company and its operating subsidiaries visit www.kerzner.com.
December 2003
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