http://www.nwda.co.uk/pdf/CasinosFinalreport05 by Northwest Regional Development Agency

Pion Economics

Casinos in Englandâ&#x20AC;&#x2122;s Northwest An Assessment of Market Demand

Final Report

Technology House Lissadel Street Salford M6 6AP Tel: 0161-278-2458 Fax: 0161-278-2701

Casino Market Demand Study June 2005

PION

Casinos in Englandâ&#x20AC;&#x2122;s Northwest An Assessment of Market Demand

Final Report June 2005

Pion Economics Ref pe568/finalreport.doc

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Casino Market Demand Study June 2005

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Contents 1

EXECUTIVE SUMMARY..................................................................................... 4 1.1 INTRODUCTION .................................................................................................. 4 1.2 STUDY OBJECTIVES ........................................................................................... 4 1.3 MARKET DEMAND............................................................................................. 4 1.3.1 Resident Demand ...................................................................................... 4 1.3.2 Tourist Demand......................................................................................... 4 1.4 CASINO ACCOMMODATION AND ECONOMIC IMPACT ....................................... 5 1.5 SCENARIO ASSESSMENT .................................................................................... 5 1.5.1 Scenario Structures ................................................................................... 6 1.5.2 Assessment Criteria................................................................................... 6 1.5.3 Option Set 1: Single Casino Appraisal ..................................................... 6 1.5.4 Option Set 2: Multiple Casino Appraisal.................................................. 7 1.6 MOVING FORWARD – A NORTH WEST REGIONAL CASINO PILOT ................... 7

INTRODUCTION................................................................................................... 8 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8

INTRODUCTION .................................................................................................. 8 STUDY ORIGINS ................................................................................................. 8 STUDY BRIEF ..................................................................................................... 9 CHANGING LEGISLATION .................................................................................. 9 STUDY PROCESS .............................................................................................. 10 SOCIAL IMPACTS ............................................................................................. 11 ACKNOWLEDGEMENT...................................................................................... 11 STRUCTURE ..................................................................................................... 11

BACKGROUND ................................................................................................... 12 3.1 INTRODUCTION ................................................................................................ 12 3.2 CASINO GAMBLING ACTIVITY ........................................................................ 12 3.3 CASINO STRUCTURES ...................................................................................... 14 3.3.1 Regional Casinos .................................................................................... 14 3.3.2 Large Casinos ......................................................................................... 14 3.3.3 Small Casinos.......................................................................................... 15

MARKET ANALYSIS AND CASINO ACCOMMODATION ........................ 16 4.1 INTRODUCTION ................................................................................................ 16 4.2 MARKET ANALYSIS: THE DEMAND FOR CASINOS .......................................... 16 4.2.1 Market Analysis: The Resident Gambling Envelope............................... 16 4.2.2 Market Analysis: The Tourism Gambling Envelope ............................... 19 4.3 MARKET ANALYSIS: CASINO ACCOMMODATION ........................................... 22

ECONOMIC IMPACT: GVA AND JOB CREATION..................................... 25 5.1 INTRODUCTION ................................................................................................ 25 5.2 THE IMPACT MODEL ....................................................................................... 25 5.3 ESTIMATING AND SIMULATING DIRECT EFFECTS ........................................... 25 5.3.1 Staffing Profiles....................................................................................... 25 5.3.2 Disposable Incomes, Consumption and Local Retention........................ 26 5.4 INDIRECT ECONOMIC IMPACT ......................................................................... 27

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5.4.1 Goods and Material Purchases............................................................... 27 5.4.2 Displacement........................................................................................... 28 5.5 INDUCED EFFECTS ........................................................................................... 31 5.6 IMPACT ASSESSMENT ...................................................................................... 32 5.6.1 Economic Impact..................................................................................... 32 5.6.2 Physical Impact....................................................................................... 33 6

SCENARIO DEVELOPMENT AND ASSESSMENT ...................................... 34 6.1 INTRODUCTION ................................................................................................ 34 6.2 SCENARIO STRUCTURES .................................................................................. 34 6.3 ASSESSMENT CRITERIA ................................................................................... 35 6.3.1 Feasibility................................................................................................ 35 6.3.2 Economic Benefits................................................................................... 35 6.3.3 Tourism Benefits...................................................................................... 36 6.3.4 Benefits for Deprived Groups ................................................................. 38 6.4 OPTION SET 1: SINGLE CASINO APPRAISAL .................................................... 42 6.4.1 Option Set 1: Feasibility ......................................................................... 43 6.4.2 Option Set 2: Economic Benefits............................................................. 43 6.4.3 Option Set 1: Tourism Benefits ............................................................... 43 6.4.4 Option Set 1: Benefits to Deprived Groups............................................. 43 6.4.5 Option Set 1: Overall Ranking................................................................ 44 6.5 OPTION SET 2: MULTIPLE CASINO APPRAISAL ............................................... 46 6.5.1 Option Set 2 : Feasibility ........................................................................ 47 6.5.2 Option Set 2: Economic Benefits............................................................. 48 6.5.3 Option Set 2: Tourism Benefits ............................................................... 49 6.5.4 Option Set 2: Benefits for Deprived Groups ........................................... 51 6.5.5 Option Set 2: Overall Ranking................................................................ 52

MOVING FORWARD â&#x20AC;&#x201C; A NORTH WEST REGIONAL CASINO PILOT .. 54 7.1 INTRODUCTION ................................................................................................ 54 7.2 POTENTIAL PILOT STUDY CRITERIA ............................................................... 54 7.2.1 Areas willing to licence a new casino ..................................................... 54 7.2.2 Areas with economic development potential........................................... 55 7.2.3 Areas in need of regeneration ................................................................. 55 7.2.4 Areas where a positive contribution can be made to the tourism sector 55 7.3 A CASE FOR THE NORTH WEST ....................................................................... 55 7.3.1 Willingness to licence a new casino........................................................ 56 7.3.2 Economic development potential ............................................................ 56 7.3.3 Regeneration Need .................................................................................. 56 7.3.4 Tourism Contribution.............................................................................. 57 7.3.5 Overview ................................................................................................. 57

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Executive Summary

1.1

Introduction

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This report provides the findings and analysis of the Pion Economics team undertaking a study of casino market demand in North West England. The study was commissioned by NWDA, jointly steered by NWRA and GONW, and shows that the North West has capacity to sustain a number of ‘regional’ casino structures. The study does not address social impacts connected with the development of casino facilities, but it recognises that they remain an underlying consideration to be addressed in evaluating casino operations.

1.2

Study Objectives The primary objectives of the exercise have been to: •

provide an independent assessment of both the demand and capacity for regional casinos in the North West; and

•

develop various scenarios of casino development to inform planning policy within the region and ensure transparency in regional decisions on the broad locations of regional casinos to be identified in the North West Regional Spatial Strategy (RSS) within the context of the evolving legislative framework.

1.3

Market Demand

1.3.1

Resident Demand The study examines potential market demand in the region by matching information from the British Gambling Prevalence Study (2000) with 2001 Census age-band demographics. This enables an assessment of current casino gambling participation across different agebands. Overall casino participation is assumed to rise from the current 3% to 10% in line with assumptions previously made by the gambling sector Cross Industry Group (CIG), with actual visit numbers assessed across four gambling types - non-gamblers, minimal interest, moderate interest and multiple interest gamblers – also defined in the Prevalence Study. This protocol is applied to each local authority area in the North West to establish a resident ‘gambling envelope’ that inevitably places the two city conurbations of Liverpool and Manchester at the higher end of the spectrum owing to their population concentrations, along with an overall estimate of an annual 13m potential casino visits across the region.

1.3.2

Tourist Demand The study also constructs an estimate of potential gambling by tourists. This task is more complicated than that for residents since detailed information on tourism activity is much more limited than that on residents. However, recent reorganisation of Tourist Board structures within the North West has encouraged development of a consistent local

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authority district (LAD) based profile of tourism across the region based on the well-used STEAM methodology 1 . Constructing estimates of potential tourism casino participation is achieved through a complex process described in the report but the main difference is to allow tourists to have a slightly higher propensity to participate since the pursuit of a leisure experience is more to the forefront of tourism activity than it is in everyday working life. Adopting this approach across all LADS adds just over 5m additional casino visits to the residential profile. While Manchester and Liverpool remain in pole position, the introduction of tourism does alter some relative positions – most noticeably Blackpool.

1.4

Casino Accommodation and Economic Impact Having established an estimate of the ‘total’ gambling envelope, the report assesses the potential of the region to accommodate development of different types of casinos. Using visitor thresholds supplied by the industry, the industry preferred 45-minute drivetime/catchment, and setting to one side catchment conflicts, the analysis suggests that around 21 large and 5 regional casinos might be viable. Adding tourists raises these numbers to 29 and 7 respectively 2 . The report also assesses the potential impact of casino structures on the North West economy. The impact model is based on a ‘multiplier’ structure that separates impact into the direct, indirect, and induced effects of operation. Impact simulations also contain both ‘gross’ and ‘net’ components allowing for the fact that ‘new’ resource expended on casino gambling following deregulation may be diverted from spending elsewhere in the gambling sector and spending on other goods and services both locally, regionally and beyond regional boundaries. It is estimated that regional casinos may typically generate somewhere around £38m of GVA per annum for the North West with large and small casinos generating some £9m and £5m. Employment figures are placed at around 2,000, 500, and 220 respectively.

1.5

Scenario Assessment Alongside analysis of potential demand and broad indications of economic impact, the study reviews a range of specific scenarios representing different potential casino configurations across the North West. Two sets of options are reviewed as part of the scenario assessment: •

Option Set 1: o

•

Option Set 2: o

a single regional casino option consistent with the current legislation;

multiple casino options – regional and large – not all of which are consistent with current legislation but which may prove viable in the medium to long-term if evaluation of pilots encourages relaxing of constraints on numbers.

STEAM – Scarborough Tourism Economic Activity Monitor

These are ‘ceiling’ estimates – catchment conflicts may reduce numbers and are taken into account in the scenario analysis later in the report.

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1.5.1

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Scenario Structures The scenarios defined for consideration are all based on known or expressed interest across the region. The options reviewed are as follows: •

Option Set 1: Single Casino Options: o

Option A: a single regional casino located at one of five locations across the region : Manchester, Salford, Trafford, Liverpool, Blackpool;

•

Option Set 2: Multiple Casino Options: o

Option B: regional casinos located at five points across the region: Manchester, Salford, Trafford, Liverpool, Blackpool;

Option C: large casinos in two locations: St Helens & Southport;

Option D: two regional casinos in three locations: Manchester, Liverpool, Blackpool;

Option E: one regional and one large casino in one location: Blackpool;

Option F: one regional and one large casino in one location: Manchester.

1.5.2

Assessment Criteria The criteria used to assess the merits of each proposal include analysis of feasibility and regeneration benefits, the latter defined in terms of contribution to both economic and tourism development as well as prospects for countering the deprivation of local areas in which casinos might be sited.

1.5.3

Option Set 1: Single Casino Appraisal If economic, tourist and deprived group benefits are weighted equally, Manchester and Blackpool are ranked at roughly the same level with Liverpool in third position, Trafford and finally Salford. The report concludes that both Manchester and Blackpool can provide a rationale for development on regeneration grounds – Manchester with regard to its high levels of deprivation and Blackpool in terms of potential economic/tourism gains. It also points out that the two are somewhat different, however, in the position from which they seek to move forward with development: •

Manchester has had a visible resurgence in fortunes and has become a major service centre within the UK. The levels of deprivation evident indicate that there remain issues with regard to matching opportunities and need on a local basis, but opportunities are in evidence. It also has a well defined and diversified local economy of which leisure/tourism is an important but not dominant component.

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•

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Blackpool is continuing to struggle against entrenched decline typical of many traditional resort areas in the UK. Levels of deprivation are lower than those in Manchester but opportunities are less extensive. It also has a local economy that is heavily dependent on tourism.

The options pit the opportunity for localised regeneration in the context of a more diversified, buoyant economy against an opportunity to restructure the fulcrum of a less diversified economy in trend decline. The report concludes that in these terms, it is difficult not to assign a higher priority to Blackpool. 1.5.4

Option Set 2: Multiple Casino Appraisal Reviewing all of these options, Option D – two regional casinos in Manchester, Liverpool and Blackpool – is the highest ranking scenario. It generates highest job numbers, is likely to generate highest tourist gain and stands likely to most benefit deprived areas. Option D is a win-win-win option that secures maximum economic gain whilst balancing wider tourism regeneration and deprivation considerations. That said, it does begin to push the catchment requirement for Blackpool beyond the 45 minute drive time that has been used as the basis for much of the analysis and into potential overlap with Manchester. More importantly, it is not permitted by the current legislative framework, but could be relevant in the 20 year timeframe of the RSS.

1.6

Moving Forward – A North West Regional Casino Pilot The final section in the report considers the set of potential criteria that could be employed as the basis for determining the location of the pilot development. It anticipates that key criteria will include having a demanding regeneration environment, operating as a destination venue, being linked to tourism, having cluster capacity, consistency with local development policy and political support. Both of the areas in the North West viewed as leading ‘candidates’ for regional casino development (Blackpool and Manchester) are considered against such criteria. The report concludes that there are strong grounds for Blackpool being considered as a primary location for the development of a regional casino pilot. Few, if any, other venues within the UK present a configuration of conditions more suited to testing the regeneration potential of regional casino development.

