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Regional Casino-led Regeneration (Alternative Approaches)

Volume 472: debated on Tuesday 26 February 2008

I am today announcing the publication of a review of the “Alternative Approaches to Regional Casino-led Regeneration” prepared by my officials. Copies will be placed in the Libraries of both Houses.

In July last year the Prime Minister asked me to undertake this review, in recognition of the lack of consensus in Parliament about regional casinos in light of the potential of a regional casino to increase problem gambling within the regional catchment area. The then Secretary of State for Culture, Media and Sport, my right hon. Friend the Member for Stalybridge and Hyde (James Purnell) in announcing the review on 16 July 2007 said:

“it would be prudent to examine afresh whether deprived areas can be equally well served by other forms of regeneration”.

The aim of the review has been to examine the evidence of whether regional casinos are the best way to regenerate specific deprived areas. It has drawn heavily on evidence within the various documents submitted to the Casino Advisory Panel for the licensing of a regional casino, published literature on casinos specifically and the benefits of regeneration more generally. A list of these points of reference is included in the document.

Specifically the review examined:

What is the regeneration need which casinos are thought to meet and what is the nature of the market failures involved;

What are the economic benefits of casino-led regeneration;

What are the economic and social costs of casino-led regeneration; and

What are the alternatives to casino-led regeneration could be considered.

The review highlights the difficulty in establishing the evidence base for the generic benefits of casinos because the source material is strongly influenced by specific location factors, and by the underpinning purpose of individual pieces of research. In particular, there are uncertainties about the scale of the benefits of a regional casino for job creation; about the wider benefits to an area from multiplier effects; or about the degree of additionality a casino would bring to existing activities. Moreover, the leakage effects—where new jobs are filled by commuters not locals limiting the benefits to the immediate area of the casino—is potentially higher than other forms of regeneration because pay within casinos is relatively high and training opportunities make it attractive to people already in employment. Finally, the review concludes that, as with most regeneration projects, there are economic and social costs associated with casino-led regeneration. In the case of a regional casino there are potentially significant costs that would arise as a result of an increase in compulsive gambling.

The review does recognise that the unique nature of a regional casino, especially in terms of inward investment, would make it challenging for any one of the alternatives the review examines in isolation to achieve the scale of benefits that could be secured through a regional casino. However, when the potential economic and social costs are factored in alongside the uncertainties around the extent to which the benefits of a regional casino are truly additional then the difference could be much reduced or even eliminated if a number of alternative options are packaged together.