Select Committee on Culture, Media and Sport Memoranda


Memorandum submitted by Leisure Parcs




  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.


  2.1  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.


  3.1  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)


  4.1  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.


  5.1  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.


  6.1  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."


  7.1  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)


  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.


  8.1  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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