European panel doubts American style gambling

SOUND ANALYSIS AT G2E ROUND TABLE

"The American casino, will Europe ever accept it?" was the theme of the pre-show round table presented by David Marshall, Gaming Director of Accor Casinos, the gaming division of French hotel giants Accor and Colony Capital, the investment group who recently acquired The Hilton Hotel and Casino, next to the Las Vegas Conference Center. Marshall, whose gaming career has taken him from The London Playboy Club through Madagascar, South Africa and Turkey made the point that, although France bears a political antipathy towards American politics, the country is host to Euro Disney, has a chain of over 750 McDonalds - the largest in Europe, and its casinos have adopted American style slots machines.

Irrespective of other European countries, the real reason for the round table was the pending deregulation of British gaming laws, and the upbeat interest by American gaming corporations to set up show there and run casino resorts Las Vegas style once the new legislation is in place. For my money, the question of the title should have read: "The American casino, will Britain ever accept it?"

The panel was composed of industry experts Julian Harris, a partner of Harris Hagan, Gambling Law Specialists from London; Iain Wilkie, a partner of Ernst & Young from London, specialising in Hospitality, Leisure and Gaming; Anton Kaszubowski, a member of The Gambling Consultancy of London; and Ian Gosling, Vice President and CEO of Hyatt Regency Casinos, Greece.

Both Julian Harris and Ian Gosling were in agreement that the casino operations’ invasion of Britain has been over played by the media: "It seems that every football club, every exhibition centre in London, every large bingo hall will have a casino. There will be some new casinos, but I think a lot of it is newspaper talk" said Gosling, adding that in 2002 the Americans dropped out of the running in Greece when more than 30 proposals were presented for the take over of a state-run casino, owing in part to the complex regulatory process.

Marshall had already pointed to the complex idiosyncrasies of each country when he said that: " While British casinos have stayed British, as has the country, despite having the opportunity to go American, French casinos have gone towards American styles despite huge administrative pressure to stay French! Every country and every market in Europe is both an opportunity and a problem to be solved." As American operators focus on Britain with their proposed mega casinos, Marshall asked the panellists: "Is this the right way to expand the British casino business?"

There was a real sense of responsibility from Ian Gosling, a veteran casino operator with some of the major companies - including Sun International in South Africa - who warned that casino operators will "have to protect their local customer" from the proliferation of the so called penny slot machines. He considered these "the most deadly weapon inside a casino" from a profit centre viewpoint, citing Australia as a clear example of problem gambling through exposure to such machines.

The panel reached a consensus that American casino companies have not been very successful operating casinos abroad in recent years, indicating that neither their brands nor themes have translated into other cultures. The fact that the British regulatory system and gaming legal environment is still pending means that problem gambling, at the core of the new legislation, may further limit the scope and size of the forthcoming destination casinos.

The two factors that emerged as the biggest stumbling blocks to the American charge were the as yet undecided gaming tax system, and the higher European labour costs that would raise operating cost levels in the labour intensive American style casinos. The argument for the American invasion is that both taxation and costs are relative to each country and, as long as taxation levels are reasonable, Europe and particularly Britain are choice destinations for holidaymakers, and prestige territories for gaming corporations.

As for Joe Public, marketing should take care of that. I remember some of the adverse comments made when the first McDonalds opened in London, roughly around the time when "Dallas" the TV soap was tops and the glamorous precursor of our own "East Enders". They said that American junk food could not replace good ol' "fish 'n chips". It is true that some cultural values and traditions cannot be replaced, but they surely subside under the barrage of commercial advertising. Though the humble fish supper has gone down as a fast food first choice, it has crossed the British frontiers to become an exotic choice in other countries.

Like Uncle Sam's hamburgers, foreign casino operators will impact greatly in Britain. Whether they are American, South African or Australian, the new gaming operators who pitch up in Great Britain will turn the industry upside down and will take more than one local operator to the cleaners. They will bring a service and entertainment culture the likes of which these islands have never seen.

Once the ‘i's have been dotted and the ‘t's crossed in the forthcoming new gaming bill, gaming operators like MGM Mirage, Kerzner and Accor will lead the charge in Great Britain. As far as the rest of Europe is concerned, perhaps David Marshall is right when he says of their taxation policies: "taxation in Europe will be guided by the popularity in election years. Voters in Europe dislike gaming in principle and governments have to be very creative when they want to pass legislation. Governments, on the other hand, are desperate for extra cash as the growth in a mature economy such as the EU cannot be expected to be over 2-3% in GOOD YEARS: an initially attractive investment is destined to become a government cash cow."

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