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Introduction

2.1

Introduction

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This report provides the findings and analysis of the Pion Economics team undertaking a study of casino market demand in North West England. The study was commissioned by NWDA, jointly steered by NWRA and GONW. The circumstances in which the study was commissioned have substantially altered (see section 2.4 below) during the course of the exercise, necessitating some degree of flexibility in study design and analysis. This section of the report provides background to the original nature and purpose of the exercise, an overview of the changing legislative environment in which it has been conducted and an outline of the content of the report.

2.2

Study Origins Until very recently, UK gambling legislation was, by and large, based on a series of statutes enacted in the 1960s. This legislation was subject to a review process (the Budd Review) that made a number of updating recommendations and was followed by the publication of the 2003 Draft Gambling Bill containing proposals to reform the legal infrastructure that governs gambling. The Bill was subjected to a Joint Draft Scrutiny Committee process that paid particular attention to the emergence of what are now known as regional casinos, their potential for economic regeneration and potential conflicts between market/regeneration priorities across the regions of the UK 3 . The impending change in legislation also made the UK one of the few potential ‘major’ growth market opportunities for gambling worldwide, arousing substantial interest in overseas as well as domestic operators. Alongside the emerging legal framework, Regional Planning Bodies (RPBs) were placed at the forefront of considerations with regard to the location of regional casinos and, thereby, to determine the ‘appropriate’ balance between market driven and regeneration led development. Ministerial statements 4 clearly envisaged that RPBs should look favourably on destination (regional) casino developments that contributed to wider tourism-led-regeneration. At the same time, however, evidence with regard to ‘options’ taken by operators suggested that many would prefer developments nearer to larger population centres. This underlying ‘conflict’ was evident in a number of the Scrutiny Committee sessions and remained a concern in the associated report. Government responses to the report made it clear that RPBs would be expected to consider the location of regional casinos in terms of their impact on regional economic development, that such casinos would preferably be located where they were likely to have significant tourism and regenerative potential - as specified in Regional Planning Guidance (RPG) or emerging Regional Spatial Strategy (RSS) - and that full consideration should be given to the impact of development outside key regeneration areas on the tourism and regeneration benefits envisaged for such areas.

The Bill also regulates what are called large and small casinos both of which are anticipated to be larger than existing casino operations. 4

Casinos: Statement of National Policy (December 2004).

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The debate surrounding market-led versus regeneration led casino development remained ‘live’ as the Gambling Bill proceeded through parliament during 2004, but the framing of legislation was (at that point) sympathetic to the development of large-scale destination or regional casinos – operations on a scale that vastly exceeded any comparative casino operation within the UK. In this context, NWDA commissioned a project (jointly steered by NWRA and GONW) to review ‘the demand and capacity for casinos in the North West and to develop various scenarios of casino development’ across the region 5 . Pion Economics were appointed to undertake the study.

2.3

Study Brief The Terms of Reference (TOR) for the study were that the study should:

2.4

•

provide a soundly based independent market assessment of both the demand and capacity for regional casinos in the North West;

•

clarify the current market potential in the North West (including external tourist potential) with regard to casino development and provide an assessment of the demand for regional casinos in the North West;

•

be informed by published and readily available data, including the various market testing exercises that have been undertaken to date within the region;

Changing Legislation It was always anticipated that the study would need to track the progression of the Gambling Bill during the latter part of 2004 and early 2005. It was not, however, anticipated that there would be wholesale change in the parts of the Bill leading to restrictions on the potential number of regional casinos to be permitted and that restructuring would be as extensive. The Gambling Bill was introduced in the House of Commons on 18 October 2004 and published on 19 October. In the period leading up to and following debate, significant media attention was focussed on those parts of the Bill relating to casino development and the risk of problem gambling. In the midst of the ensuing discussion, a statement of national policy on casinos was issued on 16 December 2004 6 . The statement reflected concerns expressed about problem gambling and argued that any increased risk would be reduced if a limit were imposed on the number of casinos. It set an initial limit of eight regional, eight large and eight small casinos. It also defined an independent Advisory Panel to recommend areas for licensed casino development with the Gambling Commission asked to review impacts after a period of three years operation. It was envisaged that the Panel would: 5

In practice, the study focuses on regional and large, but not small, casinos since the potentials locations of the latter will be intrinsically linked to decisions with regard to the location of regional and large casinos. 6

Included as an appendix to this report.

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•

be asked to choose areas in need of economic development and regeneration (as measured by employment and other social deprivation factors) and likely to benefit in regeneration terms from a casino;

•

invite views from interested parties – and in particular the Regional Planning Bodies - to identify a list of broad locations for regional casinos consistent with Regional Spatial Strategies; and

•

begin work in the course of 2006, taking account of views put forward to RPBs as they progressed the preparation of RSSs, and of local authorities as appropriate, with completion before the end of 2006.

In terms of the planning process, the statement specifies that identification of specific sites is to be for local planning authorities in their local development framework. In addition, •

operators will be required to apply for planning permission in the usual way and all applications will be considered on their merits in line with national and local planning policies;

•

the Gambling Commission will award operating licences to companies on the basis of the usual licensing criteria, but incorporating an additional test of social responsibility;

•

a local licensing authority will only be able to award a casino premises licence if one has been identified for its area. The process for awarding a premises licence will be open to all operators and subject to both a regulatory test and (if necessary) a competition process.

The Bill received its second reading in the House of Lords on 22 February 2005 but was ultimately subject to last minute negotiation as part of arrangements for progressing outstanding Bills prior to dissolution of Parliament in preparation for the 2005 general election. This negotiation reduced the number of potential regional casinos from eight to one. The Gambling Act 2005 received royal assent on 7th April 2005.

2.5

Study Process As it currently stands, the framework for the development of casinos has altered substantially from the outset of the project. Original expectations of a general market driven process have been swept away as the framework first adopted an 8-8-8 structure and then a 1-8-8 format with the single regional casino being viewed as a pilot. This sequencing has had some impact on certain aspects of the study. •

in the first instance, many of the discussions with potential operators and other interested local partners have taken place in the context of a legislative landscape that is no longer applicable;

•

secondly, while the scenarios reviewed in later sections of the report remain applicable, they were conceived by the project steering group and assessed during the 8-8-8 and not the 1-8-8 period. That said, the saving grace of the scenario structures is that they are built on known or expressed interests for development around the region and remain ‘current’ despite recent events;

•

thirdly, some issues - such as the market testing of scenarios – have been put to one side given the declining choice of venues for operators.

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2.6

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Social Impacts Concern about the social impact of gambling deregulation has remained ever present through the Scrutiny Committee process as well as debate surrounding the form of the Gambling Bill. The decision to limit numbers of regional casinos and institution of a pilot process is, in part, a reflection of such concern. While this report does not address social impacts connected with the development of casino facilities, it recognises that they remain an underlying consideration to be addressed in evaluating the pilot regional casino operation.

2.7

Acknowledgement Pion Economics acknowledges the assistance of a Project Steering Group throughout the length of this exercise– members are defined in Appendix A. This report and its conclusions and recommendations, however, are the views of Pion Economics only and do not necessarily reflect the views of Steering Group members or the organisations that they represent.

2.8

Structure The report contains 4 further sections: •

Section 3 provides a brief overview of casino gaming trends in the UK over very recent years;

•

Section 4 considers the potential scale of demand for casino gambling within the North West alongside feasible casino numbers;

•

Section 5 assesses GVA and job impacts; and

•

Section 6 considers a range of scenarios with regard to casino configuration across the region.

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Background

3.1

Introduction

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This section provides a brief overview of casino gaming trends in the UK over very recent years. It places the later analysis in context by reviewing casino numbers, visitor trends and spend. It also considers the nature of the casino facilities that are likely to emerge in the light of deregulation.

3.2

Casino Gambling Activity The 2003-04 Report of the Gaming Board for Great Britain (July 2004) discloses a total of 143 licensed casinos as at March 2004 of which 131 were trading at the time of reporting, compared to 116 trading in 1999. Three operators owned seventy-five percent of venues: •

Stanley Leisure Group Plc (42);

•

Rank Group Plc (36); and

•

Gala Group (30).

Within the North West of England casinos were operating in a number of locations: •

Birkenhead (1);

•

Blackpool (2);

•

Bolton (1);

•

Liverpool (4)

•

Lytham St Annes (1);

•

Manchester (6);

•

Salford (2);

•

Southport (1); and

•

Stockport (1)

Attendances at casinos across the North of England 7 have been relatively robust of late with a figure of around 3m visits per annum in 1999/2000 rising to some 3.4m over recent years. The surge in activity has, on the other hand, also levelled out of late.

Figures are not published for the North West and include the latter alongside Yorkshire and the Humber and North regions.

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Number of Casino Attendances (Million Visits 1999/2000 – 2003/04)

4000000

North

3000000

London South

2000000

1000000

Midlands/Wales

Scotland

1999/2000

2000/2001

Scotland

North

2001/02

2002/03

Midlands & Wales

South

2003/04

London

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Casino Drop (£m 2001/2002 – 2003/04)

2500

2000

1500

1000

500

2001/02

2002/03

Scotland

North

Midlands & Wales

2003/04

South

London

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Casino drop figures 8 across the regions show that gambling is very heavily concentrated in London, which accounts for 57% of total drop. The North of England is the second highest performer – an important background feature to the study with a slowly increasing share in recent years - but lies someway behind contributing close to 15% of the total drop.

3.3

Casino Structures The deregulation of casino gaming is to encourage the development of three categories of casino – regional (previously known as resort, destination or more recently referred to as ‘super’), large and small. These are likely to be very different in terms of the product and service range offered as well as in scale and in associated entertainment and leisure activities.

3.3.1

Regional Casinos These are defined as essentially large venue operations with large-scale table & machine gambling facilities; entertainment and conference capabilities, dining & shopping capacity and potentially extensive hotel operations. It is envisaged that such venues will be seeking 4,000 to 5,000 visits per day on average though client activity may be ‘bunched’ at weekend. Overseas operations can often contain up to 700/800 hotel rooms but evidence to date suggests that North West venues are not envisaged on this scale 9 . Regional casinos will contain a maximum of 1,250 (Category A) gaming machines 10 - 25 for every gaming table available for play - and construction may cost from £150m upward depending on specification of the units. General market location preferences for regional casinos are for high profile, physically accessible areas with maximum population ‘exposure’ and synergy with wider entertainment ‘offer’ if possible. In this context regional city locations are a primary attraction though coastal areas can compete if there is ‘critical mass’ through development of cluster type momentum.

3.3.2

Large Casinos These are ‘mini’ regional operations offering ‘scaled-down’ ancillary & entertainment services and (possibly) some hotel facilities. Desired visitor numbers are around 1,500 to 2,000 visits per day on average though some bunching of activity at weekends is to be expected. Small-scale hotel facilities might be considered if appropriate but it is likely than many will not contain any such facilities. Large casinos will contain a maximum of 150 gaming machines and construction costs maybe as low as £8m to £10m but increasing in line with specification Market location preferences are similar to those for regional casinos but with less emphasis on regional cities - major towns are feasible locations. Large casinos are

The amount exchanged for gambling chips.

Numbers in the North West range between 150 and 400.

Unlimited stake/prize machines.

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probably less attracted to coastal resorts unless there is a particular ‘niche/segment’ to be accommodated but catchment ‘mass’ is generally less of an issue. 3.3.3

Small Casinos Small casinos are envisaged as operations on a larger scale than current casino operations (and with wider gambling product offer) but small next to most other categories with limited ancillary services & no hotel facilities. Visitor numbers are likely to be around 500 visits per day on average (again maybe ‘bunched’ at weekend) with construction costs as low as £5m. Market location preferences are likely to be heavily determined by catchment population and/or targeting of specific market segments. City centre/outskirt areas are likely to be preferred but areas with high passing ‘traffic’ are also likely to be of interest.

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Casino Market Demand Study June 2005

Market Analysis and Casino Accommodation

4.1

Introduction

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This section of the report details the basis on which we make an assessment of feasible casino numbers within the North West. The early part of the section details an analysis of potential consumer demand using information from the 2001 Census and the British Gambling Prevalence Survey to construct estimates of residential leisure based participation in casino gambling. This is then amended to reflect potential additional demand from tourism activity and the subsequent total demand envelope is used to examine feasible numbers in the light of varying visitor threshold and drive time catchments.

4.2

Market Analysis: The Demand for Casinos Determining demand for casino participation is an area of some complexity due to the fact that existing gambling legislation is widely acknowledged to have deterred casino gaming. Thus much of any growth in activity is likely to be ‘latent’ or displaced from other forms of gambling. It is further complicated by the fact that potential demand should be assessed not in terms of potential visitors but potential visits since a single individual may choose to visit a casino on more than one occasion. In addition to analysis of residents, some proportion of tourists visiting the region – or a location within the region – may also choose to participate in casino gambling. In this section we construct a profile of potential casino demand within the North West, addressing each of these issues.

