Casino industry hedges its bets to survive in a changing world - Monday 23rd of June 2008

THEY are associated with style and glamour for those with plenty of cash and an appetite for risk.

But Britains casinos are facing more mundane pressures as they deal with a combination of gambling taxes, the smoking ban and changes to gaming legislation.

Genting Stanley, the UKs largest operator, says the future of the industry relies on attracting younger customers in their 20s and early 30s who visit casinos not only to gamble but also to spend money in their bars and restaurants.

It says the industry will have to modernise if it is to recover from the "torrid" year it had in 2007, when gaming duty was raised from 2.5% to 15% and the smoking ban dealt a severe blow to profits.

It also suffered from a reversal in gaming legislation which placed restrictions on the number of new casinos that can be built in the UK.

Peter Brooks, executive deputy chairman of Genting Stanley, which has four casinos across the Central Belt, says operators are investing more heavily in the food and drink side of their businesses, and are starting to market themselves as more general entertainment venues suitable for a younger audience.

"The age demographic has changed a lot in the casino industry," he said. "Its younger people coming out and spending so we are having to find ways to appeal to that demographic without alienating our traditional client base.

"Traditionally, people came into casinos to game, now people come in for a broader range. They may not game at all. We are undoubtedly seeing much higher revenues from the food and drink side."

Paul Rety, director of the Alea Casino in Glasgow, which is owned by London Clubs International, said although it has 21 gambling tables, the Alea has been set up as more of a general entertainment venue than a casino, with three bars, a restaurant, comedy and other live entertainment.

Almost 40% of its 25,000 members are female, and a lot of its trade comes from people in their twenties and early thirties who turn up for events such as themed Sex And The City nights, concerts and ladies nights.

"What we are about is an entertainment venue where people come along and go to one of our bars or restaurant. We do all sorts of entertaining. They dont need to game."

The industry is pursuing a similar strategy to the pubs sector, which has been forced to invest in catering to counter the dramatic fall in revenues triggered by the smoking ban.

JD Wetherspoon is just one of the major pub operators that has ploughed money into improving its food offering as the industry suffers under the weight of falling drinks sales.

Genting Stanley has signed up celebrity chef Jean-Christophe Novelli to design a new menu for its restaurants, which was launched at the Circus Casino in Fountainbridge, Edinburgh, on Friday.

Brooks said a number of casinos are likely to close over the next couple of years, particularly among the smaller operators, as the industry struggles to cope with the new environment. To add to its problems, he said, the industry is also starting to feel the effects of the credit crunch and the consumer slowdown.

"The industry had a torrid time in 2007. Overnight, the Government increased costs by more than 20%. Everyone is trying to knuckle down and deal with it as best we can. So far, the credit crunch is about the icing on the cake. Its yet another challenge for us to overcome."

But he added: "The casino industry is going to modernise, and I think in the end it will do that successfully."

Genting Stanley, formed when Malaysias Genting bought Stanley Leisure in 2006, reported a fall in revenues in May due to a drop in business volumes at its UK division.

The Rank Group, which owns Grosvenor Casinos and Mecca Bingo, has also seen its share price more than halve since last summer when the smoking ban was introduced in the rest of the UK. It closed on Friday at 80.50p, after reaching 194.5p per share last July.

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