The gambling act

Economic Impact Assessment for a Regional Casino in Blackpool


The Gambling Act passed in the UK in 2005 revised and altered many gambling related regulations; among the most controversial of the proposals under the act was the consideration of future regional casinos within, informally referred to as 'Super Casinos'. A tender process began in 2006 with numerous regional areas bidding to be the first. Manchester, surprisingly ahead of strong favourite Blackpool, was awarded the right to become the first area to be allowed to build a regional casino in 2007, these plans were latter scrapped and replaced with proposed plans for 16 small/medium casinos across the UK. However, leading bodies, figures and the Blackpool council have expressed a desire to pursue the process of being granted permission for the erection of a 'regional casino' in the near future. This report seeks to assess the likely Economic Impact of this proposed Regional Casino.

Overview of an Economic Impact Assessment (EIA)

In general, an economic impact analysis connects flows of spending associated with tourism activity within a region to pinpoint changes in sales, revenues and incomes and employment, resultant (Frechtling 1994).Examining and analysing such changes enables the calculation of the overall economic impact that tourism or an activity related to tourism has within the region. The focus is on estimating and forecasting the associated benefits from any project and weighing these benefits against the costs the project will impose on the community. Costs are not only limited to the economic value of money spent to pursue that project. Other issues such as social, demographic and environmental concerns must be analysed as well (Frechtling, 1994). In analysing or assessing the economic impact of any project on a community and to a wider region therefore attention must be given to the leakage effects of the project, issues of displacement, substitution effects, multiplier effects, acceleration and crowding out (Communities and Local Government, 2008). Leakage effects measures the benefits that will seep to other regions outside the target region. For example, a neighbouring fishing town might experience an increase in visitors due to its closeness to Blackpool. Displacements measures benefits that accrue to a project but arise from losses in other sectors within the same community. This simply accounts from transferred spending which therefore is not a real benefit to the region. Multiplier Effects looks at how this project boost the economy through further economic activity within the region. A regional casino in Blackpool is likely to boost the real estate and retail sector in that region.

This paper will therefore review these factors in the light of plans to station a Regional Casino in Blackpool. A regional casino was defined under the Gambling Act of 2005 as a casino having a minimum floor space 5000 square meters. Comparatively the largest casino in the UK, in terms of customer floor space, before the act was passed was 950 square meters.

The project will mainly make use of secondary data compiled during the Regional Casino bidding process. This will principally be in the form of reports prepared by expert bodies assessing the impact of a casino in the region. The contribution of this paper however is an attempt to synthesize the vast but conflicting evidence that was brought up during the process. The author will draw insights from the reports of various research bodies with the view of making an unbiased assessment of the economic impact a regional casino will have on the area should the plans to build such a casino in the region go ahead.

There are typically 4 approaches available when attempting to carry out an EIA; according to Bull (1995) these are:

Expert Judgment: Self-explanatory, this method uses expert judgment to estimate tourism activity and spending as a consequence. Furthermore, expert judgment is used to approximate the multiplier effect as a result of the increased activity resultant.

Comparable Areas/Attractions: This approach utilizes Areas/Attractions of a similar nature to the one being investigated, to estimate and calculate tourism activity and the spending resultant from tourism. Furthermore, similar Areas/Attractions are used to approximate the multiplier effect as a result of the increased activity resultant.

Estimate using segment approximations: This method involves estimating tourism activity by segment or revising estimates by segments from another area. The multiplier effect would also be revised using estimates from a comparable segment

Primary data: The method of surveying visitors to an area to allow the estimation of spending impact of tourism or of a particular attraction; typically surveys would use a random sample of visitors to an area and question them on their average spend.

The theoretical methods listed above are rarely used individually; more often than not an EIA will use a combination of these methods to carefully analyze the project and draw a conclusion.

A comparative approach is not feasible in this case since no regional casinos currently exist within the UK. Earlier reports talked of a Vegas-Style casino but using Las Vegas and the prowess it enjoys due to its casinos will be off the mark given its reputation, its size, the concentration of casinos and the fact that it is stationed within markedly different economy. The use of primary surveys to estimate the impact a casino could have in terms of the increase in visitors and their respective spend is simply neither feasible nor effective given the time frame and the resources available.

