1.1 This response is submitted on behalf of the operators of Britain’s licensed casinos by the land-based casinos group of the trade body, the Betting & Gaming Council. This group includes all licensed casinos operating in Great Britain at 1st March 2020.
1.2 Casinos form an important part of the UK’s hospitality and tourism industry, employing around 14,000 people directly (and many more through the supply chain) and providing entertainment for millions of customers every year. The sector has a long and established tradition in Great Britain, is internationally renowned and a driver of inbound tourism and international investment.
1.3 The Coronavirus emergency has resulted in casinos – in common with much of the rest of the UK hospitality industry – being unable to trade and leaves operators deeply uncertain about the future.
1.4 We welcome this inquiry and the opportunity it presents to share with the Department for Culture, Media and Sport (the ‘DCMS’) the nature of the impact of the emergency on the casino sector; to highlight specific areas where support is required; and to identify opportunities to work with HM Government to generate economic recovery.
1.5 Casino operators have responded to the emergency responsibly, constructively and with consideration for the national effort.
1.6 Sustained and targeted Government support is essential for the survival of the sector both at present and at such time as casinos are permitted to reopen.
2.0 What has been the immediate impact of Covid-19 on the sector?
2.1 All 154 casinos in Great Britain had ceased trading by midnight on 20th March 2020. Prior to this, casinos experienced four weeks of substantially reduced trade (25% to 50% declines in revenue).
2.2 The situation at present is as follows:
2.3 In addition, we have taken the following actions to support the national effort to defeat Covid-19:
3.0 How effectively has the support provided by DCMS, other Government departments and arms-length bodies addressed the sector’s needs?
3.1 Following a period of understandable uncertainty (during the first week after closure), the Government has provided critical support to the sector, through the Job Retention Scheme, business rates relief, duty deferral and the encouragement of landlords to respond constructively to tenant pressures.
3.2 We have welcomed the frequent guidance updates, and we recognise the bandwidth issues in Whitehall of providing all the answers to all the questions in a rapidly changing environment.
3.3 From the start of the emergency, we have received regular contact from the DCMS who conveyed information to HM Treasury (with whom it was – again understandably – difficult to establish direct contact).
3.4 We have also had a conference call with Neil MacArthur, CEO of the Gambling Commission
4.0 What will the likely long-term impacts of Covid-19 be on the sector, and what support is needed to deal with those?
4.1 The depth of impact on the casinos sector is likely to be determined by a) the length of lockdown; b) the application of social distancing measures post re-opening; c) the level of support from the Government during the period of business disruption, d) consumer confidence and; e) the state of the economy.
4.2 Supply side constraints (social distancing, PPE etc) are likely to combine with demand side constraints (public anxiety around congregating in public, a sub-standard customer proposition, a weakened economic situation etc) to create a very challenging trading landscape in the short, medium and possible longer terms.
4.3 If casinos are required to open with excessive constraints, the fundamental appeal of an entertainment-oriented visit will be significantly diminished. The negative impact on consumers may take a long time to recover.
4.4 It is critical that we are able to engage with the DCMS and HM Treasury in the weeks and months ahead in order to address these specific challenges in a collaborative fashion. The UK land-based casino sector is internationally renowned and respects; it provides entertainment for millions of UK consumers; and it is a valuable ‘export business’, attractive to international tourists. The sector has a valuable role to play in the UK’s economic and societal recovery.
4.5 In common with many other businesses, we will be in uncharted territory when lockdown ends. In our experience (most notably the experience of the smoking bans in 2006 and 2007), trading will be slow to recover unless supported by stimulus measures. Consumer behaviour, once disrupted can take a while to return to previous levels – and this is particularly likely to be the case under conditions of economic recession and social distancing restrictions. Many casinos (particularly in London, which constitutes a disproportionately large part of the overall sector in terms of value and employment) will also be affected by the pace of recovery in tourism.
4.6 Britain’s casinos employ around 14,000 skilled people – many of whom are personally licensed by the Gambling Commission (a legal requirement for gaming staff). A protracted lockdown may present issues of re-staffing to ensure high standards of customer service and regulatory compliance.
4.7 The most time-sensitive, critical and ultimately existential matter upon which we require clarity is the tapering of furlough support after 30 June. Payroll constitutes the single biggest component of our cost base. Therefore it is critical to understand how HM Government will support the sector, at a time when it is likely to impose restrictions which prevent operations from being economically viable if/when they re-open.
