Gaming stocks suffer on fears of delay to new law

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The Independent Online

Shares in gaming stocks slid yesterday after reports suggested that the promised deregulation of the gambling industry, which was expected to be introduced in this autumn's Queen's Speech, faced delays.

Leading industry commentators warned that the proposed shake-up, which could herald Las Vegas-style gaming centres, may be postponed to allow the Government to focus on winning Britain's 2012 Olympics bid. A proposed Asylum Bill, needed to give legislative muscle to Tony Blair's pledge to halve the number of asylum applicants by September, is also thought to be taking precedence.

A spokesman for the Department for Culture, Media and Sport insisted "all our efforts are directed to getting it ready", but added: "Parliamentary time will, as always, be very precious."

Andrew Burnett, at Merrill Lynch, warned that the chance of a delay was likely to affect the "brittle sentiment surrounding gaming stocks". Rank's shares tumbled 5.5p to 258.75p, while Stanley Leisure's fell 9p to 309p.

Foreign gaming companies have been stalking the UK since the Government published its White Paper in response to the Budd Report just over a year ago. MGM Mirage, the US casino giant, has already taken a 25 per cent stake in a private UK casino company.

Under the gaming proposals, casinos would be allowed to open 24 hours a day and offer million-pound slot machine payouts. Analysts estimated the changes could have raised £1.5bn in tax.

"If it is deferred then it's only a question of when not if. Modernisation [of the gaming industry] is long overdue," Iain Wilkie, hospitality and leisure partner at Ernst & Young, said. He added: "Gaming deregulation at the end of the day can wait. The only downside for the Government is lower taxes. The Olympics will bring in a lot more investors than gaming deregulation. It's a question of economic priorities as well as political priorities."

Analysts said discussions between industry executives and ministers had hit a stumbling block over several elements of the Bill, such as the proposal to introduce a flat rate tax for casinos. Paul Leyland, at WestLB Panmure, said this would place extra pressure on operators of provincial estates, who are shielded from the maximum 40 per cent tax rate under the current graduated scheme, which their London-based rivals pay.

Mr Burnett also warned that if the Government decided to bring forward a general election, all non-essential legislation would be put off.