Memorandum from Ameristar Casinos (DGB
135)
1. INTRODUCTION
1.1 Ameristar Casinos, Inc. appreciates
the opportunity to offer our views to the Joint Scrutiny Committee
in its examination of the Draft Gambling Bill. As a leading United
States developer, owner and operator of casinos and related entertainment
facilities, we believe we can contribute information to the current
debate surrounding the reform of the United Kingdom's gambling
laws based on our actual operational experience.
1.2 Our comments to the Scrutiny Committee
focus on two key topics: the social responsibility issues relating
to casino gambling and the potential economic benefit of casino
development.
1.3 We believe that each of these topics
will be directly and materially impacted by the size and scope
of casinos and the number of casinos that will result from the
Gambling Bill.
1.4 As discussed below, we believe that
the maximization of economic benefit and the minimization of social
issues arising from casino gambling are complimentary goals that
can best be achieved by the provisions currently in the Draft
Gambling Bill that address casino size, namely the provisions
that:
(i) establish minimum sizes for new casinos,
(ii) limit casinos with less than 40 table
games to a slot machine-to-table game ratio ("Slot-to-Table
Ratio") of 3:1 and
(iii) allow casinos with more than 40 table
games to have an unlimited number of slot machines (collectively,
the "Casino Size Requirements").
1.5 The Casino Size Requirements will lead
to the development of casinos of sufficient critical mass to better
identify and provide interventions for patrons with gambling problems.
Smaller facilities simply will not be able to dedicate and train
adequate personnel for this function.
1.6 The Casino Size Requirements also will
lead to regeneration on a national level of a size and scale not
possible through smaller facilities, assuming appropriately designed
tax and planning policies. These casinos will offer a broad range
of non-gaming amenities and will infuse the economy with capital
construction projects, job creation and training, tax revenues
and purchases of goods and services needed for operations.
2. SOCIAL RESPONSIBILITY
2.1 At Ameristar, we take our social responsibility
seriously and willingly support the industry's efforts to address
these issues head on. In each jurisdiction in which we operate,
we voluntarily implement responsible gambling programs that exceed
the minimum requirements imposed on us by law and regulation.
2.2 Industry Efforts to Promote Responsible
Gambling
2.2.1 Despite research indicating that only
approximately 1% of the general population has the propensity
to experience self-control issues with respect to gambling, we
accept our responsibility to help protect vulnerable customers.
For many years in the United States, we have funded research and
treatment programs, promoted awareness of the issue and treatment
options to our customers and allowed customers to self-exclude
themselves from our casinos. We believe this is a model that should
be adopted in the United Kingdom across the industry and we would
do so at all facilities that we may operate in the United Kingdom.
The following list demonstrates the various ways in which we are
actively involved in addressing the social impact of gambling:
— Participation in Operation Bet Smart,
a campaign that seeks to heighten awareness of problem gambling
issues among employees, guests and the industry generally;
— Participation in Project 21, an initiative
that teaches casino employees, minors, parents and guardians about
the consequences of underage gambling;
— Implementation of self-restriction
and self-exclusion programs for individuals who have asked to
be restricted in one or more ways from marketing promotions, credit
privileges or play in the casino;
— Funding of approximately US$400,000
per annum for programmes related to problem gambling;
— Distribution of brochures and informational
materials that address various topics related to problem gambling
and focus attention on gambling responsibly;
— Inclusion of help-line phone numbers
in print advertising, players club cards, property signage and
other promotional materials;
— Training for all casino employees
to improve awareness of signs of problem gambling and how to assist
patrons in getting help;
— Active participation in industry-wide
awareness and education programs through the American Gaming Association;
and
— Service by corporate management personnel
on the Editorial Advisory Board of the American Gaming Association's
Responsible Gaming Quarterly.
2.3 Effect of Casino Size Requirements on
Social Impact Issues
2.3.1 In addition to the various programs
that major international casino companies such as Ameristar incorporate
into their operations, another factor that will help minimize
the social impact of the expanded casino gambling is the Casino
Size Requirements, which will clearly limit the proliferation
of "convenience" gambling outlets or high-street "slot
sheds." From a regulatory perspective, it will be much easier
for both the authorities and casino operators themselves to effectively
oversee compliance in a smaller number of larger operations than
a larger number of small operations.
