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Nevada gamers set to bet on UK

Jun 22, 2004 6:47 AM

Last week, regulators in the United Kingdom issued guidelines on how the casino industry would look after deregulation, which is scheduled to take place within two years.

While the expansion of gambling in the U.K. would not be as rapid as originally believed, there is still plenty of room for Nevada-based operators to build Las Vegas-style casinos across the pond.

"We expect to be a major player in the United Kingdom," said Terry Lanni, chairman and CEO of MGM Mirage.

Lanni added that with the additional resources gained through the merger with Mandalay Resorts, "We’ll be better able to compete across all segments of the gaming and leisure market."

Specifically, a combined MGM Mirage-Mandalay would generate about $2 billion in cash flow yearly, which could be used in part for expansion in Great Britain, as well as other jurisdictions such as Singapore, Macau, Atlantic City and Las Vegas.

If the new casino guidelines are implemented in the U.K., regional casinos could be built containing up to 1,250 Nevada-style slot machines. Those machines, unlike ones now permitted, could offer unlimited jackpots. Existing machines are capped with a 2,000-pound limit (each British pound is worth $1.82).

In April, MGM Mirage announced it had forged an alliance with Peel Holdings (a private landowner) to build several casinos and entertainment centers in Liverpool, Manchester, Salford and Glasgow — at a total cost of nearly $1 billion.

MGM Mirage has also signed a deal to build a casino adjoining Newcastle United’s soccer stadium.

Even though the number of slots allowed per casino would be less than anticipated, MGM Mirage has reaffirmed its intent to build massive resorts, though perhaps on a less grand scale.

"Regional casinos with a wide variety of non-gaming attractions can provide a unique leisure and entertainment experience, and can contribute significantly to long-term benefits such as jobs, training, new investment and economic benefits," said Lloyd Nathan, managing director of MGM’s European development division. "The initial cap on the number of machines in regional casinos will limit the size and scale of any complex."

Although Nathan wouldn’t speculate on how the U.K. casino landscape could change after deregulation, some Wall Street analysts have predicted that the 1,250 slot machine cap could be lifted after the casinos are built and social reformers are content that the new casinos haven’t opened the floodgates to wanton gambling on every street corner.

Another high-stakes Las Vegas operator, Sheldon Adelson, has also expressed big plans for building casinos in the U.K.

Adelson, whose Las Vegas Sands owns The Venetian and the newly-constructed Macau Sands, has signed deals to build regional casinos on the grounds of two of Britain’s top soccer stadiums, the Glasgow Rangers and Sheffield United. Those casinos are expected to cost about $400 million.

While Sheldon’s group is negotiating other deals, the slot cap could dampen some of its investment plans, though officials are hopeful the cap will be lifted in the future. "There has been no in-depth research undertaken which shows that restricting machine numbers does anything to reduce problem gambling," said Rodney Brody, the head of Las Vegas Sands’ UK operations.

Finally, Las Vegas-based Harrah’s Entertainment has teamed up with Gala, a UK bingo and casino operator, to jointly develop eight regional casinos. Each would have up to 50,000 square feet of gaming space, along with entertainment amenities such as restaurants and cinemas. Harrah’s has pledged up to $1 billion for investment in the U.K.