This report therefore employs secondary data or information from bid documents and impact assessment reports from the Blackpool Council and the Casino Advisory panel commissioned by the UK Government.

The model used by PION Economics in their 2005 and 2006 reports on impact assessments measures the economic impact along three lines;

  • Direct impact- Jobs and incomes that accrue due to direct operations of casinos
  • Indirect Impact- flows of income other than labor income or client spending that arise due to the existence of casinos
  • Induced impact; the process through which the spending of staff, clients and casinos goes to support other businesses in the area.

Areas that will mainly be assessed in this work will include direct employment, indirect (induced) employment, displacement costs, social impact, Regeneration, competition on local casinos, Boost in tourism, Tax revenues, income to local businesses.

To clearly understand how a 'super casino' or regional casino will impact on the economy of Blackpool, it is worth understanding the current economic climate of Blackpool.

As stated by the Blackpool council in their formal proposal (2006), the borough is overwhelmingly dependent on a seasonal resort economy which is currently moving towards a terminal decline. It is reported that this shrinking seasonal resort economy has caused significant social and economic uncertainty with limited private sector investment and low consumer confidence. This once vibrant community is at the brink of economic and social collapse that can only be transformed by the institution of a regional casino. The community is accustomed to gaming as it holds more than 2000 adult prized machines in its arcades and hosts three already existing casinos. The borough covers 17 square miles with 7miles of sea front and a population of 142700 people, 30000 people living in the resort core. Most importantly, the area is the major retail, public administration, cultural and service centre for over 200000 people in the Fylde Coast and a dense motorway network brings over 10.7million people within a 2 hour drive from the region. Already the area attracts the highest number of tourists in the UK given its 751 acres of urban sea front, 2264 hotels and guest houses, 8000 parking spaces, 723 licensed taxis, its theatres, amusement rides, attractions, retail outlets, cafes, clubs, bars and restaurants.


Employment brought about by any new activity, engagement or venture is usually the first measure of how that activity affects the economy of that area. For the area to benefit from such a venture however, the residents must possess the skills and knowledge to take up jobs that are created. Blackpool council reports a sufficient quantity and quality of available labor. The generic PION report of 2005 initially estimated that any region in Northern England hosting a regional casino can expect to benefit from increased employment with a multiplier effect of 1.85 on current employment. Based on a 2.5million Visitor base, the PION study predicted that the basic impact of a regional casino on Blackpool with respect to jobs would be an increase in employment figures by 1680 jobs. A conference centre that will be built to support the casino activities is expected to employ over 210 staff. The institution of a casino in this region is bound to displace some businesses and individuals along with over 347 jobs. Over 1122 jobs are expected to be created in the surrounding resorts with the influx of tourists plus an additional 20% for jobs created (62 jobs) from non-gambling visitors. It is also expected that new visitors will flow into the Blackpool region raising the figure by 267 jobs plus.

The regional casino is therefore expected to boost employment in this area by over 2994 jobs.

NERA (2006) has criticized the estimates of PION (2005) for being a construction of Gross Value added (GVA) statistics by the Office of National Statistics (ONS) and for not adjusting the employment estimates for leakage. NERA (2006) adjusting for leakage by using data from English Partnership Studies and looking at different scenarios where able to come up with the following estimations;

Estimations are made based on the different categories of jobs that will be created including gaming, Hotel, Service, Security & Operations. Summarily, at minimum, employment is said to vary from 750 to 1419 and at maximum it may vary from 950 to 1797 according to NERA (2006) estimates. NERA (2006) also noted that if the regional casino development also encouraged further private sector development then every 10% rise in investment would bring about the creation of over 240 new jobs. In all, this is seemingly a very conservative estimate and actual figures can be expected to be much higher.

Estimates by the Community and Local Government department and the Blackpool council indicate that the direct and indirect benefits of a regional casino with respect to jobs in the Blackpool area may be as high as 2950 new jobs created. It was noted that there are currently no regional casinos to use as evidence in the estimation process but looking at international evidence, the Communities Department quoting from Harrison (2007) cited the example of the Regional Casino that created over 7500 jobs in Melbourne but also the case of Atlantic city where the multiplier effect expected by the institution of a regional casino were not realized.