2.3.2 Under the new legislation as currently
drafted, it is generally expected that a modest number of medium-sized
casinos (40-50 table games and 1,000-1,500 slot machines) and
a small number of larger "resort" casinos will be developed.
Although small casinos (ie, less than 10,000 square feet) may
also be developed in some areas, due to the Casino Size Requirements
and competitive factors it is not expected that there will be
a significant number of new small casinos.
2.3.3 Therefore, the development of a fewer
number of larger casinos will act as an additional safeguard in
enabling operators and regulatory authorities to oversee casino
operations and enforce minimum standards with respect to social
impact issues. Such minimum standards would include limitations
on casino access for minors and "policing" self-exclusions
from casinos.
2.3.4 We believe the adverse social impact
resulting from the expansion of casinos would be effectively controlled
under the structure currently contemplated by the Draft Gambling
Bill. Furthermore, we believe that increasing the Slot-to-Table
Ratio for casinos with fewer than 40 table games above 3:1, as
we understand has been proposed by others, would be contrary to
the interests of minimizing the social issues and would significantly
increase the Government's regulatory burden.
2.4 Recognition of Widespread Nature of Gambling
Currently
2.4.1 Although the Draft Gambling Bill will
lead to the expansion of casinos in the United Kingdom and will
provide a new form of entertainment for a broad base of United
Kingdom customers, gambling is certainly not new to the United
Kingdom.
2.4.2 A significant proportion of the United
Kingdom population already takes part in some form of gambling
activity on a regular basis, including accessing on-line gambling
sites on the internet or betting on events of national importance
such as the Grand National, Cheltenham Festival and the FA Cup
Final.
2.4.3 The development of new, modern casino-entertainment
facilities will simply add to the mix of leisure offerings available
to the consumer and afford the vast majority of adults who gamble
responsibly more freedom of choice. Furthermore, we believe that
the casinos that will be developed under the currently proposed
Casino Size Requirements will be better equipped through their
well trained, large staffs to identify and offer assistance to
those patrons who are susceptible to gambling problems than other
smaller outlets that currently offer gambling opportunities, such
as lottery sales outlets, betting shops and bingo halls. And remote
gambling operations have little or no capability to identify patrons
with gambling problems.
2.5 Casinos Will Offer a Wide Variety of Leisure
and Entertainment Options
2.5.1 We also believe it is important to
emphasize that the currently proposed Casino Size Requirements
will lead to the development of facilities in which gambling is
only one of the many forms of leisure and entertainment offerings
that will be available to patrons.
2.5.2 Based on our experience in the United
States, we expect post-deregulation casino developments in the
United Kingdom will include significant non-gaming amenities that
enhance customers' overall entertainment experience. It is quite
common in the United States, for example, for the amount of space
dedicated to a casino property's dining and entertainment venues
to exceed that of the casino floor, even without considering hotel
and parking facilities.
2.5.3 These types of facilities provide
a far different atmosphere and overall entertainment experience
than convenience gambling outlets on the high street. And because
the vast majority of our customers visit our properties for the
total entertainment experience, their spending in our casinos,
which averages approximately US$60 per person per visit, is very
much in line with their spending on other leisure and entertainment
activities that are not gambling-related.
2.6 Limits on Slot Machines in Casinos Having
More Than 40 Table Games
2.6.1 We understand there has been some
discussion in the Scrutiny Committee regarding concerns about
facilities with more than 40 table games not being subject to
some limitations on the number of slot machines they may have.
We further understand that there has been some discussion of
— (i) placing a cap on the number
of slot machines in larger casinos,
— (ii) imposing an 8:1 Slot-to-Table
Ratio in larger casinos and/or
— (iii) significantly increasing
the 40 table game requirement as a means of reducing the number
of slot machines in larger casinos. The thinking underlying these
discussions appears to be an effort to address social impact issues.
2.6.2 We believe it is important to view
the number of slot machines in the context of the overall venue.
As noted above, in our operations we emphasize an extensive variety
of non-gaming amenities. However, if we are unable to satisfy
market demand for gaming opportunities due to limitations of the
kind mentioned above, it will lead to substantially reduced footfall
and we therefore will be unable to profitably offer a wide range
of non-gaming amenities.