4.2.1

Market Analysis: The Resident Gambling Envelope The most comprehensive assessment of gambling participation at the outset of the exercise was the British Gambling Prevalence Study (2000). This provides a detailed assessment of gambling patterns across types of gaming and other demographic characteristics. The study places UK adult (16+) casino participation at around 3% with highest demographic concentrations in under 34 age-bands. This figure is relatively small in comparison to other forms of ‘mainstream’ gambling and particularly small in relation to machine gambling which is nearly five times higher and which is a fundamental component of large-scale casino development 11 . In contrast to UK profiles, casino gambling participation in other jurisdictions is significantly higher than 3% and can reach upwards of 25% in some US states.

The importance of machine gambling has increased significantly in recent years as FOBT (Fixed-Odds Betting Terminals) machines have proliferated. Such machines are responsible for significant commercial gains by traditional bookmakers and have, in some instances, proved more profitable than bookmaking. The Gambling Act 2005 allows for different numbers of machines in different casino settings.

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Participation In Gambling Activities Within Previous Year by Age-Band (% of GB 16+ Adult Population) 16-24 25-34 35-44 45-54 55-64 65-74 75+ All Casino 4 5 3 2 1 3 Bingo 7 7 7 6 7 9 10 7 Machines 32 22 15 8 6 3 1 14 Horse Races 12 19 15 14 11 9 5 13 Dog Races 6 7 4 4 2 1 1 4 Other Bookmaker Betting 5 5 3 2 2 1 3 Football Pools 4 9 8 11 13 10 6 9 National Lottery 52 71 72 72 69 61 45 65 Other Lotteries 8 9 8 9 9 8 6 8 Source: British Gambling Prevalence Study (2000)

The Gambling Prevalence Study also uses cluster analysis to define four types of gamblers – based on the extent of participation across numbers of different gambling activities: •

non-gamblers: o

•

minimal interest gamblers: o

•

defined as accounting between 30% and 40% of all age groups apart from the youngest with levels peaking in the 45-64 age-bands;

moderate interest gamblers: o

•

most prominent within the youngest (16-24) and oldest age-bands (65+);

most prominent among the youngest age-bands with prevalence declining directly with age;

multiple interest gamblers: o

defined as accounting for 11% to 12% of the 16-34 years adult population but declining significantly with age.

In terms of these groups, casino gambling is defined as an activity that is primarily undertaken by multiple interest gamblers in that it is typically one of several types of gambling (including the National Lottery) that such individuals pursue.

Gambling Interest Groups by Age-Band (% of GB 16+ Adult Population) 16-24 25-34 35-44 45-54 55-64 65-74 75+ All Non-Gamblers 34 22 23 22 26 34 48 28 Minimal Interest Gamblers 19 31 35 39 38 35 30 33 Moderate Interest Gamblers 36 35 34 33 32 30 21 32 Multiple Interest Gamblers 11 12 8 6 4 2 1 7 Source: British Gambling Prevalence Study (2000)

The starting point for this exercise has been to use the information contained in the Prevalence Survey to construct estimates of likely casino gambling participation across the North West.

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One of the key early requirements of the analysis has been to take a perspective on the likely level of ‘aggregate’ adult casino participation in the event of casino gambling deregulation. Different perspectives exist on this issue across the gambling industry reflecting experience across differing jurisdictions and differing views about the extent to which evidence elsewhere can be applied to the UK context. During the autumn of 2003 and spring 2004, Pion Economics was engaged to assess the impact of gambling deregulation on the UK economy by a Cross Industry Group (CIG) of domestic and overseas operators established to assist development of the evidence base underpinning the emerging legislation. The modelling work undertaken for that project required the CIG to reach a consensus about casino participation levels five years after the introduction of deregulation. The consensus situation modelled was a participation rate of 10% - essentially a ‘compromise’ between conservative and optimistic operators. We have adopted the same assumption in defining the gambling envelope. In constructing an estimate of potential participation across the region, data on the 2001 Census population demographics of each local authority area is aggregated to match the age-bands used in the Prevalence Survey. Information from the profiles (described above) is then employed to define a distribution of gambling ‘types’ in each authority 12 . As far as non-gamblers are concerned, the age profiles outlined above are applied directly to each local area. Since casino gaming is primarily an activity undertaken by multiple interest gamblers, the age-related casino gambling profile is uplifted to reflect the aggregate 10% participation assumption 13 . The distribution of minimal and moderate interest gamblers is defined as a residual in the light of these two sets of actions though the relative emphasis between gambling types and age-bands is maintained. The final step in constructing a baseline of potential residence-based casino participation is to convert estimates of ‘relevant population’ into estimates of visits. For this we have adopted a simple and relatively conservative protocol. Clearly, non-gamblers are assumed to pay no visits to a casino in the light of deregulation. Minimal interest gamblers are assumed to pay one visit per annum, moderate interest gamblers three visits per annum and multiple interest gamblers nine visits per annum. This protocol defines an estimate envelope of residence-based gamblers for each local authority area in the region. The resulting profile inevitably places the two city conurbations of Liverpool and Manchester at the higher end of the spectrum, each with an estimated 750,000 plus potential visits per annum, owing to their population concentrations. The distribution, as a whole, is generally in line with size of LAD’s defining an envelope of over 13 million visits per annum 14 .

The Prevalence Survey provides information only at UK level and the analysis therefore implies that the gambling profiles of the North West adult population are broadly similar in nature to the UK average. 13

This uplift maintains the age-related differences evidenced in the Prevalence Survey.

14 Two areas considered as potential options later in the report but not ranked in the top ten illustrated in the figure include Blackpool and St Helens – these have estimated resident profiles of 0.284 and 0.347 million visits per annum respectively.

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‘Resident’ Gambling Profile Pion

(Ten Highest Authorities - Million Casino Visits Per Annum)

1.4 1.2 1 0.8 0.6 0.4

4.2.2

Tameside

Trafford

Salford

Bolton

Sefton

Stockport

Wigan

Wirral

Manchester

Liverpool

0.2

Market Analysis: The Tourism Gambling Envelope Alongside the estimation of potential residence-based casino participation, the study TOR required that similar attention be paid to estimating a tourism gambling envelope – visits to casino that might be made by tourists as part of their leisure activities. This task is more complicated than that for residents in that detailed information on tourism activity is much more limited than that on residents. That said, relatively recent reorganisation of Tourist Board structures within the North West has encouraged (for the first time) development of a consistent local authority district (LAD) based profile of tourism across the region based on the well-used STEAM methodology 15 . The latest STEAM results for the region show close to 260m tourist visits during 2003. Manchester and Liverpool are again at the top of the spectrum though Blackpool and Sefton (Southport) are third and fourth in ranking, reflecting the attractions of the resorts in the two areas. Constructing estimates of potential tourism casino participation is achieved through a complex process, involving the following steps: •

global tourism numbers for each authority are decomposed into the staying in accommodation, staying with friends and relatives and day-trip categories defined within the STEAM profiles;

STEAM – Scarborough Tourism Economic Activity Monitor

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LAD Tourism Profile (2003) Pion

(Ten Highest Authorities - Million Visits)

Stockport

Bolton

Macclesfield

Wirral

Trafford

Wigan

Sefton

Blackpool

Liverpool

Manchester

•

length of stay patterns are extracted from the STEAM data to provide an indication of physical ‘presence’ – visitor days - in an area for each category of visitor;

•

visitors are allocated into domestic/overseas categories on the basis of preSTEAM North West Tourist Board (NWTB) and Cumbria Tourist Board (CTB) data 16 ;

•

NWTB and CTB information on the age profiles of both domestic and overseas visitors are used to match both types of visitors with the age-bands employed for the residential analysis; and

•

visitor days – now defined across age-bands – are assigned to the non-gambler, minimal interest, moderate interest and multiple interest gambler types in the same manner as that described for the residential analysis;

The main difference between the tourism and residential envelope lies in the participation assumptions employed to generate potential casino visits. The residential analysis assumes an aggregate participation rate of 10%. However, simply adopting the same approach in the case of tourism may underestimate potential participation where the pursuit of a leisure experience is more to the forefront of activity than it is in everyday working life. Our approach has been to define participation using the numbers of visits per annum employed earlier as weights. In the case of moderate gamblers, for example, we have previously assumed that such individuals make 3 visits per annum – a probability of a visit on any single day equivalent to 3/365 or less than 1%. For moderate interest tourists 16

NWTB profiles are used for all areas of the region other than Cumbria where CTB data is employed.

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we weight this probability by a factor of 3 to provide a casino visit probability of 2.5%. In the case of multiple interest gamblers the weight used reflects the assumption of nine visits per annum. Effectively, therefore, tourists are given a higher propensity to visit a casino than are residents. Adopting this approach across all LADS adds just over 5m additional casino visits to the residential profile defined above with the residence baseline figures uplifted by a minimum of 1.3 times and a maximum of 2.1 times though the latter relates to Blackpool with the next highest multiple being 1.6 17 . STEAM shows that the Blackpool uplift is high due to the fact that the proportion of staying visitors is significantly higher than many other areas. While Manchester and Liverpool remain in pole position, the introduction of tourism does alter some relative positions – most noticeably Blackpool.

‘Combined’ Gambling Profile Pion

(Ten Highest Authorities - Million Casino Visits Per Annum)

1.4 1.2 1 0.8 0.6 0.4

Salford

Trafford

Blackpool

Bolton

Stockport

Wirral

Wigan

Sefton

Manchester

Liverpool

0.2

In bringing together these two profiles, it is important to be aware of potential overlap. While the analysis treats the two datasets as independent, there are circumstances when an individual might be defined as within a residential catchment and also as a visitor. It is not possible to assess the likelihood of this overlap since STEAM does not provide estimates of tourism origins though there is some evidence from the UK Travel Survey that around 25% of visitors to the North West also reside in the North West and day visitor profiles are likely to be higher. These latter considerations suggest that combined profiles should be viewed as a ‘ceiling’ estimates (ie as upper boundary estimates to allow for double counting) and that any

17 All but one of the areas considered as potential locations in option assessment are included in the illustrated combined gambling profile – St Helens is the exception and has an estimated combined visit number of 0.47m visits per annum.

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feasibility assessments should distinguish between residential and wider (residential plus tourism) bases 18 in order to determine the importance of tourism to the outcome.

4.3

Market Analysis: Casino Accommodation Having established an estimate of the gambling envelope within the region, it is possible to move towards a general assessment of feasibility and assess the potential of the region to accommodate development of different types of casinos. There are a number of parameters of importance in any such assessment: •

in the first instance, there is the assumed average daily casino visitor threshold required by commercial operating criteria - this varies according to the size of facility under consideration and is addressed by reporting on a range of thresholds from 500 persons up to 10,000 persons. As indicated earlier in the report, small casinos can be assumed to lie at the bottom end of the distribution while regional casinos can be assumed to require average throughput in the order of 5,000 persons per day 19 ;

•

secondly, there is the issue of catchment. Larger facilities will require and look to larger catchments to sustain viability. The assessment provides four differing catchment structures – no catchment, 30 minutes, 45 minutes and 75 minutes. Accessibility is analysed through drive time calculations provided by Salford GIS 20 ;

•

finally, there is the issue of the demographic profiles included – resident as well as resident plus tourists. Both are included in the assessment.

Two factors are not considered in the analysis at this stage – location and catchment conflicts. In an attempt to provide an indication of the risk of proliferation, our initial investigation does not constrain analysis by specifying any particular or preferred location or by allowing for catchment conflicts – overlapping catchments from different locations. The analysis simply examines each LAD area in turn and assesses the numbers of casinos that might be feasible in the context of the visitor threshold, catchment and demographic base employed. The maximum value is reported as the ‘ceiling’ estimate of casino numbers. The profiles that result from this process are interesting and informative. They suggest, as anticipated, that feasible numbers decline as thresholds grow and as catchment drive times decline. They are also lower if one uses resident rather than combined resident and tourist visit profiles. More specifically: •

in the absence of any catchment considerations and using the residential visit profile up to 72 small casinos, some 25 large casinos 21 and around 7 regional casinos might be viable across the region:

It should be recognised that this analysis is based on current tourism profiles Allowance for newly generated tourism visits is made in the impact and scenario analysis contained in later sections. 19

As indicated in Section 3 – regional casinos can be considered in the context of 5,000 visitors per day, with some 2,000 and 500 for large and small casinos respectively.

Our understanding is the industry would be most comfortable in using a 45 minute drivetime.

Assuming 1,500 as the threshold and broadly averaging the 1,000 and 2,000 thresholds.

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a 75 minute catchment constraint would lower these numbers to 68, 25 and 6 respectively;

a 45 minute catchment constraint would lower these numbers to 57, 21 and 5 respectively; and

Feasible Casino Numbers Pion

(by average daily visitor threshold & catchment – no location constraint) 0.5k

10k

Residents No Catchment

30 Mins Catchment

45 Mins Catchment

75 Mins Catchment

No Catchment

30 Mins Catchment

45 Mins Catchment

75 Mins Catchment

Residents + Tourists

o •

a 30 minute catchment constraint would lower these numbers to 30, 10 and 3 respectively.

in the absence of any catchment considerations and using the residential plus tourist visit profile up to 99 small casinos, some 36 large casinos 22 and around 9 regional casinos might be viable across the region: o

a 75 minute catchment constraint would lower these numbers to 95, 35 and 9 respectively.

a 45 minute catchment constraint would lower these numbers to 79, 29 and 7 respectively; and

a 30 minute catchment constraint would lower these numbers to 41, 15 and 4 respectively.

