Cash in the chips
Last November's national lottery launch could have implications for the hospitality industry far beyond a weekly flush of new millionaires eager to spend their winnings in top hotels and restaurants.
Ultimately, it could lead to an exciting and lucrative new area of expansion for hotels, coupled with considerable market opportunities for food and beverage of all kinds.
Experience elsewhere in the world shows that wherever national lotteries start, governments' resistance to gambling has eventually crumbled, ushering in deregulation which has led to a boom in casino development.
Casinos are far from being stand-alone enterprises. Food and beverage has become a key part of the experience, critical in retaining customers, and hotels have become integral to the large casino complexes now being developed overseas.
Except for the UK, the casino industry is going through a period of unprecedented growth worldwide; key areas of development being the USA, Canada, the Caribbean, western Europe, countries in the former Soviet bloc, Australia, New Zealand, and parts of Asia, Africa and South America.
This growth is being fuelled by "pent-up consumer demand unleashed by a change in the moral climate," according to New York casino industry consultant Eugene Martin Christiansen of Christiansen/ Cummings Associates. Most people no longer see gambling as morally reprehensible, drugs and crime having become of greater concern.
The casino industry's image has also improved because of tighter controls over the way operations are run and managed. Further inducements for governments are the huge revenues obtainable from casino licences and taxes.
Casinos overseas are markedly different from their British counterparts. Governed by less stringent legislation, they have a higher profile because advertising is generally allowed. Most are public access - players can walk straight in from the street and gamble (whereas all British casinos are membership-only clubs) - and banks of high-tech slot machines are commonplace.
Intense competition between operators is leading to more facilities, with design, entertainment, restaurants, bars and high-quality hotel rooms becoming essential to win and retain customers.
Best described as "adult entertainment centres", many of the new developments are large complexes, akin to hotel resorts, where everything leads back to the gaming floor. In Australia, for example, where seven casinos are planned, the world's second largest operation is to be built in Melbourne. It will include a theatre, funfair, 17 restaurants, retail outlets and 1,000 hotel bedrooms.
Naturally, the USA remains world leader in casino development where the industry has trebled in 10 years, mushrooming beyond Nevada and New Jersey (until 1988, the only states allowing casinos). Riverboat casinos, introduced by Iowa in 1988 to encourage tourism, have spread to at least seven other states, with more than 60 boats expected to be in operation next year.
Cashing in on the boom, Las Vegas operators have recently invested $3.2b in themed extravaganzas, such as the $390m Luxor, a vast pyramid-shaped structure in which guests are ferried from reception to elevators on an indoor river. It opened this year along with 11,000 new hotel bedrooms. Already close to over-capacity, Las Vegas operators are expected to spend as much again by the end of the century.
So where does this leave this country's envious casino industry?
Rigidly controlled by the 1968 Gaming Act - one of the toughest pieces of legislation around - the UK has 118 casinos, a more or less constant number for the past 26 years. The Act has been extremely effective in achieving its objectives: the eradication of unscrupulous, criminal elements and control of the growth of casino gaming.
That casinos need tight controls is without question, but the effect of the Act on the industry has been highly restrictive, shackling and silencing it for nearly three decades.
Basic business activities, such as expansion, marketing and self-promotion within the UK, which most industries accept not only as standard practice but consider to be a right, are denied to casino operators.
For a casino to take display space in the Yellow Pages, for example, would be unthinkable, contravening the Act's ban on all forms of advertising, leading to possible loss of licence and even closure. (The advertising ban even extends to seeking editorial coverage. Casinos cannot approach journalists.)
Similarly, expansion is fraught with difficulty as operators have to prove "unstimulated demand" for a new casino without recourse to the usual marketing tools, and can only seek new licences within "centres of population" designated 20 years ago and which take no account of subsequent demographic changes.
But now things are starting to change. Committed to deregulation, the Government has already relaxed betting shop restrictions, allowing them to sell food and open late and on Sundays, and it has weakened its guard with the beginning of the national lottery.