4.8 Many of Britain’s 154 casinos will not be able to re-open and survive in the event that furlough support is not maintained following permission to re-open. If the Government intends to adopt a phased approach to restarting the economy, it is essential that it sustains the Coronavirus Job Retention Scheme. This will enable businesses to keep many employees on furlough while trading recovers.
4.9 We would welcome a review of employment law to ensure the avoidance of otherwise unnecessary redundancies of colleagues who are unable to return to work in their previous capacities. The flexibility operators have in existing contracts does not give them sufficient scope to mobilise their workforces appropriately and thus aid a return to business profitability. Without legal support from government on this, operators will remain sub-economic and will need to reduce the number of colleagues on payroll. With Government support to address contract flexibility many jobs will be protected.
4.10 Given Government support, Casinos will be able to contribute positively to a rebound in tourism, employment and economic recovery (as well as consumer entertainment). There are a number of areas of legislative modernisation that will provide critical stimulus to the sector during the period of economic rebuilding; and would achieve a more logical, more consumer-oriented approach to the provision of casino gaming in Great Britain. These include:
4.11 We note that some of these measures (for example, cashless payments and more electronic terminals) will contribute to improved operation (and enhanced customer safety) under conditions of social distancing.
4.12 As with any programme of reform, there will be concerns regarding unintended negative consequences. These will be addressed through the sector’s programme of safer gambling initiatives to ensure enhanced player supervision. Any reforms would be underpinned by a transparent and scientific programme of evaluation to identify behavioural responses and allow for recalibration.
4.13 Casinos are (uniquely in British leisure and retail) taxed using a sliding scale of 15% to 50% of revenue (on table games, the chief source of revenue). This has the effect of imposing high levels of taxation on operators (with some venues incurring effective rates of duty of between 40% and 50%).
4.14 Even before lockdown, this high level of taxation was threatening the viability of some casinos by hindering their ability to compete both domestically and internationally (the London high-end casinos compete with casinos the world over for international trade). We would be keen to work with HM Treasury to look at how the gaming duty regime for British casinos may be used to encourage increased investment, employment and sustainable contributions to public finances.
5.0 What lessons can be learnt from how DCMS, arms-length bodies and the sector have dealt with Covid-19?
5.1 The support received from the DCMS and from HM Government in general has been extremely welcome. The situation has perhaps exposed the extent to which the Government (principally the DCMS and HM Treasury) understands the economic workings of the casino sector.
5.2 We believe there is merit in putting in place a series of measures to assist the DCMS and HM Treasury in obtaining a clearer understanding of the sector in terms of sources of revenue, cost base, economic contribution, financial sensitivities and growth potential.
5.3 A regular system of briefings and/or meetings with the DCMS and HM Treasury would help to facilitate greater understanding of our sector. This would also enable early identification of emerging challenges and allow casinos to respond effectively and constructively to challenges facing the Government.
5.4 We propose that this system of briefings might start now to allow the casino sector, the DCMS and HM Treasury to work together in addressing the challenges of reopening and helping to drive economic regrowth.
6.0 How might the sector evolve after Covid-19, and how can DCMS support such innovation to deal with future challenges?
6.1 In recent years, Britain’s casinos have been held back by the preservation of outmoded legislation (grandfathered from the 1968 Betting and Gaming Act) that has restricted their ability to provide the range of experiences that consumers expect - expectations conditioned by developments in the online sphere, where there are relatively few constraints on product or innovation, as well as their experiences of visiting international land-based casinos.
6.2 We have set out above (section 4.10) a number of measures that would help the casino sector to rebuild in challenging times.
6.3 We are also looking at how the casino sector may develop in the long-term, to ensure that it is able to respond to consumer tastes in more agile fashion; and to support the creation of more diverse, more competitive (in an international market) and more socially and economically valuable gaming-based entertainment venues.
6.4 This will involve a wider range of gaming and non-gaming experiences, better use of emerging technology, enhanced levels of customer service (including harm prevention) and investment in infrastructure.
6.5 We have been involving a range of stakeholders in this process, including consumers, technology firms and mental health experts. We would welcome the opportunity to involve the DCMS directly in this process.