Although somewhat dry, this arithmetic process is useful in the sense that it provides some parameters for reflection with regard to feasible numbers and the risk of proliferation. As far as matching the ‘technical’ process to reality is concerned, operators have expressed a view that 45 minute drive time is likely to be the criteria of catchment interest for regional casinos, suggesting that – ignoring any problems of location or catchment constraints - something of the order of five regional casinos be envisaged as 22

Ibid.

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viable in the North West perhaps rising to seven if sufficient numbers of tourists can be induced to participate. Our understanding from discussions with operators is that somewhere around five regional casinos is broadly consistent with their expectations prior to the introduction of constraints through the legislative process, placing the North West as one of the most prominent areas of activity in the UK, alongside London. The emphasis on the potential of the North West by operators is understandable given the large population densities that are evidence in the region compared to other parts of the country.

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Economic Impact: GVA and Job Creation

5.1

Introduction

PION

This section seeks to define broad scales of impact for typical regional, large and small size casinos within the North West. The basis for the work lies in a complex impact assessment structure developed as part of an earlier exercise to examine the impact of deregulation on the UK economy Details of the approach originally employed can be reviewed as part of the oral and written evidence presented to the pre-legislative scrutiny Joint Committee 23 . The structure is not, however, applied without adjustment. The original framework was designed to operate at UK rather than at sub-national or sub-regional level and the introduction of different spatial scales requires subtle differences to be made to modelling. Of particular importance for this study – and especially so in the case of the scenarios considered later in the report – there are complex additionality and displacement considerations with regard to the interaction between local and regional leisure and tourist visits that can substantially alter ‘net’ impacts.

5.2

The Impact Model The impact model is based on a ‘multiplier’ structure that separates impact into the direct, indirect, and induced effects of operation. •

direct effects are primarily the jobs and incomes that accrue due to the everyday operation of casinos;

•

indirect effects relate to flows of income (other than labour income/client spending) arising from the operation of casinos; and

•

induced or multiplier effects represent the process through which the spending of staff, clients and casinos (i.e. both the direct and indirect income flows) helps to support other businesses, contributing to the wages and salaries of employees and covering material overheads.

Finally, as already noted, impact simulations contain both ‘gross’ and ‘net’ components with the latter reflecting the fact that an element of any ‘new’ resource expended on casino gambling following deregulation may be diverted from spending elsewhere in the gambling sector and spending on other goods and services both locally, regionally and beyond regional boundaries.

5.3

Estimating and Simulating Direct Effects

5.3.1

Staffing Profiles Direct effects are primarily the jobs and incomes that accrue due to everyday operations. Staffing profiles are defined as per the ‘generic’ casino structures outlined in section 3.3 23

House of Lords (HL Papers 63-II), House of Commons (HC 139-II) Joint Committee on the Draft Gambling Bill, Volume II, EV119 – EV126, Supplementary Memorandum from Pion Economics.

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above namely some 1,500 staff for regional casinos, 400 for large casinos and 200 for small casinos. Staff numbers are distributed across work groups reflecting the type of casino operation. In the case of regional casinos, work groups include: •

casino staffing: o

•

hotel staffing: o

•

housekeepers, porters, management, supervisory, front representatives, guest service, call centre and concierge staff;

service

service staff: o

•

table and machine, sports book, VIP services and cage staff;

food, beverage and entertainment staff;

other staff: o

finance, human resources, IT, purchasing, security, surveillance, sales, promotion and facilities staff.

The distribution of direct staff across work groups, and associated costs, are consistent with the profiles used for the CIG study with an assumed salary bill of some £25m for a regional casino. Large and small casino structures have a substantially reduced set of activities, staffing and costs with the latter (for modelling purposes) reduced to £6.5m and £3.7m respectively 5.3.2

Disposable Incomes, Consumption and Local Retention Having established the level and distribution of gross salaries, the next step in the impact framework is to evaluate the disposable income position of staff employed by casinos, determining the propensities to consume out of disposable income and the proportion of that spending that is focussed on local goods and services. Disposable Incomes Each of the direct staff groups is subjected to an individual disposable income assessment calculated using information on the tax and national insurance regimes in place, having taken account of personal allowances in the calculation of tax burdens. For modelling purposes, the regime adopted is that in place for Fiscal Year 2003/2004. Consumption Propensities Consumption propensities are constructed using Family Resource Survey (FRS) and input-output tables. We take the gross salary for each staff group, match and select the appropriate spending profile in a relevant FRS band. This provides an estimate of spending patterns for each group across goods and services but is further weighted to take account of differences in spending patterns within the North West rather than the UK. Taking FRS figures for tax and insurance deductions in the relevant income bands we estimate average propensities to consume (APC) out of disposable income. The APCs are taken to be estimates of marginal propensities to consume and vary across staff groups with lower paid groups displaying higher propensities to consume and vice-versa. Local Retention As indicated earlier, not all local spending will remain in the local area due to leakages from goods and services imported from outside the local economy, and smaller local

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areas can be expected to have higher leakages. In other words, local area impacts will be lower than regional level impacts for any given expenditure sum since leakages will be higher. The propensity to consume is applied to the estimated disposable income of each staff group to supply a total spend figure. This spend is then distributed across FRS spend categories to provide an estimate of spend profile for the group. Values for local regional retention factors, or the proportions of consumption spending that remain within the local economy (as opposed to leaving through imports from other areas) are constructed via the use of UK input-out tables: •

FRS spend categories are aggregated in a manner consistent with the expenditure categories for consumer spending detailed in the National Accounts. Once this process is complete there is a defined link between the spend patterns of staff groups and industry sectors.

•

the extent to which any spending on a given industry sector remains in an area is assumed to reflect two elements - the share and concentration of sector employment relative to GB as a whole 24 .

FRS spend estimates are thereby translated into spend on industry sectors, a proportion is deducted to reflect foreign import penetration and amounts are allocated to sectors on the basis of the methodology outlined above. The sum of money allocated to all sectors, as a proportion of the total expenditure, gives an estimate of retained spend and thus leakage from an area in the light of group spending profiles.

5.4

Indirect Economic Impact Indirect effects relate to flows of income (other than labour income) to the local area arising from the operation of an activity. In most instances, these effects reflect the purchase of goods and services by casinos and will cover items such as materials, supplies and business and professional services. As indicated earlier, in the case of some operations, such as regional or large casinos, there exists another potential indirect effect, which reflects the attraction of visitors to the site of operations resulting in potential for ‘additional’ spending both within and outwith the facility. The size of any indirect effects will be greater if facility purchases come from within the local/regional economy rather than outside and if visitor spending is focussed on goods and services produced in the local/regional economy since expenditure will be retained in, rather than bypass, such areas. There are also circumstances in which new casinos may displace existing expenditure and thereby offset anticipated gains. The analysis of indirect effects thus requires consideration of displacement.

5.4.1

Goods and Material Purchases Work for the earlier CIG study involved gathering information on the level and pattern of indirect spend by casino operators 25 . This information has been used here, along with evidence from other jurisdictions, to define anticipated patterns of indirect spend across 24 In the case of small local economies (such as LAD’s) , we impose a 100% spending leakage restriction on retail distribution and housing to reflect the very local nature of these services. Similar restrictions are placed on public administration, education, health and social work and sanitary services. 25

CIG Gambling Deregulation Impact Study, (2003), Pion Economics

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differing casino structures. In the context of regional, large and small casinos the operating indirect spend figures used are £46m, £9m and £6m respectively. Local retention factors for material/service purchases are calculated in a similar manner to those for the direct analysis above. Anticipated spend is allocated across industry sectors via input-output tables with employment shares and concentrations used to assign local/regional retention across each sector and with the sum of money retained as a proportion of the total expenditure providing an estimate of retained spend. 5.4.2

Displacement Consideration of displacement is a key element in impact assessment though the extent to which it is evaluated varies from study to study. This exercise includes a detailed assessment of displacement potential. The primary mechanism employed is an analysis of the catchment profile of casino client groups. This profile can be divided into a number of sub-divisions namely: •

catchment type: o

•

origin: o

•

whether clients are (drivetime) residents visiting a casino as part of a leisure event, tourists that are already visiting the area in which a casino is developed and choose to participate in casino gambling or new tourists attracted to the area via the development of a casino;

whether clients are local (from the local area), regional (outside the local area but within the region) or from outside the region;

expenditure type: o

whether clients are existing casino gamblers altering their place of gambling, existing gamblers switching spend towards casino gambling from other forms of gambling or new gamblers substituting casino gambling for other forms of leisure activity.

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Pion

Client Structure & Displacement Catchment

Origin

Spend Type

Residential Catchment

Local

Existing

Local Displacement

Reg Displacement

Residential Catchment

Local

Residential Catchment

Local

New (Switch)

Yes

New (New)

Yes

Residential Catchment

Regional

Existing

Yes

Residential Catchment

Regional

New (Switch)

Yes

Residential Catchment

Regional

New (New)

Yes

Residential Catchment

Non-Regional

Existing

Residential Catchment

Non-Regional

New (Switch)

Residential Catchment

Non-Regional

New (New)

Existing Tourists

Regional

Existing

Existing Tourists

Regional

New (Switch)

Yes

Existing Tourists

Regional

New (New)

Yes

Existing Tourists

Non-Regional

Existing

Existing Tourists

Non-Regional

New (Switch)

Yes

Existing Tourists

Non-Regional

New (New)

Yes

New Tourists

Regional

Existing

New Tourists

Regional

New (Switch)

Yes

New Tourists

Regional

New (New)

Yes

New Tourists

Non-Regional

Existing

New Tourists

Non-Regional

New (Switch)

New Tourists

Non-Regional

New (New)

Decisions about the attributes of each of these elements contribute to defining the scale of potential displacement and can rationalised at the local level as follows: •

•

local origin residential clients 26 : o

existing casino gamblers create no displacement in the sense that they already spend in other casinos locally and are simply altering the place of their spending. One operator may gain at the expense of another but the local area still has the same broad amount of resource input in casino gambling 27 ;

gamblers that switch towards casino gambling from other forms of gambling create displacement within the local gambling industry – resource moves from one part of the industry to another;

non-gamblers that switch towards casino gambling from other forms of leisure activity create displacement within the local economy – resource moves from other leisure services towards the casino gambling industry;

regional and non regional origin residential clients: o

since none of the potential spending that is attracted towards casino gambling is already spent locally, there can be no local displacement for either of these sets of clients;

Local as in the LAD in which a casino is located.

It is possible that changing the nature of the ‘gambling offer’ may induce an increase in average spend.

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•

existing tourist/regional origin clients: o

•

since these individuals are assumed to be visiting the local area already, they can be treated in exactly the same manner as local origin residential leisure clients – displacement occurs due to switching of expenditure from other forms of gambling and leisure spending;

existing tourist/non-regional origin clients: o

•

PION

since none of the potential spending that is attracted towards casino gambling is already spent locally, there can be no local displacement for this client group;

new tourist regional and non-regional origin clients: o

since none of the potential spending that is attracted towards casino gambling is already spent locally, there can be no local displacement for either of these sets of clients;

Above and beyond these considerations, it is necessary to take into account other forms of displacement when examining regional as opposed to local impact. In particular, where monies are substituted into local area casino gambling from other forms of gambling and leisure activity within the region but outside the local area, then displacement occurs within the region. Evaluating the magnitude of potential displacement requires that assumptions be made about the distribution of casino visits across each of these categories and the scale of displacement. The latter is evaluated on the assumption that average spend per casino visit is approximately £50 and the former are constructed as follows 28 : •

resident leisure /tourist visit client base: o

regional/large casinos: defined via the catchment profiles detailed earlier but averaged across the 10 LADs with the largest casino gambling potential for this generic modelling exercise 29 ;

small casinos: it is assumed that 90% of the client base is resident in nature;

•

local/regional/non-regional resident client base: o

regional/large casinos: it is assumed that 10% of the client base comes from outside the region 30 ;

This was the working figure agreed with the CIG as the basis for the UK deregulation study.

On the basis that casinos are less likely to be developed in lower population areas. The scenario analysis later in the report operates at an individual LAD level. 30

This assumption was made in the context of the presumed 8-8-8 policy configuration and, as far as regional/large casinos are concerned, on the basis that competing facilities would exist in Yorkshire & the Humber region. The assumption may therefore be more conservative than initially anticipated in a 1-8-8 policy configuration.

