Maxims Casino has gone into administration in the hope that the Canadian owners can find a buyer. Maxims is situated in a beautiful Victorian townhouse built in the 1860s in the London Borough of Kensington. Previous owner Genting offloaded the casino to Sonco, a Canadian company, for £34.6 million in 2019, realising a significant profit, having purchased it when the company acquired Stanley Leisure’s casinos in 2006. Maxims is yours if you have £30 million to spend.
One option available to Sonco is to keep the licence and sell the freehold of the building, but receiving planning consent for change of use to anything else, such as residential, is not assured. Whilst residential use would usually provide for a significant uplift in value, I believe there is a bus stop immediately outside, which will reduce the potential value, and moving the bus stop will be resisted by the other residents.
The value of the licence has to be questionable. As things stand, licences can only be used in the licensing area in which they were issued. There has been some talk of transferability of licences and this may come as a consequence of the 2005 Gambling Act review. But currently, Maxims’ licence can only be used in the Borough of Kensington and Chelsea, which is not the best area for casinos in London.
Sonco’s acquisition of Maxims always struck me as a strange first step into Europe for a Canadian company that operates the Grey Eagle Resort and Casino, the largest casino in Calgary with more than 40 gaming tables and 900-plus slot machines. London’s VIP market has been anything but stable in recent years, requiring a large balance sheet to meet the demands of its volatility. Clearly, Sonco’s UK subsidiary didn’t have one large enough.
Maxims’ collapse cannot be placed solely at the door of the pandemic. Firstly, Maxims caters to a higher-end clientele, but suffers from the fact that it is not in Mayfair. VIP customers on a gambling night out often go from casino to casino and in Mayfair, they have a number of casinos to choose from. Whilst Maxims was part of Genting’s stable of London casinos, management could incentivise some of their customers to visit Maxims on a regular basis, but it is very difficult to make a standalone casino in today’s environment work.
Secondly, the VIP market in London has gone through a major structural change. In the ’70s, ’80s, and ’90s, the customer base was mainly Middle Eastern. In the last two decades, the rise of the Asian VIP gambler has pushed London’s VIP revenues to approximately £250 million at their highest. However, the number of Middle Eastern customers has reduced significantly and the amounts they are prepared to gamble with is much less than in the last century. The sons of the wealthy Arabs do not gamble like their fathers. And due to the Chinese government’s crackdown on money leaving China and conspicuous spending, visitation and spend from this segment has plummeted.
Finally, KYC and AML checks have deterred a significant number of VIP customers from gambling in London, preferring to play where the checks are not so intrusive or onerous. London’s VIP market has been struggling for a few years; high-end Ritz Club, the casino in the hotel of the same name, closed prior to the first lockdown in 2020, not to reopen. It last made a profit in 2016.
Here’s some good news from the UK Gambling Commission’s quarterly phone survey of gambling activity and problem gambling. Every quarter, the Commission conducts a phone survey, questioning 4,005 people over the age of 16 about their gambling behaviour in the last four weeks. Compared to last year, gambling participation remained constant at 42%, but in-person (i.e., land-based) was down 5%. The reduction is hardly surprising, given the continued high rates of COVID-19 infection in the UK.
The good news is that problem gambling has decreased from 0.6% to 0.3%, a statistically significant amount. Also, those at moderate risk have decreased from 1.2% in the year to September 2020 to 0.7% in the year to September 2021. Again, a statistically significant reduction.
But reading the media, you would be hard pressed to know that the rate of problem gambling has been declining for some time now, possibly to one of the lowest rates in the world. Lord Lawson, former Chancellor of the Exchequer (Finance Minister) and father of Nigella, recently penned a letter to the Daily Mail about how his good friend was addicted to gambling, even placing bets whilst on his death bed. A tragic story. But Lawson went on to berate the government about soaring levels of problem gambling! Sadly, he has a seat in the House of Lords and has an impact on the UK’s legislation.
It strikes me that the members of both houses of Parliament live in some dystopian land where facts are very thin on the ground and don’t really matter too much anyway. Reading their debates about gambling makes you realise that most of our legislators have very little actual knowledge about which they speak, appearing to get their information mainly from rags like the Daily Mail and their equally ill-informed colleagues.
One standout from this madness is the All-Party Parliamentary Betting & Gaming Group (APBGG), not to be confused with the GRH-APPG. The APBGG has asked the gambling industry for evidence of the UK Gambling Commission breaching their powers — in other words, beating them up. This group is made up of members that have experience with gambling, which some would say means they are tainted.
In private, some operators have said that the actions of the enforcement division of the UKGC have been irrational and completely outside of their powers; for example, the size of the fines seems to be plucked out of the air. But given that the UKGC control their destiny, these operators have been reluctant to take legal action or even complain publicly. Hopefully, the actions of this parliamentary group will rein in the more egregious activities of the UKGC.
