New casinos 'to boost UK productivity'

Julia Kollewe
Saturday 15 April 2006 00:00

The advent of new casinos, along with tax changes and new gambling rules, is expected to boost overall economic productivity, according to a study.

Some 27 councils across the UK are competing for the only licence for a Las Vegas-style "super-casino," with up to 1,250 slot machines and unlimited jackpots, under the Gambling Act, passed last year. About 40 councils want to host one of the eight large and eight small new casinos.

The shake-up, the biggest since 1968, will relax restrictions on how casinos are run and how bets are taken. Yesterday was probably the last Good Friday that racecourses were shut because betting on tracks is due to be allowed under the Gambling Act.

A research report to be presented at the Royal Economic Society's annual conference at the University of Nottingham next week found evidence that the changes to the gambling industry will benefit the UK economy by boosting productivity.

The study, by the economics professors Leighton Vaughan Williams, David Paton and Donald Siegel, points to tax reforms in 2001 which in effect abolished tax on punters, and concludes: "We find consistent evidence that productivity increased following major reforms to gambling taxation in 2001. Another key result is that internet operations appear to be associated with higher relative efficiency."

Gambling is one of the fastest-growing service industries, fuelled by the rise in gambling outside traditional betting shops - over the telephone or the internet, including betting exchanges and interactive TV betting.

Professor Vaughan Williams, from Nottingham Trent University's business school, said: "Our research suggests that recent policies designed to deregulate the gambling industry are likely to realise significant gains for the wider economy in terms of economic productivity. From this perspective at the very least, the new phase of casino developments soon to be introduced into the UK can only be good news for the economy." He said the new mega-casino would bring in £300m in investment and create 3,000 permanent jobs.

The report points to the radical change in tax rates in October 2001, moving away from a tax on gross revenue to a tax on gross profits, and in effect halving taxation on bookmakers. Professor Vaughan Williams described tax changes in this year's Budget as "tinkering at the margins". He said: "It doesn't change the main thrust of our findings." The Chancellor, Gordon Brown, imposed licence fees on bookmakers' betting machines on top of value-added tax, and raised the tax on amusement machines. Ladbrokes estimated it would be hit by £3m this year and £11m next year. Casinos fared better, having their tax increased in line with inflation.

The Government shelved plans for eight super-casinos after an outcry from Labour backbenchers and gambling addiction charities, although it has come under pressure from councils to allow more than the one mega-casino. Its current stance is to wait and see how it turns out and possibly allow more super-casinos to be built. The site of the super-casino will be determined by the Casino Advisory Panel, with Blackpool among the frontrunners.

The Gambling Act abolished the rule that casino users had to become members at least 24 hours before they visited the premises. Before the removal of the rule in October last year, it was estimated that only 2.7 per cent of adults had visited a casino. Now any adult can visit one and observers think it will become commonplace to end up at a casino on a night out or after football. A further boon came from new rules permitting the installation of more slot machines, with higher payouts, from last October.

Rules of the game

* APRIL 2005

Gambling Bill is passed, shaking up Britain's gaming laws for the first time since 1968.

* OCTOBER 2005

Removal of 24-hour membership rule for casinos and increase in stakes and prizes.

* 2006

27 councils are competing for the only super-casino licence and about 40 are bidding for licences for eight large and eight small casinos.

* EARLY 2007

New casino licences to be awarded to councils.

* AUTUMN 2007

Casinos will be allowed to lure punters by advertising for the first time.

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