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the local/regional distribution of the residual is determined via a gravity model process that seeks to determine the scale of ‘local capture’ taking into account the pattern of catchment within a 45 minute drive time and distance to be travelled to access a facility. An average of the 10 LAD’s with the largest casino gambling potential is used as the basis of the generic modelling exercise; o

small casinos: it is assumed that 90% of the client base is resident in nature;

•

existing/new tourist client base: o

regional casinos: defined, in the absence of information on tourism flows, in accordance with the general resident/tourist profile used earlier. Thus areas with larger existing tourism flows are implicitly assumed to be more likely to attract new tourist visitors;

large casinos: it is assumed that 80% of the tourism client base is assumed to take the form of existing tourists;

small casinos: it is assumed that 90% of the client base is resident in nature;

•

regional/non-regional tourist client base: o

regional/large/small casinos: in the absence of any formal data, it is assumed that these clients are split 50/50 between regional and non-regional origins;

•

expenditure types: o

regional/large/small casinos: it is assumed that 30% of casino gamblers are existing casino gamblers and that 70% are new to casino gambling. Of the latter 25% are assumed to switch funds from other forms of gambling and 75% from other areas of leisure activity.

There are two final sets of adjustments that are made in the modelling structure that are not defined through the analysis of client profiles. Firstly, some existing tourist hotel bednight might be displaced into larger casino facilities. The extent of any such displacement is likely to vary across different areas and we adopt a relatively conservative assumption that 20% of bednights are at risk of displacement. Secondly, the attraction of new tourists may bring with it additional spending above and beyond that in the casino facility. We assume that such tourist visitors generally expend double their casino spend on other goods and services locally.

5.5

Induced Effects The final element in the impact structure focuses on induced or multiplier effects. This represents the process through which the local spending of staff, clients and the casinos (i.e. both the direct and indirect income flows) helps to support other businesses in the

PION

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area, contributing to the wages and salaries of employees and covering material overheads. These employees and businesses, in turn, also spend a proportion of their incomes on local goods and services and the process repeats itself over a number of rounds. To undertake the expenditure round analysis, it is necessary to construct a variety of spending parameters. In particular, it is necessary to evaluate marginal propensities to consume for recipients of the expenditure that is spent in the local economy by employees, visitors and the casinos (and which will wind its way through subsequent expenditure rounds) and retention factors. Such parameters are calculated in precisely the same way as those for employees described earlier with the exception that FRS data for the North West region as a whole is used as the basis of expenditure profiling. The model is iterated for eight expenditure rounds. While the bulk of spending impact takes place in early rounds, the wider the area under consideration, the longer the tail of any induced impact, and the larger the number of rounds that should be included to account for the induced effect.

5.6

Impact Assessment The model primarily operates by evaluating output and GVA impacts. GVA is constructed through consideration of direct employee wages and salaries, non-repatriated profits and GVA generated through indirect and induced expenditure flows. Employment effects are calculated in two steps. Direct employment is calculated as part of the direct impact assessment in the early stages of model operation. Indirect and induced employment are calculated through an approach that matches Annual Business Inquiry (ABI) data to the 123 input-output sectors to provide output/employment ratios for each sector and then uses the latter to convert output estimates for each of the sectors contained in the model to employment.

5.6.1

Economic Impact It is estimated that, at local level, regional casinos may typically generate somewhere in the region of ÂŁ50m of GVA per annum with large and small casino generating some ÂŁ12m and ÂŁ7m. Employment figures are placed at around 1,471, 377 and 181 respectively.

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‘Generic’ Economic Impact Assessment Regional

Large

Small

Local Impact GVA Contribution

£50m

£12m

£7m

Jobs Created

1471

377

181

Regional Impact GVA Contribution

£38m

£9m

£5m

Jobs Created

2117

513

223

Multipliers Local Employment

1.85

1.49

1.24

Regional Employment

1.41

1.28

1.12

Regional level estimates are also produced for each casino structure. These entail a reduction in GVA contribution since part of the GVA generated locally will be sourced from displaced expenditure elsewhere in the region. In contrast, job numbers increase. The explanation lies in the fact that when constructing local job estimates, only part of the direct jobs in casinos are assumed to be filled by local residents – some are filled from commuters and are thus a regional as opposed to local gain - constraining induced/multiplier effects. For the regional level estimates, however, all of the direct jobs are assumed taken by residents within the region. It is estimated that, at regional level, regional casinos may typically generate somewhere in the region of £38m of GVA per annum with large and small casino generating some £9m and £5m. Employment figures are placed at around 2,117, 513 and 223 respectively. 5.6.2

Physical Impact Alongside these specific economic impacts, development of regional casinos is likely to have significant physical impacts of the local areas in which they are located. Many of the proposals that are emerging involve configurations of premises and transport interchanges alongside substantial car parking provision. In addition, they all involve a range of additional facilities. For example, the original Kirzner New East Manchester – Sportcity proposals involve a building intersected by pedestrian and transport linkages. It also envisages a 4,000 seat indoor arena, swimming pool, 1,000 seat capacity multi-purpose event and sports arena alongside other commercial premises and very extensive car parking. Likewise, Hilton ‘Palace of Light’ proposals for Blackpool involve, a casino, congress centre, an entertainments lounge, spa and health facilities, retail development, substantial parking and a second possible hotel with a regional casino capability. These additional physical dimensions will have economic benefits on local economies, but are not directly included in this report which is primarily concerned with everyday on-going operational impacts.

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Scenario Development and Assessment

6.1

Introduction

PION

Alongside analysis of potential demand and broad indications of economic impact, the study brief requires that attention be given to a range of specific scenarios representing different potential casino configurations across the North West. This section of the report reviews two sets of options: •

Option Set 1: o

•

Option Set 2: o

6.2

a single regional casino option consistent with the current legislation;

Scenario Structures The scenarios defined for consideration within the later stages of the project are all based on known or expressed interests across the region. At the start of the study process a press release was issued to all local authorities inviting identification of interests (included in Appendix B). In terms of regional casinos, interests cover: •

Manchester (New East Manchester) - where proposals exists to develop a site adjacent to the City Of Manchester football stadium;

•

Trafford - where emerging proposals have been released in regard of development alongside Old Trafford football stadium;

•

Salford - where proposals exist in relation to the redevelopment of the Salford Reds rugby league stadium;

•

Blackpool – where Masterplan regeneration envisages a number of regional casino structures; and

•

Liverpool – where a limited number of alternative proposals exist with reference to redevelopment of the waterfront and expansion of an existing casino structure.

Alongside these, there are clear interests in terms of large casino developments in St Helens (scaled back from what was originally a regional casino), Southport where a casino has been highlighted as a potential regeneration vehicle in the New Vision for Northwest Coastal Resorts report and in both Manchester and Blackpool 31 . The project steering group decided that regional and large casinos should form the basis of analysis rather than small casinos – primarily for the reason that the location of small casinos will be inextricably linked to prior decisions regarding regional and large casinos locations. Taking all of these elements into account, the options reviewed are as follows:

New Vision for North West Coastal Resorts Report, LOCUM Consultants (for NWDA), 2003.

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•

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Option Set 1: Single Casino Options: o

Option A: a single regional casino located at one of five locations across the region: Manchester, Salford, Trafford, Liverpool, Blackpool;

•

Option Set 2: Multiple Casino Options o

Option B: a regional casino located at five points across the region: Manchester, Salford, Trafford, Liverpool, Blackpool;

Option C: large casinos in two locations: St Helens & Southport;

Option D: two regional casinos in three locations: Manchester, Liverpool, Blackpool

Option E: one regional and one large casino in one location: Blackpool;

Option F: one regional and one large casino in one location: Manchester.

6.3

Assessment Criteria The criteria used to assess the merits of each proposal, as agreed by the steering group, include analysis of feasibility and regeneration benefits, the latter defined in terms of contribution to both economic and tourism development as well as prospects for countering the deprivation of local areas in which casinos might be sited.

6.3.1

Feasibility Feasibility is assessed through analysis of overlapping catchment profiles (for 45 and 75 minutes drive times – chosen to reflect industry preference and perceived outer edge of travel boundary) established earlier in the report taking into account both residential leisure and combined residential/tourist flows and an assumed average daily 5,000 and 1,500 visitor level for regional and large casinos respectively 32 .

6.3.2

Economic Benefits The economic impact of options is assessed in exactly the same manner as outlined in Section 5 above. The primary difference is that specific local values of parameters are employed rather than the averages used to construct the ‘generic’ model results. In each instance local and regional level impacts are computed.

In other words, feasibility is assessed in terms of whether there is significant overlap in the catchments required to ‘service’ potential competing locations.

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Tourism Benefits In coming to a view about the potential tourism benefits of options it is useful to reflect on the evidence available with regard to tourism flows across the region. The STEAM model defined in section 4 above provides a number of useful facts and figures. In the first instance, estimated total visitor numbers in the areas of interest to the study range from just under 7m visits per annum for Salford to some 20m for Manchester 33 . Liverpool has the second highest total followed by Blackpool with close to 15m visits.

Tourist Visit Profiles 2003 (Million Visits)

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6.3.3

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Manchester

Liverpool

Blackpool

Sefton

Trafford

St. Helens

Salford

STEAM data also shows significant differences in average spend per visit across the areas of interest. Average spend in Blackpool and Manchester is substantially higher than that elsewhere with some margin between Blackpool and Manchester. Part of the explanation for the high spend evident in Blackpool comes from the fact that it has by far the highest residential accommodation profile across the areas. The share of total visitors staying in accommodation in Blackpool is double that in Manchester which is, in turn, higher than all other areas.

Visits are defined as including staying in accommodation, staying with friends and relations and day visitors.

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Tourist Visitor Spend Profiles 2003 Pion

(£ per Visit)

Blackpool

Manchester

Salford

Liverpool

Trafford

Sefton

St. Helens

‘Staying’ Visitor Profiles 2003 Pion

(% of visitors staying in accommodation)

Blackpool

Manchester

Salford

Liverpool

Trafford

Sefton

St. Helens

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The fact that spend is significantly higher in Blackpool should be reflected in the importance of the tourism sector to the employment base of the area. STEAM produces data regarding the number of direct and indirect jobs supported by tourism, but does not contrast this against total employment. If we take the 2003 Local Labour Force Survey estimate of total employment we can place one against the other. This suggests that tourism constitutes over 25% of the Blackpool economic base – five times higher than that in any other area. The dependence of the Blackpool area on tourism is very evident.

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Tourism Supported Employment 2003 (% of Employment Base)

Blackpool

Manchester

Sefton

Trafford

Liverpool

Salford

St. Helens

In examining the options we adopt a simple protocol which constructs an index taking into account absolute visitor numbers, the proportion of the employment base supported by tourism in each area and the tourist share of total estimated casino visits. 6.3.4

Benefits for Deprived Groups The final strand in the assessment seeks to examine the extent to which casino development (in the broad locations considered) might help to address the difficulties faced by groups from deprived communities - providing access and opportunities for employment. As with tourism, it is useful to stand back and to review indicators of underlying deprivation across areas prior to ranking the options under discussion. The 2004 Index of Multiple Deprivation (IMD) provides a relatively comprehensive overview of deprivation at a local authority spatial scale. It operates across a number of ‘domains’ each of which is constructed via a range of underlying deprivation factors. One useful way of examining the patterns evident is to assess the proportion of population in each authority area contained in the most deprived quartile (25%) of superoutput areas (SOA’s) within the region 34 . 34

SOAs are the spatial areas used as the basis of IMD construction.

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The set of diagrams displayed below provide a summary of this analysis for the IMD index as a whole and each of the major domains used in the sub-analysis – income deprivation, employment deprivation, health deprivation, education/skills deprivation and living environment deprivation. Although the profiles differ, they tend to outline a consistent pattern in terms of the areas under discussion in this report 35 : •

the primary areas of deprivation are located in the urban core. Manchester and Liverpool consistently have the highest proportion of their population in the most deprived quartile - around 60% for the overall IMD index – with the most extensive difference in terms of income and employment deprivation;

•

Salford typically comes third in most of the indices followed by Blackpool and St Helens;

•

Sefton and Trafford lie at the lower end of the range in terms of most indices.

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IMD 2004 Quartiles (Percent of Population in Quartiles)

Manchester

Liverpool

Salford

Trafford

St Helens

Sefton

Blackpool

Highest Qtile

2ND Qtile

3RD Qtile

100

Lowest Qtile

Although not discussed directly, it is possible that there may exist a counterbalance to benefiting deprived groups through employment - such groups may also prove more likely to exhibit problem gambling.

