UK misses out as Harrah's $1.4bn heads overseas

Harrah's Entertainment, the US gambling giant, is investing $1.37bn (£795m) in Las Vegas-style casinos in Spain and Slovenia after its ambitions to build in the UK were frustrated by a change of heart by the Government.

The company is announcing two major casino-hotel developments today in Spain and Slovenia, and is one of the first US groups to invest so heavily in Europe. Experts in the leisure industry say the multibillion-dollar investment would have come to the UK had the Government not backtracked on its plans to open up the UK market to large casino developments.

Harrah's had been working with the UK gaming group Gala to build huge resort casinos in Britain, each housing 1,250 high-prize slot machines. They would have been part of large entertainment complexes with cinemas, bars, restaurants and sporting facilities. The company abandoned its joint-venture this year when the Government said only one such development could be piloted in the UK.

Harrah's was one of a number of overseas gaming groups, including MGM Mirage, Las Vegas Sands, Kerzner International and Sun International, that had been gearing up to build "supercasinos" in the UK, promising major investment, the regeneration of run-down areas and thousands of jobs. Harrah's had said it planned an "aggressive" expansion plan in Britain. But amid fears supercasinos would lead to widespread problem-gambling, the Government limited the number of supercasinos to one. Its location and operator has yet to be decided.

Nick Pattie, of KPMG, which advised overseas players looking to invest in the UK, said: "There is no doubt a number of overseas companies were set up and ready to come to the UK before the Government said there could be only one supercasino. Some of the biggest gaming groups in the world had demonstrated serious intentions towards the UK market and had spent a lot of money in developing their plans. Following the Government's decision, they have all gone away to lick their wounds." He added: "It is inevitable those operators wanting to expand have had to look elsewhere and Britain has lost out on that investment and regeneration projects."

The Government has left the door open to increasing the number of supercasinos to allow a wider test of their effects on society. Mr Pattie said the UK would still be an attractive market to overseas operators such as Harrah's if the Government allowed more developments.

"The culture of the UK is more readily understood by US and South African players than other European countries," Mr Pattie said.