ICE Panel Report: Integrated Resorts Luke Haward, CDC Gaming Reports · February 8, 2018 at 3:30 pm The finale in the series of panels on global casino trends held on Tuesday 6th at the ICE convention at ExCeL London was an intriguing treatment of Integrated Resorts (IRs) by some prestigious speakers in the industry. Simon Thomas, CEO of London’s Hippodrome Casino, was the first to take questions, and understandably bemoaned the restrictions on his venue which require him to cap in-house slot machines at twenty, whereas the high streets of the UK are still teeming with over 30,000 (albeit soon to be severely regulated in stakes) fixed odds betting terminals (FOBTs). Despite the Hippodrome being arguably London’s best piece of casino real estate, it’s hard to see integrated resorts operating successfully within such restrictions, as the panelists acknowledged. Hard Rock International chairman Jim Allen spoke next, recognising that, as Thomas indicated, “We subscribe to the concept that if a product is created with all the amenities… and the right landmass, we view that as an opportunity, but as in any situation it’s very hard to find the right location where you can do it properly. We continue to monitor the political environment,” he said, referring to Hard Rock’s developments in Barcelona and the political issues the Catalan region has seen recently. Allen went on to discuss the unique situation the Hard Rock brand is in: its reputation and brand is centred more on hospitality and music whilst still able to access the returns possible from including casino games in their premises. “We did over 35,000 live music events last year alone… We blend that all into one experience. You need land and you need space to do that, to do it effectively… We certainly recognise that certain cultures may be more interested in the aspects of being entertained by a gaming device… so… we monitor those things and try to navigate the opportunities.” Andrew Tottenham, Managing Director at Tottenham & Co., offered a good working definition of an integrated resort, calling it “… a cohesive piece of real estate with multiple intentions and purposes,” and indicated that locating such resorts by the sea can be a major challenge: “Draw a line that represents two hours of travel from any resort… if you’re near the coast, you lose half your locals market, since… no one lives in the sea.” This was counterpointed a little by Allen’s reference to his involvement in the very successful Atlantis Resort in the Bahamas. Tottenham went on to elaborate that integrated resorts are fascinating, explaining that gaming revenue at an IR frequently makes up between 45 and 80% of total revenue and has a far higher ROI than other features, such as the hotel and general hospitality, yet typically takes up approximately 5% of the real estate. This takes us back to Allen’s commentary about how the sweet spot for an IR is to have a brand which is not already known as a gaming brand, such as Hard Rock, which can feature and benefit from gaming facilities without, as he mentioned, the stigma still attached to gambling venues and casinos, which tend to make local communities and other interested parties “a little nervous.” Other challenges for IRs mentioned by Tottenham include the need to have a sufficiently large local community interested in accessing the resort, in order to keep numbers up, as well as meeting resistance to new ventures, not just from anti-gambling groups and the like but from the incumbent gaming industry in a given locale. “Japan is obviously a very, very interesting conversation,” Allen continued. “I think in Japan whether we look at MGM or Caesars or ourselves or Wynn… companies who have the financial ability to write this equity cheque, I think everybody’s recognising it’s important for us to have a unified message… in terms (of) what we’re trying to create from an entertainment standpoint…and then we can beat each other out for who gets the license. I don’t think Europe has reached that particular situation, because, very politely, to have a business model where there’s only 20 machines, and that’s your most profitable aspect… it creates a little bit of a challenge to then say let’s go out and create a huge integrated resort where you’re spending €500 million (or) €700 million or €1 billion.”. In closing, panellists focused once again on the need for the political will to accomplish changes – whether the 80-machine target Simon Thomas is hoping for from the UK government or much wider changes to allow for true integrated resorts – and reiterated the need to “educate politicians” on the advantages of allowing such developments to take place. Nobody is holding their breath for IRs in the UK anytime soon, but across Europe, where it is down to individual jurisdictions, we will likely see major developments in the future.