Contact: Sarah McFarlane
Deloitte
Public Relations
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The Casino Advisory Panel (CAP) deadline for Local Authorities’ submissions for regional casino licenses will leave just one week for Local Authorities to incorporate any Budget announcements on gaming tax rates, into their plans.
CAP announced a process for choosing the locations where 17 new casino licenses, under the 2005 Gambling Act, including one regional ‘super casino’ with up to 1,250 Class A slot machines. The deadline for submissions is 31 March 2006.
Alex Kyriakidis, Global Head of Tourism, Hospitality & Leisure at Deloitte comments: “Local authorities across the country are at various stages in their preparation of casino license submissions. Some have considered applying for a license and declined to do so, others have incorporated the prospect of a license into regeneration proposals and a number have already held casino license bid processes and have ‘awarded’ the license – yet to be won – to consortia comprising operators, developers and investors."
“When the Local Authorities held their ‘shadow bid’ processes, there was no license to award, the tax rates applicable to these casinos were not, and to date, have not been announced, and the terms associated with these licenses, such as exclusivity*, which are crucial to gauge their economic impact are yet to be defined. Even if tax rates are announced in the Budget on 22 March 2006, that could be too short a time period to reformulate proposals by the submission date of 31 March. This could lead to difficulty for CAP and Local Authorities to identify which economic proposal is the most competitive. Put another way, if the Treasury announces a particularly stringent tax regime, will those bids still stand?"
“The announcement could also pose a major risk to the Local Authorities who have been through license award processes as one of their chosen partners may back away from the consortia once the tax rates are announced."
“Equally, there is a risk that a location in a Local Authority which has already held a ‘shadow bid’ process and is therefore ready to go, may fall because of legal challenge under European Competition Law. This is due to the value of the license only coming to life when it has been awarded and its terms are known. Any operator who did not participate at the time that the Local Authority held the ‘shadow bid process’ could now claim that they are being denied the opportunity to bid."
“Considered thought also needs to be given to CAP’s expectations of the positive regeneration and social impact associated with the proposals. There is little doubt that for the one regional license, a significant regeneration impact can be anticipated, which includes job creation, inbound visitation and the economic benefit from spend within the resort. However, any expectation that the same can be said for small casinos may be overly optimistic. Unless the license is located away from deprived areas and attracts higher earning visitors, there is a risk that most of the visitors would come from the less affluent area itself, defeating the stated objectives."
“Whilst the Gambling Commission will be providing an update on their progress at the Future of Betting and Gaming conference in London this week, it is likely the attendees will be hoping that the Government speakers will provide a steer ahead of possible announcements in the Budget, however, it is probable that clarity will not be provided until 22 March,” adds Kyriakidis.
Ends
Notes to editor
* The exclusivity of a license may include the radius around a casino site which may not have another casino built on it for a set period of time.
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