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IMD 2004 Income Domain Quartiles (Percent of Population in Quartiles)

Manchester

Liverpool

Salford

Trafford

St Helens

Sefton

Blackpool

HIGH Q

2ND Q

3RD Q

100

LOW Q

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IMD 2004 Employment Domain Quartiles (Percent of Population in Quartiles)

Manchester

Liverpool

Salford

Trafford

St Helens

Sefton

Blackpool

HIGH Q

2ND Q

3RD Q

LOW Q

100

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IMD 2004 Health Domain Quartiles (Percent of Population in Quartiles)

Manchester

Liverpool

Salford

Trafford

St Helens

Sefton

Blackpool

HIGH Q

2ND Q

3RD Q

100

LOW Q

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IMD 2004 Education/Skills Domain Quartiles (Percent of Population in Quartiles)

Manchester

Liverpool

Salford

Trafford

St Helens

Sefton

Blackpool

HIGH Q

2ND Q

3RD Q

LOW Q

100

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IMD 2004 Living Environment Domain Quartiles (Percent of Population in Quartiles)

Manchester

Liverpool

Salford

Trafford

St Helens

Sefton

Blackpool

HIGH Q

2ND Q

3RD Q

100

LOW Q

Developing a mechanism for assessing the benefits of casino development to deprived communities is clearly complex. The approach taken has been to attempt to capture a number of differing facets of potential gain. In the first instance, we take account of the proportion of the population contained in the most deprived quartile as defined in the above diagrams. Secondly, we take account of the number of jobs created and thirdly, we take account of the number of these potential jobs likely to be captured by local residents rather than commuters. This latter element is constructed via a gravity model process that takes into account the pattern of skills anticipated to be required in casinos against the pattern of skills available in local unemployed/economically inactive groups as defined in the Local Labour Force Survey (LLFS). This approach effectively considers potential benefits to deprived groups in the immediate locality (local authority area) of a casino development. This is a â&#x20AC;&#x2DC;narrowâ&#x20AC;&#x2122; approach but provides the most defined set of outcomes. Adopting a broader approach, and looking at benefits to groups across a wider area, would tend to reduce differences between areas. Another important point, not discussed directly, is that it is possible that there may exist a counterbalance to casino development benefiting deprived groups through employment opportunities if such groups also prove more amenable to gambling participation and associated social impact risks.

6.4

Option Set 1: Single Casino Appraisal This option set covers regional casinos but allows for development of only one facility at one of the following locations - Manchester, Salford, Trafford, Liverpool and Blackpool.

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6.4.1

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Option Set 1: Feasibility There are no significant feasibility (catchment) issues connected to this option set as, by definition, just one casino is being considered and all potential locations have required catchments within a 45 minute drivetime.

6.4.2

Option Set 2: Economic Benefits Economic benefits are defined solely in terms of estimated net jobs created at regional level for each of the regional/large casinos locations. Economic impacts lie within a range that extends from close to 2,700 net jobs in Blackpool to just over 2,000 jobs in Salford. The range reflects the fact that the analysis positions exactly the same operation in different areas with only the different location characteristics acting to determine differing outcomes. Blackpool is ranked highest primarily due to anticipated higher visitors numbers from outside the region.

Regional Casino Economic Benefits Assessment Regional Casinos

Manchester

Liverpool

Blackpool

Salford

Trafford

Regional Employment (No)

2230

2101

2686

2016

2134

Rank

6.4.3

Option Set 1: Tourism Benefits Tourism benefits are assessed via a process that constructs an index taking into account absolute visitor numbers, the proportion of the employment base supported by tourism in each area and the tourist share of total estimated casino visits. Blackpool is ranked highly in both instances due to the high profile of tourism visitors and the importance of tourism to the local employment base. Manchester is also ranked second in both instances.

Regional/ Casino Tourism Benefits Assessment Regional Casinos

Manchester

Liverpoo l

Blackpoo l

Salford

Trafford

Total STEAM Tourism Visits (m)

20.2

18.6

14.9

6.7

9.7

Average Tourism Casino Visit Share (%)

Average Tourism Employment Base (%)

4.8

2.5

26.5

2.4

2.8

Rank

6.4.4

Option Set 1: Benefits to Deprived Groups These benefits are assessed through a process that takes account of the proportion of the population contained in the most deprived population quartile in each area, the number of

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jobs created and the number of these potential jobs likely to be captured by local residents rather than commuters. This latter element is constructed via a gravity model process that takes into account the pattern of skills anticipated to be required in casinos against the pattern of skills available in local unemployed/economically inactive groups as defined in the LLFS. The process ranks Manchester and Liverpool as the areas with most potential gain.

Regional Casino Deprivation Benefits Assessment Regional Casinos

Manchester

Liverpoo l

Blackpoo l

Salford

Trafford

2230

2101

2686

2016

2134

Average Potential Local Job Capture (%)

Rank

Average Highest Residents (%)

Quartile

Regional Employment (No)

6.4.5

Option Set 1: Overall Ranking Overall, if the three categories are weighted equally, Manchester and Blackpool are ranked at roughly the same level with Liverpool in third position, Trafford and finally Salford. As noted previously, there is an expectation that RSSâ&#x20AC;&#x2122;s will assist in the selection of broad locations suited to development of regional casinos but decisions about location of a single regional casino are complex. The analysis suggests that Blackpool and Manchester are on something of an equal footing, though for different reasons. While Blackpool is indicated to generate higher economic and tourism benefits, it appears likely to generate less deprivation benefits than Manchester (or indeed Liverpool). This does not imply that Blackpool is devoid of pockets of substantial deprivation, but simply that it has a scale of deprivation that is less intense than those in the urban centres. Ultimately, therefore, prioritising Manchester or Blackpool requires either that the categories (economic, tourism, deprivation benefits) are assigned non-equal weights or that broader considerations should be taken into account: â&#x20AC;˘

Manchester and Blackpool are very different entities. The former is a major hub of regional economic activity acting as a travel-to-work node with more jobs available than residents to fill them (ODPM job density figures). The latter is a historic resort centre experiencing long-term decline of its traditional economic base, with more residents than jobs available;

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Single Regional Casino Option Ranking Location

Manchester

Liverpool

Blackpool

Salford

Trafford

Feasibility

Economic Benefits Rank

Tourism Benefits Rank

Deprivation Benefits Rank

Overall Rank

No Issues within 45 mins drive time

•

in terms of broad industry structure, Manchester has a much stronger base in transport and communications and particularly finance/business services activities (with a share of employment over twice that of Blackpool) whereas the public sector and distribution, hotels and restaurants are significantly more important for Blackpool. As such, the two areas function with very different specialisms and with Manchester more heavily geared towards higher value-added activities than Blackpool;

•

although it is difficult to compare GVA performance across the two areas 36 :

•

the most recent local area GVA data available shows that Blackpool GVA (gross and current prices) grew by some 25% between 1995 and 2002 compared to 56% in Greater Manchester South and 43% for Greater Manchester as a whole 37 ;

Blackpool GVA per capita (2002) lies at 72% of the UK level compared to 70% for Greater Manchester North and 95% for Greater Manchester as a whole;

the impact analysis suggests that Blackpool may help to generate more GVA since it is more likely to generate external tourism visits;

working age activity rates are significantly lower in Manchester than Blackpool with figures (LLFS) of 65% and 76% respectively though the same source quotes

Since GVA is reported at NUTS3 level, defined as either Greater Manchester North or South in the case of Manchester. 37

Amendment: The original report referenced Greater Manchester North not Greater Manchester South.

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average 2003 ILO (International Labour Office) unemployment rates (working age) of 7.9% and 7.3% respectively; •

the Manchester City Region Development Plan highlights the transformation of Manchester with rapid growth in business and consumer services, stimulated by the regeneration of the city core, and increasing activity at Manchester Airport turning the city into a national and regional service centre;

•

in contrast, the Blackpool Urban Regeneration Company Business Plan draws attention to the slow, steady decline of the traditional resort economy such that the area is approaching ‘a position from which resort regeneration is not practicable’. The Central Lancashire City Region Development Plan likewise defines casino regeneration (along with associated convention facilities) as of major importance for both Blackpool and the wider city region;

At the end of the day, Manchester and Blackpool are two broad locations within which a casino might be located. Each can provide a rationale for development on regeneration grounds – Manchester with regard to its high levels of deprivation and Blackpool in terms of potential economic/tourism gains. The two are somewhat different, however, in the position from which they seek to move forward with development: •

•

Manchester: o

has had a visible resurgence in fortunes and has become a major service centre within the UK. The levels of deprivation evident indicate that there remain issues with regard to matching opportunities and need on a local basis, but opportunities are in evidence;

has a well defined and diversified local economy of which leisure/tourism is an important but not dominant component;

Blackpool: o

is continuing to struggle against entrenched decline typical of many traditional resort areas in the UK. Levels of deprivation are lower than those in Manchester but opportunities are also less extensive;

has a local economy that is heavily dependent on tourism.

Thus it seems that the options here pit the opportunity for localised regeneration in the context of a more diversified, buoyant economy against an opportunity to restructure the fulcrum of a less diversified economy in trend decline. In these terms it is difficult not to assign a higher priority to Blackpool.

6.5

Option Set 2: Multiple Casino Appraisal This option set covers fiver different casino configurations across the region as set out above, namely: •

Option B: a regional casino located at five points across the region: o

•

Manchester, Salford, Trafford, Liverpool, Blackpool;

Option C: large casinos in two locations: o

St Helens & Southport;

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•

Option D: two regional casinos in three locations: o

•

Blackpool;

Option F: one regional and one large casino in one location: o

6.5.1

Manchester, Liverpool, Blackpool

Option E: one regional and one large casino in one location: o

•

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Manchester.

Option Set 2 : Feasibility Feasibility is assessed, as previously defined, through analysis of overlapping catchment profiles for 45 and 75 minutes drive times. The following table provides a summary of the assessment:

Scenario Feasibility Assessment Residential Catchment No feasibility issues for Blackpool or Liverpool

Option B

Residential Plus Tourist Catchment No feasibility issues for 45 mins DT

Very congested ‘core’ catchment for Manchester, Trafford, Salford but sufficient population within 45 mins DT Option C

No feasibility issues in 45mins DT

Option D

Feasibility issues for Blackpool in 45 mins DT

Minor catchment overlap with Manchester & Liverpool in 75 mins DT

No feasibility issues in 75 mins DT

Feasibility issues in 45 mins DT

No feasibility issues in 45 mins DT

Option E

No Feasibility issues in 75 mins DT No Feasibility issues in 45 mins DT

Option F

•

No Feasibility issues in 45 mins DT

Option B Feasibility Assessment: o

This option has five regional casinos across three spatial nodes – Manchester, Liverpool and Blackpool. This ‘triangle’ is a generally efficient location structure in that the very dense nature of the North West allows large concentrations of people to live within relatively easy access to each of the points of the triangle. The only potential complication relates to the very congested Manchester/Trafford/Salford node where the casinos have overlapping catchment profiles. Analysis, however, suggests that there is a sufficient number of potential residential leisure gamblers within a 45 minute drive time to support three regional casinos

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in this nexus without having to take into account potential tourist gambler numbers 38 ; •

Option C Feasibility Assessment: o

•

Option D Feasibility Assessment: o

•

Option 4 focuses on a regional and large casino both located in Blackpool. As with Option D, the residential base within a 45 minute drive time is deemed as too limited to sustain this option but extending the drive time to 75 minutes for the residence base or introducing tourist gamblers within the 45 minute drive time improves feasibility;

Option F Feasibility Assessment: o

6.5.2

Option D involves consideration of 2 regional casinos in Manchester, Liverpool and Blackpool. In these circumstances, Manchester and Liverpool are sufficiently distant and the intervening area sufficiently dense to make two regional casinos in each location feasible using a 45 minute drive time. The same is not true for Blackpool – here a 45 minute drive time appears to be too limited to sustain two such casinos and remains so even taking into account tourists. Extending the drive time to 75 minutes is sufficient to accommodate two casinos in Blackpool in terms of resident base but comes at with overlapping catchments against both Liverpool and Manchester. Introducing tourist gamblers within the 75 minute drive time limits the problems of catchment overlap and generation of new additional visitors would further alleviate the issue;

Option 4 Feasibility Assessment: o

•

The development of large casinos in both St Helens and Southport creates no feasibility issues of note with residential catchments within a 45 minute drive time let alone combined (residential plus tourism) catchments. This outcome may also indicate potential for proliferation of large casinos in the towns between Manchester and Liverpool.

This option is the same as option 4 but with the casinos located in Manchester rather than Blackpool. The 45 minute catchment for Manchester is sufficient to sustain this option using the residence base alone.

Option Set 2: Economic Benefits The economic impact of options is assessed in exactly the same manner as with Option set 1. In each instance local and regional level impacts are computed. The options vary significantly as far as employment impacts are concerned.

This assessment of feasibility is couched only in terms of catchment – it does not signify that three such facilities are likely to survive in open competition.

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Scenario Economic Impact Assessment Option B

Option C

Option D

Option E

Option F

5 Regional Casinos in 5 locations

2 Large Casinos in 2 locations

6 Regional Casinos in 3 locations

1 Regional & 1 Large Casino in Blackpool

1 Regional & 1 Large Casino in Manchester

Local Employment (No)

7690

790

8,700

2450

1860

Regional Employment (No)

11170

970

13950

3190

2720

Rank

•

Option B Economic Impact Assessment: o

•

Option C Economic Impact Assessment: o

•

Option E is an intermediate option with one regional and one large casino in Blackpool and is ranked three of the five. Around 3,200 jobs are estimated as generated.