Job creation is certainly a good thing but the impact on Blackpool itself might need keener attention. Social and Economic regeneration consultants, Hall Aitken, in their February 2006 research report brought forward further concerns that are related to jobs that will be created by Casinos in this region. Firstly, they remarked that many of these jobs will be displaced from elsewhere in the leisure sector, therefore the overall effect might be much smaller than anticipated. Again, they realized that the jobs will not necessarily match the needs of the local population. Lastly they find strong evidence that these jobs will go to migrant workers. The implication of this is that although employment will increase in the area, the associated increase in population will more than compensate for this increase in jobs. They also commented that Blackpool currently suffers from an over reliance on low-paid part time employment provided by the seasonal tourism sector and this will not change with the institution of a regional casino.

Hall Aitken (2006) found that there was significant risk of the regional casinos absorbing local businesses. The Gambling industry is already a vibrant but small industry in Blackpool with many local betting shops and arcade stance. It is feared that these businesses will loose in the competition against the more fancy super casinos and thus do require some level of protection. Blackpool notably has a striving leisure sector. Other leisure providers around the proposed Casino site include 208 hotels, 25 amusement arcades, 5 bingo halls, 2 bowling alleys and 2 cinemas. On the downside, if a super casino is introduced, most of these businesses are likely to fold up leaving many individuals unemployed. Again, the regional casinos are likely to draw all valuable talent from the region leaving other gambling businesses with poor management. The net effect on employment may thus not be as rosy as it may seem at first sight.

Both Reports were quick to note that the like owners of the regional casino will be foreigners with casino experience most likely from North America, South America and the Far East (UAE). The implication is that wealth would rather be shifted from British businesses to foreign businesses.

Local Government income

Doing a generic economic impact assessment for Northern England in 2005, PION Economics, revealed that local councils can expect to benefit from a gross added value of over £50million per year from hosting a regional casino while the region as a whole can benefit from an expected gross added value of £38million. These funds would be generated from additional council taxes and charges, parking fees, licensing fees etc

It is expected that huge tax revenues will be generated from this Casino but it unclear where these revenues will go to. Most likely these revenues like all others will be controlled by the Chancellor of the UK and Blackpool will only be able to use what it is apportioned through the national budgeting system. At a national level therefore the tax benefits that will arise from such a project are enormous but it is unclear how much of these finances will be enjoyed by residents in the Blackpool area. What is clear is that these residents will have to bear the social costs that will come with the development.

Displacement costs

The PION report suggests that new money to be brought in to this area will only be from tourists. Without income from overseas tourist, any incomes realized will be a displacement from other forms of entertainment and from other regions in the UK. The only other means by which new money might flow into the economy would be from an increase in aggregate economic activity brought about by the introduction of the Regional casino but this seems unlikely.

Research carried out by the Henley Centre and reported in the Hall Aitken report suggests that an introduction of a regional casino will divert about 32% of the income from bingo halls,11.3% of the income from amusement centers, 9% from the income of pubs, 5.5% of the income of clubs and 2.5% of the income of the National Lottery. This issue again has be reiterated by the PION report. It suggested that 70% of customers to the regional casino will be new to casino gambling. A quarter of these people are likely to shift their expenditure from other forms of gambling while the rest will switch expenditure from other leisure activities. Aggregately, an estimated £49million is expected to be shifted from other leisure activity providers.

Social impact

Gambling is unarguably a social ill. The effect of this is the birth of new 'Problem gamblers'. Hall Aitken (2006) comments that due to a predicted increase in the number of gamblers in the Blackpool area from about 4486 to an estimated 6191, an additional £15Million will be needed to tackle gambling related problems. Schwer et al (2003) cited in Hall Aitken (2006) found that compared to non gamblers, problem gamblers were two to three times more likely to loose their jobs. An introduction of a major regional casino can therefore exacerbate such a problem. Aside from the potential impact on health, this venture would also potentially increase crime, debt and homelessness in the region. The social impacts of gambling will thus be felt even in an economic sense as the local council struggles to tackle these issues.


