SBC News Winning Post: Third time's the charm for England’s casinos

Winning Post: Third time’s the charm for England’s casinos

Industry strategic consultancy Regulus Partners starts the week by looking at the arduous efforts to reopen casinos in England and the re-regulation of Ukraine’s gambling market.

UK: reopening – England’s casinos expect….

England’s casino operators will be hoping that the third time really is a charm as the Government finally confirmed that casinos (along with bowling alleys and theatres) would be allowed to reopen from Saturday.

Lockdown has been particularly frustrating for casinos – the Government has executed more u-turns than Mr Magoo navigating Spaghetti Junction in the fog. Operators had been expecting to reopen on 4th July, along with bingo clubs, amusement arcades, pubs and restaurants (betting shops had started up again in mid-June); but were advised to stand down a fortnight in advance. Then came the heart-break of the 31st July announcement as the Prime Minister whipped the rug away again – this time with barely 12 hours’ notice.

The decision to allow casinos to open their doors for the first time in five months is unlikely to be universally popular; but those who contend that school reopening should come first clearly made very little use of their own schooling. There are only around 100 casino venues in England – many of which will not reopen immediately.

They will be required to operate at reduced capacities and subject to much higher levels of public health controls than in other venues. In considering how to reduce risk of infection at a population level and how the nation’s education system may be restarted (in the teeth of union opposition), whether or not casinos are open is frankly irrelevant. At the same time, it is existential for companies that have been burning their way through cash reserves while unable to trade.

Having finally (fingers crossed) been given permission to get going, operators now face the challenge of how they can do so sustainably in the most hostile of conditions.

Ukraine: domestically regulated gambling – the lesser evil?

Gambling stakeholders should not need lessons in chicken counting, but Ukraine provided another one this week. While President Zelensky (broadly pro regulated gambling, pro-choice) signed the omnibus bill into law as expected (though providing some 11th hour jitters), he also demanded some ‘last minute’ changes (as is the prerequisite of a strong executive).

For example, Zelenski has demanded the tightening of casino locations to 5* hotels (currently 35 in Ukraine) rather than also 4* (currently c. 200: a major potential additional expansion and a much easier new-build entry point); more oversight of UBOs and the licensing process was also demanded (echoing the concerns of other government agencies, addressed in the Act on a more geopolitical level by an insistence that owners and/or management are not Russian dominated). Tax rates remain uncertain but broadly range-bound with an upper rate of 25% which looks unlikely to apply to betting (possibly as low as 5% GGR), online and slot machines (possibly as low as 12.5%); VAT in Ukraine is 20%, so the tax rates set are much more about channelling and investment than ‘sin taxes’ or even consumer tax benchmarking – although licence fees are relatively high, especially for the long-tail (up to €0.25k pa per online licence; €0.8m pa per Kyiv casino)

Tellingly, the explicit reason why the president was keen to get on with domestic regulation of betting, casino and online was to convert a rife black market (including organised crime) into a transparent, regulated and tax paying sector. Politicians and other stakeholders from more developed jurisdictions who think heavy restrictions are anything but moral posturing and a gift to organised crime should probably look at the brief history of Ukraine’s gambling ban 2009-2020 for a better understanding of the underlying issues such an approach causes (Wikipedia’s entry outlining the activities of the Ukrainian mafia is instructive: racketeering, extortion, murder, human trafficking, money laundering, bootlegging, arms trafficking, gambling, bribery, fencing, prostitution, theft, skimming, pornography and fraud – the sort of ‘parallel businesses’ effective policy making keeps gambling well away from).

International: horseracing – out of Servis

The Jockey Club of Saudi Arabia has paid out prize money owed to the horses placed 2nd to 10th in the race held for the first time in February. However, the connections of winner, Maximum Security (purchased privately by Coolmore prior to this race), will not be paid out his US$10m until the authorities have concluded investigations into the use of potentially performance enhancing supplements. The horse’s then trainer, Jason Servis, is subject to a federal indictment for his part in the use of these unlicensed substances. It is still unclear whether the winning horse could yet be disqualified, as the horse has never failed a drugs test.

The entire event has cast a shadow on the Saudi Cup as an event, which was supposed to enter the horseracing scene as a great international showcase able to attract the best horses and connections with the promise of enormous prizemoney and excellent hosting. It has left the JCSA in a difficult situation, where while it is not a part of the FBI investigation, it has a moral duty to ensure integrity for law enforcement and participants, although it also arguable has a contractual obligation to connections of the winning horse, of which there is no evidence (yet) of rule breaking. The real losers are the connections of Maximum Security, who have not only lost out on valuable prizemoney, but also, and probably more importantly, the debacle is likely to have devalued the horse from a breeding point of view (a horse that only won a lot of races due to being ‘drugged’).

There are quite a few threads here; the issue of what constitutes a performance enhancing drug (the supplement used is naturally occurring and undetectable, as are many other ‘legal’ treatments – although it is unknown whether there is any benefit), and how racing regulators (and other sports governing bodies) should cooperate with investigations involving law enforcement. One, thing it does highlight though is the need for International racing regulators to work together, share information and align rules where this is possible. This is vital for the integrity of the sport, the preservation of the sport and the maintenance of the thoroughbred.

Ireland: horseracing – show no fear getting involved

The biggest priced winner in the UK and Ireland, He Knows No Fear, enjoyed success at odds of 300-1 in the mile maiden at Leopardstown yesterday, beating the evens favourite by a head. The horse was so unfancied on only his second start following a poor showing on debut, as well as favourite Agitare, from a more fashionable stable (Jim Bolger, rather than a billionaire businessman hobbyist Luke Comer).

It’s a heartwarming story, and serves as a reminder that sometimes horses (and indeed people) can be written off too quickly in the racing industry. While it may have to be a ‘numbers game’ for large operations to pay the bills, the hobbyists and smaller trainers have more time to persist with these ‘difficult characters’ and very often a different approach can be the key to success. Maiden races can throw up surprises, with a focus on fashionable stables or breeding dictating the market, and perhaps also the way the races are run. There is room for the ‘little man’ in racing, they just need to be brave enough to pick up the challenge.


SBC News Winning Post: Third time's the charm for England’s casinos

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