Option F Economic Impact Assessment: o

6.5.3

This is the largest impact option, not really surprising in that six regional casinos are included compared to the five in Option B and close to 14,000 jobs are estimated to be generated. The distribution of activity also plays a role in determining the scale of outputs – Manchester, Liverpool and Blackpool each account for 33% of total activity compared to 20% in Option B;

Option E Economic Impact Assessment: o

•

Option C is the most modest option with just two large casinos. It has the lowest contribution with just short of 1,000 jobs generated;

Option D Economic Impact Assessment: o

•

This option ranks second highest in terms of impact though that should not be surprising given that five regional casinos are included. Overall, close to 11,200 jobs are estimated to be generated;

This final option is directly comparable with option E in that the only difference relates to location – Manchester rather than Blackpool - with around 2,720 jobs generated. Option F is ranked four of the five options.

Option Set 2: Tourism Benefits In examining the options simple protocol is adopted which constructs an index taking into account absolute visitor numbers, the proportion of the employment base supported by tourism in each area and the tourist share of total estimated casino visits.

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Scenario Tourism Benefits Assessment Option B

Option C

Option D

Option E

Option F

5 Regional Casinos in 5 locations

2 Large Casinos in 2 locations

6 Regional Casinos in 3 locations

1 Regional & 1 Large Casino in Blackpool

1 Regional & 1 Large Casino in Manchester

70.1

19.9

53.7

14.9

20.2

Average Tourism Casino Visit Share (%)

Average Tourism Employment Base (%)

7.8

2.6

11.3

26.5

4.8

Total STEAM Tourism Visits (m)

Rank

•

Option B Tourism Benefit Assessment: o

•

Option C Tourism Benefit Assessment: o

•

This is the largest benefits option. While total tourism visits are second to Option B, both casino shares and employment base averages are higher – and particularly the latter which is strongly influenced by Blackpool;

Option E Tourism Benefit Assessment: o

•

Option C is again the most modest option with just two large casinos. Tourism visits are not the lowest but casino visit shares are, and the tourism employment base average is the smallest across the options. The option is ranked lowest of the five;

Option D Tourism Benefit Assessment: o

•

This option involves the highest number of overall annual tourism visits to local areas across all of the options (70m). The (average) share of casino visits within the options is moderate reflecting the range across authority areas as is the tourism employment base. Overall, the option is ranked second;

Option E is the intermediate option with one regional and one large casino in Blackpool and is ranked third of the five. Despite having the lowest tourism visits of the options, estimated casino shares – involving only Blackpool – are the highest and the employment base profile is much greater than elsewhere;

Option F Tourism Benefit Assessment: o

This final option is directly comparable with option E in that the only difference relates to location – Manchester rather than Blackpool. Tourism visit numbers and casino shares are moderate and the employment is relatively weak. This combination places the option at four of five.

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6.5.4

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Option Set 2: Benefits for Deprived Groups These benefits are assessed via the proportion of the population contained in the most deprived quartile, the number of jobs created and the number of these potential jobs likely to be captured by local residents rather than commuters.

Scenario Deprived Groups Benefits Assessment Option B

Option C

Option D

Option E

Option F

5 Regional Casinos in 5 locations

2 Large Casinos in 2 locations

6 Regional Casinos in 3 locations

1 Regional & 1 Large Casino in Blackpool

1 Regional & 1 Large Casino in Manchester

11130

970

13950

3190

2680

Average Potential Local Job Capture (%)

Rank

Average Highest Quartile Residents (%) Net Jobs Created

In terms of option profiles: •

Option B Deprived Group Benefit Assessment: o

•

Option C Deprived Group Benefit Assessment: o

•

This is once more the largest benefit option. The deprivation quartile figure is the highest as is the number of jobs with job capture at the lower end of the range;

Option E Deprived Group Benefit Assessment: o

•

Option C is ranked as the lowest option for obvious reasons - just two large casinos are involved, deprivation is lower than other options and job capture is defined as modest;

Option D Deprived Group Benefit Assessment: o

•

This option contains the second highest average quartile content, the second highest jobs created figure and the third highest local capture rate. The high quartile figure comes from the inclusion of both Liverpool and Manchester among the areas considered with the option ranked in position two overall;

Option E is the intermediate option with one regional and one large casino in Blackpool and is ranked four of the five. Job numbers are some way behind other options with deprivation levels generally less pronounced;

Option F Deprived Group Benefit Assessment: o

This final option sees one regional and one large casino in Manchester rather than Blackpool. Although job gains and local capture are lower than option E, deprivation levels are significantly higher providing an overall ranking of 3 from 5.

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Option Set 2: Overall Ranking Bringing the scenario assessment together shows a clear ranking among the options considered. Option D – two regional casinos in Manchester. Liverpool and Blackpool – is evidently the highest ranking scenario. It generates highest job numbers, is likely to generate highest tourist gain and stands likely to most benefit deprived areas. Option D is a win-win-win option that secures maximum economic gain whilst balancing wider tourism regeneration and deprivation considerations. That said, it does begin to push the catchment requirement for Blackpool beyond the 45 minute drive time that has been used as the basis for much of the analysis and into potential overlap with Manchester. More importantly, it is not permitted by the current legislative framework. Option B – one regional casino in five locations – is ranked second overall. It again gains from scale giving it a high economic benefit, though not as significant as Option D that has six and not five regional casinos. There are relatively high deprivation benefits as both the urban core LAD’s are included though low deprivation areas are also present, lowering overall performance compared to option D.

Option Ranking

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6.5.5

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Option

Option B

Option C

Option D

Option E

Option F

Feasibility

Economic Benefits Rank

Tourism Benefits Rank

Deprivation Benefits Rank

Overall Rank

Requires greater than 45 mins drive-time for Blackpool

Very congested core but 45 mins drive time sufficient No Issues

No Issues

Tourism benefits are ranked as third highest as lower gaining areas are alongside better performers. Finally, although catchment is not technically an issue, this option provides for a very congested casino ‘canvas’ around the Manchester area. Third in ranking is option E –one regional and one large casino in Blackpool. The best performing aspect of this option is in terms of tourism where it is ranked in position two overall. Both economic benefits and deprivation benefits are ranked at three of five, reflecting lower scale of activity and generally lower deprivation levels. The catchment requirement for Blackpool is beyond the 45 minute drive time. Option F - one regional and one large casino in Manchester - is ranked fourth and is in fact ranked fourth in each category. It is lower in economic terms than Option E though

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the differences in jobs are relatively muted. It is lower in terms of tourism benefits since Blackpool has more extensive tourism potential but it also lower than option E in terms of the deprivation benefit calculation. This latter outcome stems from the fact although Manchester has a much higher deprivation quartile figure, it is viewed as having a much lower job capture rate. In practice, the two tend to offset each other and the net adjustment push this option into fourth position. Option C â&#x20AC;&#x201C; one large casino in St Helens and Southport - is consigned to the lowest rank position in each category. In economic terms the job gains are smaller than other options. Tourism is not as strong for the scenario as other options and deprivation is significantly lower than elsewhere.

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Moving Forward – A North West Regional Casino Pilot

7.1

Introduction

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This study has investigated options with regard to a range of casino configurations within the North West. Some of these are compatible with existing legislation and some look forward, attempting to assist thinking behind the development of the RSS within the region. That this dichotomy in approach is required is due to the status of the legislation which has limited the growth of regional casinos until such time as an evaluation of the initial ‘pilot’ phase has been completed. At this point, the mechanism for determining the location of a pilot regional casino is clear – namely through the formation of the expert panel charged to provide locational guidance for regional as well as large and small casinos. What is less clear is the set of precise criteria likely to be employed as the basis for determining the location of the pilot development. In this final section some thought is given to a range of criteria that might be used as a basis for selecting a pilot location and examining the case for the pilot being located in the North West.

7.2

Potential Pilot Study Criteria It is possible to consider a number of potential criteria to guide location of a regional casino pilot study exercise – building upon some elements of existing guidance - but it is self-evident that since regional casinos are a brand new leisure and entertainment vehicle, and with no comparable venture in existence, it is important that the pilot exercise is structured to test the concept of regional casinos as a mechanism for regeneration to the full. Prominent among potential pilot study criteria are likely to be the following:

7.2.1

•

Areas willing to licence a new casino;

•

Areas with economic development potential;

•

Areas in need of regeneration;

•

Areas where a positive contribution can be made to the tourism sector.

Areas willing to licence a new casino •

Political support: o

•

The legislation has been drafted to ensure that casino development will be permitted only where there exists local support. Placing the pilot in a location with such support would appear to be a primary consideration;

Consistency with local/national development policy: o

Locating the pilot in an area which has a coherent local development perspective consistent with the emergence of new destination orientated leisure and tourist related vehicles would appear to be a sensible location consideration. Likewise consistency with PPS6 suggests that preference for development should be given to town centres followed by edge of centre and only then out of centre sites.

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7.2.2

Areas with economic development potential •

Cluster capacity: o

7.2.3

Demanding regeneration environment: o

•

since one of the primary benefits of regional casino development is envisaged to be regeneration, the pilot study should be located in a challenging regeneration environment. Such environments can vary enormously over relatively small geographies and the pilot should seek to be exacting, assessing the extent to which development addresses entrenched patterns of decline;

Regeneration advantage: o

The very fact that a pilot regional casino is to be established at all will provide the chosen location with a short-term national advantage as the only such facility and will bring with it regeneration potential. The pilot study process needs to be sensitive to this consideration.

Areas where a positive contribution can be made to the tourism sector •

Tourism linked: o

•

Regional casino development has been closely linked to potential tourism impacts since the very outset of discussions about deregulation. Such connectivity has also been reinforced in policy circles with the clear implication that the pilot should be set in a tourism related environment;

Destination venues: o

7.3

Ultimately, the pilot operation may – subject to the evaluation process – be the first of a number of such facilities approved within the UK. If patterns in other jurisdictions are a guide, then the potential exists to facilitate a casino ‘cluster’. Longer-term regeneration and economic development benefits will be better served if the pilot site is located in an area with such potential at the outset and there may exist an opportunity to combine a regional and large casino to form a ‘mini-cluster’ from the beginning.

Areas in need of regeneration •

7.2.4

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arguments about potential social impacts of casino gambling have always been countered by the claim that making regional casinos a ‘destination’ related offer – requiring the bulk of clients to travel some distance to participate – will limit risks associated with mass market ‘doorstep’ access. The pilot study should seek to determine the validity of such claims by selecting a location which is consistent with the concept of a destination venue.

A Case for the North West The analysis contained in earlier parts of this study demonstrates that the North West of England is eminently placed to sustain a number of regional casino facilities. This is

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primarily due to concentrations of population that are rarely replicated to the same extent in other parts of the country. The analysis also suggests, in so far as a single choice of venue is concerned, that while both Blackpool and Manchester present comparable potential for development benefits, the Blackpool local economy is significantly less well balanced than that of Manchester and has greater need for new investment to bolster and broaden the local economy.. In the context of the above comments, the issue at hand is whether Blackpool might prove to be a viable location in which to site a regional casino pilot. In addressing this question we examine the status of Blackpool in regard to each of the criteria established in the last section: 7.3.1

Willingness to licence a new casino •

Political support: o

•

Consistency with local development policy: o

7.3.2

The Masterplan process defined above defines the basis for local development policy within Blackpool. As such, the local development perspective is entirely consistent with the concept of regional casinos as destination orientated leisure and tourist related vehicles. It also places development at the heart of the Blackpool town centre, consistent with PPS6 guidance.

Economic development potential •

Cluster capacity: o

7.3.3

The regeneration vision for Blackpool – including proposals for casino development - has been exposed to substantial public scrutiny locally. This has resulted in demonstrable political support for the proposals which are being carried forward by Blackpool Urban Regeneration Company.

The Masterplan process that has taken place over the last two years is explicit in terms of building a cluster of casino related activity within Blackpool. Establishing a pilot exercise within the area would be consistent with Masterplan ambitions, and provide the first step – subject to evaluation – in developing a casino cluster. Potential might also exist to form a mini-cluster (a regional and large casino) at the outset;

Regeneration Need •

Demanding regeneration environment: o

Blackpool is a well-established seaside resort with an employment base heavily weighted to tourism and which has been in decline for decades. In moving towards establishment of the Blackpool Urban Regeneration Company (URC) it has been recognised that the local area is approaching a position from which regeneration is not practicable. A spatially concentrated and defined regeneration challenge is very much in evidence;

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•

Regeneration advantage: o

7.3.4

As noted, the Masterplan vision for Blackpool is explicit (subject to appropriate legislation) in terms of desire to establish a cluster of casino related activity. There are few other examples of this type of ‘cluster concept’ evident and it would appear sensible to embed any short-term national advantage in an area with such a focussed longer-term development vision.

Tourism Contribution •

Tourism linked: o

•

Blackpool is one of the primary tourism areas of the UK. It has an economy that is heavily geared towards tourism in terms of employment and businesses and it is evident that it presents a strong case for examination of potential regional casino synergies;

Destination venues: o

7.3.5

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The physical geography of Blackpool in relation to the rest of the North West, and further afield, is such that it is very difficult for it not to be considered as a destination venue;

Overview A number of the candidate areas considered in this report score positively against the set of criteria reviewed. Manchester for example – a direct and close competitor to Blackpool – has clear evidence of willingness to support development, has a identifiable regeneration need suited to development, a recognised development vision and is actively developing appropriate forms of tourism. Other areas, likewise, have positive attributes, but only in Blackpool does there exist a ‘nexus’ of support, development need, destination venue status and cluster ambition. Overall, there are very strong grounds for Blackpool being considered as a primary location for the development of a regional casino pilot. There are likely to exist few if any other venues within the UK that present a configuration of conditions more suited to testing the regeneration potential of regional casino development.

