Isle looks for growth beyond U.S.

Bahamas, Britain ripe for new casinos

By TIMOTHY BOONE

THE SUN HERALD

BILOXI - During its first decade of business, Isle of Capri Casinos made a name for itself as a successful operator of regional casinos. The company opened and acquired casinos across the South and Midwest, aggressively pursuing faltering gambling resorts and turning them around.

But last summer, the company started to shift its focus to markets outside the United States. In a period of a few months, the Isle announced plans to build two casinos in the United Kingdom, open a resort in the Caribbean and buy controlling interest of a UK gambling company.

"Even though we're a U.S.-based company, we have taken a look at opportunities in South America, Central America, the Caribbean," said Tim Hinkley, president and chief operating officer of the Biloxi-based Isle. "It's more opportunities that have surfaced (overseas) that we're trying to take advantage of."

Hinkley said the company started looking at the UK market about 2½ years ago.

"Alan Solomon, our executive vice president, had been reading that Great Britain would deregulate its gambling statutes," Hinkley said.

Solomon, along with Bernard Goldstein, the Isle's chairman, and John M. Gallaway, then president and chief operating officer, started studying the UK casino regulations.

The UK is studying loosening its strict regulations and slashing gaming taxes, from 40 percent down to possibly 15 percent, to generate more gambling revenue for the government. According to a report cited by Hinkley, the UK is estimated to have a casino market worth $13.5 billion. That's more than four times what Mississippi's 29 commercial casinos reported in winnings for 2003.

"Only 3 percent or 4 percent of the UK population visits casinos," Hinkley said. "But there are sports betting shops and these little areas that have slot machines in them. Gambling is part of the UK culture, it's just that the casino part of it hasn't flourished. The government is realizing that there's a missed opportunity in terms of revenues."

Not only could gambling attract tourists from across the British Isles, Hinkley said, but it could prove to be a draw across Europe.

Published reports from the UK indicate that Parliament could pass a new gambling bill by summer 2005.

To establish a foothold in the UK market in advance of any gambling deregulation, in December the Isle paid $8 million for two-thirds interest in Blue Chip Casinos Plc. Blue Chip owns a casino near Dudley, England, and has plans to develop two more.

"It was important to get into the marketplace and become recognized by the regulators," Hinkley said.

The Isle renamed the Dudley casino, which had been the Castle Casino, as Castle Hill Casino. "We've taken the approach these are smaller, local pub-type casinos and we did not brand them Isle of Capris," he said.

After deregulation, the Isle plans to build casinos in Coventry near Birmingham and Salford near Manchester as part of multimillion-dollar sports and entertainment complexes. Those resorts would carry the Isle of Capri name.

The Isle is taking a long-term approach to the UK, but the company expects to see some rewards soon from its resort in Freeport, Bahamas.

The company opened a casino in the luxurious Our Lucaya Resort and Golf Club in December. There was a building set aside for a casino, but plans for operators to put slots and tables on the property fell through, Hinkley said.

Our Lucaya is seen as a way to bring in south Florida visitors, because of the regular flights to the Bahamas, and even more important, as a way to reward regular Isle gamblers for their play, Hinkley said.

The Isle has aggressively promoted Our Lucaya in its advertising campaigns and is working with junket representatives to bring planes full of gamblers to the Bahamas.

The current advertising hasn't been going on long enough yet to see any increase in business at Isle casinos. Even if Our Lucaya breaks even, Hinkley said he'll be pleased because of the incentive it represents to U.S. gamblers.

Despite the international projects, the Isle remains committed to the Coast. The company will complete an $80 million expansion to its flagship Biloxi resort by May 1, 2005, which includes a new hotel tower, restaurants and convention space.

The company is also expanding its corporate headquarters on Popp's Ferry Road and should open the offices in May.

"I think we're fine being right here in Biloxi," Hinkley said. "This has been a great place to have a corporate office."

Source: SunHerald.com