Casino firms hit as UK market opens to Las Vegas giants
Tuesday 15 June 2004
Shares in casino groups were hit yesterday amid fears that a relaxation of UK gaming laws will result in increased competition from big US players entering the market.
Stanley Leisure and Rank Group dropped about 6 per cent on the Government's proposals to limit the number and type of slot machines they can operate within small and medium-sized casinos. London Clubs International also fell.
The biggest upset in the proposals was the restriction on machines with unlimited jackpots to the new, regional resort casinos, which the casino groups said puts them at a disadvantage. "The Government has not consulted on this," David Boden, the managing director of gaming at Rank, said.
Publication of the Government's plans came as MGM Mirage, one of the giant US casino operators planning to enter the UK market, raised its bid for the Mandalay Resort Group - a deal that would create the world's largest casino empire.
The relaxation of UK gambling laws will allow super-casinos to be built in rundown regions in need of regeneration. But investors voiced fears that additional competition from big US players such as MGM would outweigh the benefits to existing domestic operators of greater freedom on opening and the number of slot machines allowed.
MGM is planning to invest £650m in the UK, building gambling resorts that will combine cinemas, bowling alleys, and restaurants with casinos. There are concerns that the arrival of MGM and other US casino groups could dwarf existing casino outlets. But MGM said the limit of 1,250 on the number of slot machines in these large, "regional casinos" will cause it to hold back some of its investment plans.
MGM Mirage, meanwhile, raised its offer for Mandalay to $71 a share or $4.8bn (£2.6bn), from $68 a share. A deal would combine MGM's high-end Las Vegas casinos such as the Bellagio and the MGM Grand with the more downmarket gaming rooms of Mandalay's Excalibur and Luxor. It would create a company that would operate across the gambling spectrum. The enlarged group would control nearly 50 per cent of the hotel market on the Las Vegas Strip and about one-third of its casinos.
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