Gaming bill storm boosts Blackpool's Vegas hopes

Parliament’s resistance to the gaming bill has ensured the government will be less likely to give in to pressure from foreign firms for substantial tax breaks, providing an unexpected further boost to Blackpool’s ambitions to become a leading showbusiness casino site.

The Treasury had consistently shown unease over calls from US companies in particular, for tax rates on gambling to be cut from the current 40% to at least 20%. Such a move would dramatically reduce the substantial benefits for the Exchequer, which would follow from the relaxation of the gaming laws. This week’s rough reception for the legislation and criticism that the government was creating a free for all by failing to limit the number of large casinos has made it difficult for Downing Street to be seen to give ground on the tax issue.

While a deterrent to outside investors, a refusal to introduce massive tax breaks will favour Blackpool, which has so far conspicuously failed to secure foreign investment for its ambitious casino and entertainment schemes.

Gaming giants such as MGM Mirage and Kerzner International have instead concentrated their efforts on the larger cities such as London, Glasgow and Manchester.

Joan Humble, Labour MP for Blackpool North and Fleetwood, said: “The large casino operators will pick the easy targets in large city centres, where there is already the population and the infrastructure. They won’t look at towns like Blackpool, which are on the periphery as seaside resorts.”

British casino operators indicated they would welcome signs that the government was taking a more hands-on role. UK-based firms have already complained that too much is being done to favour overseas companies at their expense.

Recently hotel group Hilton revealed intentions to re-enter the casino market by opening a £200 million complex in Blackpool. It already has a four-star hotel in the resort and previously owned six London and 21 regional casinos through its Ladbroke Casinos arm. However, a representative said Hilton would only go ahead if the government introduced a limit on the number of large-scale super-casinos permitted in the UK.

He said: “There should be space for about five across the country and, as with any situation, we would rather that any changes would benefit UK firms.”

At present British people spend an estimated £8.7 billion a year on gambling, with the industry generating £1.3 billion for the Exchequer. By 2009 this is expected to rise to £12.5 billion, providing an extra £0.5 billion in tax and an overall £1.8 billion to the Inland Revenue.

However, if tax on gambling was halved to encourage overseas investors, the gain for the Treasury would be reduced to £0.26 billion with total tax receipts of just £0.91 billion – £340 million less than the Exchequer is making now.

The Gaming Bill was passed by a majority of just 74 after 29 Labour MPs voted against it. Ministers are now expected to offer further concessions to rebels to try and quell the hostility as the bill passes through parliament.