The 2005 Gambling Act, which set out the new legislative landscape for the regulation of gambling in Great Britain, made recommendations for the building of 16 new casinos across the country. Local authorities were invited to bid for these new casinos – eight ‘large’ and eight ‘small’ – and did so with the aim of boosting regeneration and tourism to their areas. However, there is ongoing debate as to whether casino development and increased tourism go hand in hand. In this article we consider what has happened elsewhere and what the new British casino destinations may learn from the experience of others.
Little hard evidence about the impact of casinos on tourism
With a few notable exceptions (Nevada, Caribbean and specific locales in Europe), casino development is a relatively recent phenomenon. However, notwithstanding the rapid growth in the number and size of casinos and related developments in various jurisdictions in recent years, there is little hard evidence about the impact such developments have had on tourism.
Immediate urban markets are paramount
Historically, casinos have been closely associated with glamorous tourist destination resorts such as Monte Carlo, Baden Baden and Las Vegas. However, although there is a high correlation between casinos and tourism in these ‘resort’ destinations, not all casinos rely on tourists, or cause expansion of tourism markets. Most casinos cater primarily and predominantly to their immediate urban markets.
Casino developments to encourage tourism
However, in recent years, many casinos in the US and Australia were authorised for the explicit purpose of encouraging tourism development. That is, to bring in a greater proportion of outsiders and additional wealth into the local economy. Although in some cases this has been achieved, for example the major casinos of the Gold Coast of Australia have been successful in attracting premium players from South East Asia, the ability to use a casino as a major stimulus for tourism development is dependent on a range of characteristics and considerations including location, type of development and the legal and competitive environment. Broadly, there are two scenarios where casino development has helped drive tourism.
Concentration of casinos in a location can become tourist attractions in their own right
First, where large casinos and ancillary facilities have been concentrated in one location they have become major tourist attractions in their own right, as in Las Vegas and Macau. This concentration of casinos will not be permitted in the UK under the 2005 Gambling Act but important lessons can still be learned. Las Vegas began as a destination resort centred on casino gaming but, in the face of increasing competition (as legislation has been relaxed in surrounding areas), it is now a multi-faceted entertainment and convention venue with gambling as its main theme. The destination features Disney-style architecture, entertainment, attractions, retail, convention facilities and recreational opportunities catering for a number of markets. There are now 133,000 hotel rooms in Las Vegas with many more in planning. In Nevada generally, casinos rely on non-core income streams such as hotels, restaurants and live shows for up to half their overall revenue.
In short, a casino on its own is not enough to have a significant impact on tourism. Without the critical mass required to develop a ‘casino destination’, further tourism activity will have to be offered. By the same token, casinos coming into an existing tourism development or destination can act as an additional tourism driver.
Casinos across borders can attract new markets
Second, where legal controls prevent development of casinos in a particular area, casinos in neighbouring jurisdictions often draw considerable numbers of tourists from a distance or ‘across the border’. Such restrictions dictate the need to travel, for example to the Indian reservations in the US or to Malaysia, which attracts international visitors from Thailand and other far eastern countries where gambling is not permitted. Customers to these casinos are for the most part single-purpose visitors, focused on gaming. The economic impact of these single use casino destinations is considerably different than at tourist oriented destination resort casinos. In this scenario, there is always the danger of a relaxation in restrictive legislation which could undermine casino destinations that do not have a broad-based product.
In the UK, casinos in most urban provincial areas have always catered to a local clientele, a pattern reinforced by other factors such as restrictions on scale and advertising. The new Gambling Act changes this dynamic. The new casinos will be larger, higher quality products that can now be promoted more widely. Additional licences are not likely in the short-medium term which means the 16 new casinos will have a significant degree of protection from new competition and the enhanced quality could therefore pull visitors further afield.
The importance of linking casino development to the wider tourism context
The key message for those developing new casinos in the UK seems to be that casino consumers will generally gravitate toward casinos closest to their residences unless there are substantial qualitative and non-gaming attractions that can entice them to travel further. A larger footprint gambling venue will not attract more visitors on its own. It is therefore imperative that casinos be seen within the wider tourism context, and that those planning casinos understand that the relationship between casinos and increased tourism is two-way: the better the existing tourism infrastructure and product links into a casino, the more likely the casino is to have a positive impact on tourism in an area. For those seeking to develop tourism in a destination, it is important to understand that it is not a given that a new casino will generate new tourism markets of its own accord.
This article draws from work undertaken by The Tourism Company in 2008 for one of the UK's leading casino operators. For more information on our work on tourism and casinos please contact us.