With a series of new costs being heaped on British casino operators over the coming years, the timing of ‘critical modernisations needed by the sector’ is now as important as ever but still there is no indication of when the public policies contained in the long-awaited White Paper will come into play.
David Williams, Director of Public Affairs, at the Rank Group, said: “The casino industry can be absolutely certain of the timing of a number of changes rattling down the line in 2024: in April, the 9.8 per cent increase in the National Living Wage will land. For land-based businesses like ours, people are, quite rightly, the biggest and most important cost line in our business. That is exactly how it should be, and our brilliant colleagues in our clubs are what make the difference and they are why our customers continue to keep coming back. Even so, the National Living Wage increase will come at a cost of almost £10m to the Rank Group (both our Grosvenor casinos and Mecca bingo clubs) on an annualised basis. In context, our most recent full year results (to June 2023) saw the Group make a like for like trading EBIT of just £20.3m and a statutory loss after balance sheet right downs and venue closure costs of £95.3m. When costs increase, we feel it harder than most.
Mr Williams also highlighted the statutory Levy facing casinos over the next three to four years, where operators will pay 300 per cent more towards research, prevention and treatment of gambling-related harms. “We recognise the arguments in favour of elevated payment levels, notwithstanding some reservations about how the money will be put to use,” he explained. “We can layer on top of these cost increases the disappointment felt by casinos in the recent Autumn Statement when the Chancellor chose to freeze casino duty bands rather than moving them in line with inflation. The Treasury’s numbers point to a £5 million benefit to the Exchequer. At the same time, fragile consumer confidence and wider inflationary pressures all combine to impact casinos as we look ahead to the New Year.
In many businesses, these costs would simply be passed to the consumer in terms of higher prices but casinos can’t do that. “We can’t sell a £10 chip for £11.20,” explained Mr Williams. “The key mitigation that we have against these pressures is the delivery of the public policies in the White Paper, some of which will really make a positive difference. At the top of the tree is the long-overdue change to gaming machine allocations. Casinos will also be able to offer sports betting, whilst electronic payment methods (rather than the current over-reliance on cash in our clubs) will help to give customers a more contemporary casino experience and one which is the norm almost everywhere else in the world. These improvements cannot come a moment too soon and it is precisely why the industry is urging the Government to keep its foot to the floor in delivering their response to the land-based consultation, laying the necessary statutory instruments and getting the legislation delivered in the first half of 2024. It all takes time, and whilst timing is everything, we are not blessed with time on our side.”
“We are playing catch-up with casinos elsewhere in the world, and much of the wider gambling ecosystem here in the UK. Only when the legislation is delivered can we set about making our casinos more modern and appealing. We simply cannot withstand the cost increases that are all but certain without knowing when the promised modernisations are going to land. In short, we need the modernisations which will help to drive revenue which will help us to absorb the costs. That’s the only sequence of events that works.
“As we reflect on a busy 2023, we lean into the first half of 2024 knowing that it’s likely to be even busier. By the summer, providing the Government delivers the casino-modernising policies that were so long in the making, it will have been worth the wait,” he added.