2.6.3 Furthermore, if these kinds of limitations
are adopted in the Gambling Bill, we believe they would substantially
reduce the development of larger casinos and lead to the proliferation
of a greater number of smaller casinos with limited non-gaming
offerings. As a result, these kinds of limitations are likely
to negatively affect rather than ameliorate the social impact
of casino gaming.
2.6.4 To the extent that the Scrutiny Committee
deems it appropriate to impose some additional limitations on
casino sizes in larger casinos, we encourage the Scrutiny Committee
to consider the adoption of a formula that provides for a maximum
allowable floor space for slot machines based on the aggregate
space dedicated to table gaming and non-gaming amenities ("Additional
Casino Size Requirements").
2.6.5 For example, we would expect a casino
we would develop with 10,000 square feet of table gaming space
would have approximately 40,000 square feet of slot machine gaming
space and at least 50,000 square feet of space devoted to bars,
restaurants, live entertainment venues and back-of-house facilities,
for a total development size of at least 100,000 square feet.
We would certainly be willing to commit to this level of investment
in non-gaming amenities, but only if the space available for slot
machines is not reduced to an artificially low level that would
cause the business model to be unviable.
3. ECONOMIC BENEFIT
3.1 As described above, the Casino Size
Requirements, whether or not supplemented by the Additional Casino
Size Requirements, will lead to the development of casino-entertainment
facilities that include a broader range of non-gaming amenities
than would be found in smaller facilities. Such amenities will
include a variety of dining options, cabaret lounges and other
live entertainment venues, as well as specialty outlets such as
high-tech sports-bars.
3.2 Case Study—Ameristar Casino Hotel
Council Bluffs
3.2.1 To illustrate the overall impact this
type of property can have on its community, we would like to highlight
one of our properties—Ameristar Casino Hotel Council Bluffs.
This property serves the Council Bluffs, Iowa/Omaha, Nebraska
metropolitan area, a market of roughly 700,000 adults. There are
three similarly-sized casinos in the market, and we believe our
property represents a good example of the size of a "regional"
casino that could develop under the new legislation as currently
drafted.
Ameristar Casino Hotel Council Bluffs consists
of the following:
— 38,500 square feet of gaming space,
including 37 table games and 1,500 slot machines;
— 160-room AAA-rated four-diamond hotel
(plus an additional 284 hotel rooms owned and operated by a third
party on the property);
— Four award-winning restaurants—Waterfront
Grill, Amerisports Bar, Prairie Mill Café &
Bakery and Veranda Buffet;
— Star Club VIP Players Lounge;
— Indoor Pool and Spa; and
— 3,000 car parking spaces, including
1,000 spaces in a covered parking structure.
3.2.2 In addition to providing a truly top
quality leisure offering to its customers, Ameristar Council Bluffs
contributes greatly to the state and local economies. Some examples
of the economic contributions by this property are as follows:
— Total non-maintenance capital investment
of approximately US$150 million (from 1995 through 2001);
— Approximately 1,280 permanent jobs
at the property (not including construction jobs and indirect
jobs in local businesses);
— Annual payroll and payroll-related
taxes of approximately US$36 million;
— Gaming and other state taxes of approximately
US$28.4 million annually;
— US$10-12 million per year of local/county
taxes and charitable contributions; and
— US$12-15 million annually in purchases
from local vendors and service providers.
3.2.3 And, as is typically the case across
the country, our communities welcome us as an important part of
the local landscape. The following recent statement from Council
Bluffs Mayor Tom Hanafan exemplifies this:
"In 1995 Ameristar Casino presented the
concept of a destination entertainment complex unlike anything
before developed in the State of Iowa to the City of Council Bluffs.
The completion of that complex in 1996 surpassed all expectations
and has continued to develop since. Ameristar has a history of
outstanding community service and is the true definition of a
good corporate citizen."
3.2.4 As mentioned above, there are three
similarly-sized casinos in the Omaha/Council Bluffs market, and
there are literally dozens of markets like this in the United
States Based on these statistics, it is easy for us to support
the report prepared by Pion Economics that predicts the creation
of 117,000 new jobs and £5 billion of new capital investment
in the sector.
3.3 Effect of Casino Size Requirements on
Economic Benefit
3.3.1 It is critical to note that the type
of facility described above cannot be profitable if a Slot-to-Table
Ratio of 3:1 or even 8:1 is imposed.