The Blackpool council's bid proposal saw the development of a regional casino in the local area as a major step towards the regeneration of a once vibrant local economy. Looking at the indices of deprivation from the office of the prime minister, Blackpool was classified as the 6th most deprived area in the North West and the 24th most deprived area in England. Statistics from the office of national statistics show that the rate of unemployment in Blackpool is 3.6% markedly higher than the regions average of 2.1%. Looking at the 25 localities in the region, statistics show that there is over a 44% level of worklessness matched only by a 13% level of unemployment in the entire region. Blackpool council children services in 2005 also reported low educational attainment in the region with over 50% of the population having no qualifications. The councils plan for regeneration involves the re-invention of the tourism sector by fostering an all year round instead of seasonal entertainment industry. It is expected that a re-invention of the industry kick started by the institution of a regional Casino will draw in affluent tourists into the area who will increase spending in the region to promote local businesses.

The Blackpool council anticipates capital investment worth about £359.3million in the casino site most of which will be private investment. The plan will see the construction of the regional casino, access roads, parking spaces, hotel, a conference/exhibition/entertainment complex, and leisure & retail spaces. This huge capital investment is bound to have positive spillover effects on the community through employment, social betterment and development.

It is anticipated that this project will boost tourism to the tune of 4.2 to 5.5 million visits per year. This significant influx is bound to revive the tourism sector and the overall business environment. Businesses are expected to benefit from the spillover in terms of increased number of potential customers. Business that are not in direct competition with the Gambling & Leisure sector can be expected to fair very well. These will include the retail sector and the real estate sector in particular.


At first sight, the benefits that a regional casino will bring to any area seem enormous. The primary benefits that will be enjoyed will come in the form of increased employment, heavy capital expenditure, increased tax revenues, spillovers to other businesses, development, regeneration etc A careful economic impact assessment warrants that these purported benefits be carefully weighed against the costs of the development of such a casino. When carefully examined, we find that the social costs associated with such a development are wanton. Residents of the Blackpool area appear seemingly incapable or unprepared to support such costs. This is mainly due to their preferences, skill and level of education. Many of the jobs created would not be absorbed by residents of this area. There is a high probability that these jobs will be taken up by migrant workers from the new EU accession countries. However, the social costs of increased indebtedness, crime, homelessness etc would be borne by these residents. Even though the region is in dire need of regeneration, the institution of a Regional Casino does not look like the best solution to the problem. Again the tax income that would be generated from this project would not be wholly enjoyed by the residents of this area due to the UK government financing policy. Yet, a Super casino is bound to draw business from local businesses and may even drive some businesses to bankruptcy. It was again noted that the owners of such Casinos will mostly be foreign firms. This has the effect of rather taking money out of the economy in the long run. This will neither be good for the Blackpool community nor for the UK as a whole in the long run.


  • BBC, (2008). 'Super Casino Proposal is Ditched'. [Online]. BBC. [14 November 2009]
  • Blackpool Council, (2009). 'Regeneration Projects'. [Online]. Blackpool Council. [14 November 2009]
  • Mak, J. (2004). Tourism and the economy. Honolulu, University of Hawaii Press.
  • Vanhove, N. (2005) The economic of tourism destinations. Oxford, Elsevier Butterworth Heinemann.
  • Frechtling, Douglas C. (1994). Assessing the economic impacts of travel and tourism - Measuring economic benefits. In. Travel, Tourism and Hospitality Research, second edition. J.R. Brent Ritchie and Charles R. Goeldner (eds). New York: John Wiley and Sons Inc.
  • Harrison, B. (2007) casinos and Regeneration, the story so far, centres for cities briefing paper No. 1
  • Bull, Adrian. 1995. The economics of travel and tourism. 2nd edition. Melbourne, Australia: Longman.
  • Communities and Local government (2008), A review of alternative approaches to regional casino-led regeneration. [23 November 2009]
  • Hall Aitken (2006) The social and economic Impacts of Casinos in the UK [23 November 2009]
  • PION Economics (2005) Casinos in England's Northwest; An assessment of market demand. Final report [23 November 2009]
  • Blackpool Council (2006) Submission to the Casino Advisory Panel, Formal Proposal Cover Sheet
  • PION Economics (2006) PION economic impact model for Blackpool regional casino proposal, casino advisory panel note 1, September 2006
  • PION Economics (2006) Cambridge policy Consultants Review of evidence for a Blackpool Regional Casino; PION Economics response, casino advisory panel note 2, October 2006

Please be aware that the free essay that you were just reading was not written by us. This essay, and all of the others available to view on the website, were provided to us by students in exchange for services that we offer. This relationship helps our students to get an even better deal while also contributing to the biggest free essay resource in the UK!