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Appendix A Steering Group Members

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Steering Group Members

James Berresford:

NWDA

Alastair Bishop:

GONW

Andrew Burrows:

NWDA

Vanessa Collier:

GONW

Steven Fyfe:

GONW

Nick Gerrard:

NWDA

Tim Hill:

NWRA

Janet Matthewman:

GONW

Katherine Oâ&#x20AC;&#x2122;Connor:

NWDA

Jackie Potter:

GONW

Rebecca Rutter:

NWRA

Ian Wray:

NWDA

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Appendix B Study Press Release

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Government Office for the North West

INDEPENDENT CASINO MARKET ASSESSMENT LAUNCHED An independent market assessment into the impact of a new generation of casinos in the North West has been launched today. It has been commissioned by the Northwest Regional Development Agency (NWDA) in partnership with the Government Office for the North West and the North West Regional Assembly. It will be carried out by Salford based Pion Economics who will report back to the partners in February 2005. The study will look at the economic impact of new casinos on the regional economy including the effect of varying numbers and where they should be sited. Steven Broomhead, NWDA Chief Executive, said: “The proposed changes to gambling legislation have the potential to create huge economic benefits for England’s Northwest and the UK as a whole. This study will be vital in determining the economic impact of casinos and identifying how this can be capitalised upon in the region, as well as presenting a major opportunity for anyone with an interest in casino development to express their views on this important issue.” Keith Barnes, Regional Director of the Government Office for the North West, said: “There are big changes coming in the gambling industry. It is vital we have a clear understanding of its effects on the regional economy and the potential for regeneration, tourism and jobs.” Cllr Derek Boden, Leader of the North West Regional Assembly, said: “New casinos are a big issue for the region, with both economic and social considerations. The NWRA and its regional partners will seek to ensure that

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there is an open and transparent development process which takes both these considerations into account." The Gambling Bill seeks to modernise the legislation governing gambling in England and Wales. Developer interest in potential casino development in the region is growing and the Bill could open the way for large regional casinos to be established. The study will be used to develop a planning policy for regional casinos â&#x20AC;&#x201C; the largest casinos. Local authorities and other organisations are asked to register interest in casino development with the consultants. Notes to Editors Interested organisations should make their comments to: Jim Twomey, Pion Economics, Technology House, Lissadel Street, Salford, M6 6AP. Government policy is for the regional planning body to identify locations for casinos with regional impact taking into account the need to optimise the benefits to tourism and regeneration. The North West Regional Assembly is the regional planning body. A regional casino will require a minimum area exclusively for table games of 1,000 square metres and a minimum additional gambling area of 2,500 square metres. They will also need a minimum non-gambling area available to customers of 1,500 square metres. They will be allowed up to 25 gaming machines (of up to category A) per gaming table available for play up to a maximum of 1,250 and will be permitted to provide betting and bingo. More information on the Gambling Bill is available on the Department for Culture Media and Sport website, WWW.CULTURE.GOV.UK

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Appendix C Casino Statement

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Casinos: Statement of National Policy

This statement is issued on behalf of Her Majesty's Government.

The Government’s policy on casinos is based on the three broad objectives of the Gambling Bill: • • •

To protect children and other vulnerable people from harm; To prevent gambling being a source of crime or disorder; and To ensure that gambling is conducted in a fair and open way.

Britain has a low level of problem gambling compared to other countries (less than 1% of the population) and the Government is committed to maintaining this record. Casinos are already tightly regulated and have strict controls in place. The Gambling Bill will strengthen the existing safeguards. There are currently a number of regulations, however, which the Government believe are outdated. The 24-hour rule, the ban on advertising and the permitted areas rule unnecessarily restrict customer choice and discourage investment and economic regeneration. 3.

The tourism and leisure industries are increasingly significant elements of the economy. Tourism alone accounts for 4.4% of our GDP. The Government believes that the casino proposals in the Bill, with its emphasis on increased regulation, have the potential to make a positive contribution to the success of these sectors. In addition Regional casinos, as major developments, offer clear potential for regeneration of areas across Britain. They will provide not just a range of gambling activities, but may include hotel accommodation, conference facilities, restaurants, bars, areas for live entertainment and other leisure attractions. The benefits of such a development could go much wider than the location of the casino itself. There are many parts of the country which could benefit from the regeneration that these kinds of leisure developments can offer.

The Government recognises, however, that the casino proposals in the Bill represent a significant change and we need to take a cautious approach in order to assess whether their introduction leads to an increase in problem gambling. The Government has taken the view that the risk of an increase in problem gambling will be reduced if a limit is imposed on the number of casinos. We have therefore decided to set an initial limit on the number of Regional, Large and Small casinos of 8 each. The identification of operators and locations for the new casinos will be subject to broadly the same arrangements in each case.

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The Government believes that, in order properly to assess the impact of these new casinos, there needs to be a sufficient number of casinos in each category to allow the impacts to be assessed in a range of areas and types of location that might be suitable (including, for example, urban centres and seaside resorts across different parts of the Britain). A limit on Regional, Large and Small casinos of 8 each is consistent with this aim while at the same time ensuring that any risk of problem gambling is minimised. The Government has decided to appoint an independent Advisory Panel to recommend the areas for the Regional, Large and Small casinos. Following the Panel's advice the Government will decide the areas where each of the new casinos may be licensed.

Once an assessment has been made of the impact on problem gambling of the limited number of new casinos, it will be easier to judge the continuing need for a limit. No earlier than three years after the award of the first premises licence, the Government will ask the Gambling Commission to advise on whether the introduction of the new types of casinos has led to an increase in problem gambling or is increasing that risk. We believe such a period is necessary to ensure a full assessment can be made of the impact of the new casinos. If the Government, on the basis of the Gambling Commission's advice decides to propose that more casinos may be licensed then the Order providing for this will need to be approved by Parliament. We will also want to assess, with the help of regional bodies, what the regeneration and other economic outcomes have been.

This policy statement sets out our policy on casinos in more detail below, including the role of the Advisory Panel in recommending areas for the new casinos and arrangements for casinos which already have a licence under the Gaming Act 1968. The proposals for casinos outlined here are for England, Scotland and Wales. Responsibility for the planning system in Scotland and Wales is for their respective devolved administrations. None of the proposals here will affect the ability of local authorities to refuse to have a new casino of any size category in their area.

The Advisory Panel on new casino locations

The Secretary of State for Culture, Media and Sport will appoint an independent Advisory Panel to advise her on the areas in which the new casinos should be located. The Panel will collectively have knowledge and expertise in a range of matters including planning, securing regeneration, tourism and addressing the social impacts of gambling. Clearly, all Panel members must be able to demonstrate independence from any potential interested parties and must have an appreciation of the need for impartiality.

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In order to ensure that the impact of the new casinos can be assessed on the basis of a broad range of information and experience, the Advisory Panel will asked to identify areas for the new casinos which will provide: • •

a good range of types of areas; and a good geographical spread of areas across Britain.

The Panel will also want to ensure that those areas selected are willing to license a new casino. Subject to these criteria, the Panel will be asked to choose areas in need of economic development and regeneration (as measured by employment and other social deprivation factors) and likely to benefit in regeneration terms from a casino. 10.

The Advisory Panel will invite views from interested parties. In taking forward its work it will in particular invite the Regional Planning Bodies in England to identify a list of broad locations for Regional casinos emerging from their work on the Regional Spatial Strategies. Before the Advisory Panel finalises its recommendations on areas for Regional casinos it will need to ensure that these areas are compatible with the broad locations identified in England in Regional Spatial Strategies or in any draft revisions of Regional Spatial Strategies before the First Secretary of State.

11.

The Advisory Panel will be asked to offer Ministers a list of up to 8 recommended areas for each of the three categories of casino. The Secretary of State will consider the Panel’s recommendations. After consulting the Scottish Executive and the Welsh Assembly Government, the Secretary of State will then decide which areas to designate.

12.

The Panel will be able to begin its work in the course of 2006, taking account of views put forward to Regional Planning Bodies as they progress the preparation of revisions of Regional Spatial Strategies, and of local authorities as appropriate. We do not expect it to complete its work before the end of 2006.

Planning for casinos

13.

In England, Regional Planning Bodies as part of their revision of Regional Spatial Strategies will need to consider possible broad locations for Regional casinos within their region. Their proposals will then feed into the recommendations of areas for the initial eight Regional casinos by the Advisory Panel. In revising their Regional Spatial Strategies, Regional Planning Bodies need to take into account national planning policy guidance. Planning Policy Guidance Note 6 “Planning for Town Centres and Retail Developments”/draft Planning Policy Statement 6 “Planning for Town Centres”, Planning Policy Guidance Note 13: “Transport” and the

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two joint statements already provide a comprehensive policy framework for casino development. 14.

The Government does not consider that a separate national planning policy statement on casinos is required. However, it will consider whether there needs to be further clarification or development of its planning policy in respect of casinos in particular, in finalising PPS6.

15.

For all three categories of casinos, the identification of specific sites will be for local planning authorities in their local development framework, having regard to national policy and the Regional Spatial Strategy. Local planning authorities will also be responsible for deciding applications for casino developments.

16.

Operators will be required to apply for planning permission in the usual way and all applications will be considered on their merits in line with national and local planning policies. Applications may come forward at any stage. Decisions on whether they should be called in for decision by the First Secretary of State will be made in light of the Government's callin policy and the particular circumstances of the case.

17.

It will be for the devolved administrations to decide to what extent these considerations should apply to them.

The operating licence

18.

The Gambling Commission will award operating licences to companies on the basis of the usual licensing criteria, but incorporating an additionally stringent test of social responsibility to reflect the fact that Regional, Large and Small casinos will present hitherto untested risks of social harm. Therefore, operators will need to demonstrate a commitment to: â&#x20AC;˘ â&#x20AC;˘

ensuring effective measures for reducing the risks posed to vulnerable people by casino gambling products and the environment in which they are supplied; and making available information, advice and assistance to people using the casino who may be affected by problems related to gambling.

The Commission will take account of the fact that greater commitment and resources is likely to be needed in the case of Regional casinos because of the greater risk they pose, particularly because of the availability of Category A machines. There will be no limit on the number of operating licences that may be granted. The premises licence

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19.

A local licensing authority will only be able to award a casino premises licence if one has been identified for its area. The process for awarding a premises licence will be open to all operators. It will have two stages. The first stage will be a regulatory test to ensure that all proposals satisfy the regulatory premises licensing requirements already in the Bill. The second stage will be triggered where there are more applications for casino premises licences than the local licensing authority is permitted to grant.

20.

The second stage of the process will be a competition held by the local authority on the wider casino proposal. We will consult with the Local Government Association and others on how the competition should be conducted. The competition could be judged on a wide range of issues, reflecting the issues that are important in the local area, local concerns and priorities. These may include, for example, employment and regeneration potential, the design of the proposed development, financial commitments by the developer to local projects, location, range of facilities and other matters. The local authority may wish to provide an opportunity for consultation with local people. The local authority would set out its priorities and concerns in a set of objective key considerations and it will then invite operators to submit entries to the competition. The eventual winner of the competition will be eligible for a full premises licence once he has obtained planning permission and the casino has been built.

21.

The operator will therefore need to have an operating licence, a premises licence and planning permission. The planning permission is likely to be subject to a planning obligation.

22.

The premises licensing process and the planning consent process will need to be conducted taking account of the need to clearly separate the licensing and planning functions. ODPM and DCMS will issue guidance to local authorities on the propriety issues surrounding these processes. The fact that an applicant's proposal may be the preferred option in the competition will not guarantee planning permission. Once planning permission has been granted and the casino has been built, the operator will be able to apply for a full premises licence, which he could expect to obtain provided there has been no material change in the proposals since the competition.

Casinos which already have a licence under the Gaming Act 1968

23.

The arrangements described above for Regional, Large and Small casinos are aimed at minimising the risk of problem gambling from an increase in the number of casinos, particularly from a proliferation of high stake and high prize gaming machines. Existing casinos will be allowed to continue to operate, and to have the opportunity to compete for the new licences. But the Government does not believe it would be appropriate to allow

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them to have all the new casino entitlements in circumstances where a limit is imposed on the establishment of new casinos. 24.

Accordingly, we propose that there will be no size requirements on existing casinos and they will not be subject to the ban on advertising and the 24-hour rule. They will, however, be restricted to their current gaming machine entitlement of 10 gaming machines of up to Category B and they will not be allowed to provide bingo or betting on real or virtual events.

25.

Arrangements will be made to ensure that existing casino businesses can in the future be transferred to new owners and to new premises if the current premises for some reason become unavailable (such as end of lease or fire), so long as it is within the existing licensing area. A company operating a casino which already had a licence under the 1968 Act may apply for a Regional, Large or Small casino premises licence. If it is awarded one of them for an existing casino, then it will be able to operate it with all the new entitlements authorised by the new licence.

Statement Issued: 16 December 2004