3.3.2 In order to justify the level of capital
investment to build this type of facility and the operational
cost associated with thousands of jobs and millions of pounds
sterling of purchases of goods and services, our casinos must
include a large number of slot machines to satisfy free market
demand given the appeal of slot machines to the mainstream leisure-going
public.
3.3.3 Casinos, like most other leisure offerings,
have both peak and non-peak times of business. In order to operate
efficiently, most casino operators seek to develop facilities
that can handle business levels during the peak times during the
evening hours and on weekends. This is true for both the casino
floor and the non-gaming amenities. We seek to satisfy customer
demand in all of our operations, and we know from decades of experience
that slot floors subjected to an 8:1 Slot-to-Table Ratio will
fail to satisfy the demands of a free market.
3.3.4 If a restriction is imposed that unduly
limits the slot machine operations, the post-reform United Kingdom
gaming market would not be viable for our business model and we
would not invest in the United Kingdom. Based on our experience
in the industry, we believe other international operators would
adhere to this view as well, with the result that the positive
economic benefit predicted in the Pion Report simply will not
occur.
3.3.5 We urge the Scrutiny Committee to
bear in mind that the number of slot machines allowable in a large
casino facility is a critical threshold question that could result
in the evaporation of the investment potential currently being
discussed throughout the United Kingdom.
3.4 Effect of Planning Considerations on Economic
Benefit
3.4.1 We believe the Draft Gambling Bill
represents a unique opportunity for the Government to spark the
development of a new mainstream leisure and entertainment market
that will boost the United Kingdom economy and act as a catalyst
for economic regeneration throughout the country.
3.4.2 However, we believe regeneration standards
should be applied uniformly to all areas of the United Kingdom
and not be used as a means of limiting casino development or granting
certain areas monopoly status.
3.4.3 If the Government through its planning
policy authorizes casinos only in a small number of cities that
are considered to be most in need of regeneration, there is no
necessary reason to believe that casino operators will be willing
to invest the large amount of capital needed to develop facilities
of sufficient size and scope to accomplish the desired regeneration.
3.4.4 Furthermore, such developments will
take many years to complete and therefore delay the desired economic
benefits. We also respectfully note that economic history has
shown that markets are better served by higher quality operations
when free competition is allowed to develop rather than a monopoly.
And even if casino facilities are built in a small number of cities,
the resulting economic benefit will be isolated to those few cities
and will not inure to the United Kingdom as a whole.
3.4.5 On the other hand, if the Government
favors "regeneration" more generally, as the term has
been used for property development in cities throughout the country
in recent years, the overall economic benefit in terms of property
redevelopment, job creation and training and advancement programs
will be significant and widespread. For this reason, we do not
believe giving regional planning bodies the power to mandate the
location of casinos is in the best interest of the United Kingdom
as a whole. Rather, we do not see any reason why current planning
policy, with local planning agencies having the power to implement
their objectives taking into account regional and national guidelines,
would not provide for an orderly growth of the market based on
rational free market conditions.
3.4.6 The Draft Gambling Bill does not provide
sufficient guidance with respect to the issuance of premises licenses
and the scope of review to be applied by the local authorities
in making licensing decisions. It seems clear that local planning
considerations are a critical element of premises licensing, but
we are unclear of the allocation of responsibilities between planning
and premises licensing authorities. We believe the responsibilities
allocated to the local authorities with respect to premises licensing
should be clearly specified, and to the maximum extent possible
should not overlap with and be duplicative of the responsibilities
assigned to local planning authorities and the Gambling Commission.
3.5 Researching Other Newly Developed Markets
3.5.1 Finally, we urge members of the Government
and the Scrutiny Committee to visit some of the cities in the
United States where gaming has developed in the last decade to
see first hand the type of casino development that has occurred
in markets that have taken steps similar to what the United Kingdom
is currently contemplating.
3.5.2 We believe these markets are more
predictive of the United Kingdom's future based on the Draft Gambling
Bill and planning policy than are the Australian, French and Las
Vegas models that we understand have been visited in the past.
We also believe these recently developed United States markets
will be instructive on the social impact issues that we know are,
and should be, central to the Government and the Scrutiny Committee.
February 2004
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