Home Secretary Michael Howard has also indicated that the complete ban on casino advertising is ripe for review. The British Casino Association, the industry's representative body with 100% membership, is lobbying for change in this area as a first step.
General secretary Brian Lemon says: "We're not at this time seeking unrestricted advertising, but it's unacceptable that we can't even proclaim our existence. What we seek is for us to be able to inform the public of our existence and what we have to offer by providing information in directories, listings, newspaper classified and hotel brochures, for example.
"We are also seeking to change other areas of the Act, including the 48-hour rule, liquor licensing in England and Wales and to be able to use debit card plastic. However, to achieve this we need a new Act, which probably means a Government bill. But we do have permission to introduce two new games in January."
Now, the BCA is seeking a private member's bill to raise the number of slot machines in a casino from two to six, and later to permit machines with new technology.
In the meantime, overseas activity and prospects of UK change are galvanising the industry. Stakis, the largest operator with 22 casinos, is starting to make its properties more visible to the public. Its third Glasgow casino is being rebuilt, themed as a riverboat, and will have a restaurant with a view of the gaming floor.
Ladbroke has returned, buying three London casinos as a platform for international expansion and is considering prospects in four US states and opportunities with Hilton International, where hotel casinos are run by other operators.
Undoubtedly, a natural symbiosis exists between hotels and casinos as overseas examples demonstrate, and with changes on the cards, the possibility exists that a gaming floor could become a lucrative part of hotels by the end of the decade. Certainly it is an area worth watching.
THE SPORTSMAN
As only 2% of the public have ever been to a casino, misconceptions abound. Most people's image of a casino is of a dark, intense atmosphere, with lots of black and red, smoked glass and glitzy chandeliers.
But this image is swiftly dispelled by casinos such as the London Club's Sportsman near Marble Arch - particularly on descending the Sportsman's blue and gold stairs to the basement gaming floor.
The interior is new, the casino having recently moved from another London site, and is subtly themed as the deck of a 19th-century Mississippi riverboat. Murals depict leisurely riverbank scenes; the bar has a working paddle wheel; pillars and deck canopy are of Victorian-style filigree metalwork, and pale cream, not red, is the predominant colour.
Overhead, Quaglino's-style lights create the impression of sunlight streaming on to roulette, black jack, dice and punto banco tables. The atmosphere is light, airy, spacious, relaxed. It's hard to believe this is a basement, let alone a casino.
Director Derrick Rhodes says it serves a middle market niche, and a high proportion of members are overseas businessmen - the result of promotion outside of the UK which is not restricted by the Gaming Act. About 200-300 members are present, an ethnic cross-section in smart business suits, engrossed in the gaming tables.
As gamblers leave, a fresh crowd will appear, says Rhodes, a cycle repeated during the 12.30pm-4am opening hours.
One step up from the gaming floor, the restaurant serves an "East meets West" menu, a repertoire of Cajun, Greek, Middle Eastern, Thai and Chinese. London Clubs' group catering director Otto Hoenig says this is a popular combination in casinos, reflecting the cultural mix of members.
The restaurant is run as a service to the casino - average spend being ú16, with fixed-price menus at ú10-ú12 a head - so has an element of subsidy. Hoenig says this is commonplace among London's 20 casinos where competition is fierce. "Catering has become very important as it is the only means we have of giving something back to members. At the Golden Nugget, our mass market casino near Piccadilly, we've introduced fast food that members eat while gambling, and it's free. In the restaurant, we do London's cheapest steak, chips and peas at ú2.75. We get through huge quantities," he says.
The Gaming Act looms large at every turn, strictly followed to the letter however anomalous or trivial. For example, recruitment advertisements for catering staff never give the casino's full name, address and phone number in case they might be misconstrued as a form of promotion to the public. "We have to be so careful," says Rhodes.
Each day he's called into the casino's reception to explain the Act's 48-hour membership rule to would-be gamblers, usually from abroad, turning them away.
"It's not just us missing out, but British tourism. A lot of overseas gamblers won't come to Britain, they don't understand the Act, they take it personally," he says. n
