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Southampton casino challenge: High Court says no dice

The final curtain fell on a colourful episode in UK gambling history this morning. The place was Court 1 of the Royal Courts of Justice on the Strand. The time was 10 a.m. when Mr Justice Jeremy Baker swept in and handed down his judgment in the case of The Queen on the application of Global Gaming Ventures versus Southampton City Council. The challenge, by a disappointed applicant for the right to open a large casino, failed. The winning applicant, Aspers, is free to build at Southampton's Royal Pier, just as soon as land has been reclaimed from the River Test for it to build on, as part of a vast, 4,400 job urban regeneration project, including hotels, residential, shops, offices, a community park and, of course, leisure. It will be able to offer bingo and betting alongside its casino games, and if it manages to fit in 30 gaming tables, it will be able to provide no fewer than 150 Category B1 gaming machines, 130 more than 1968 Act casinos. Quite a prize.

Aspers' win came at the end of a long competition, during which seven applicants made it through Stage 1 of the competition – the regulatory stage. Four entered Stage 2: Aspers, who wanted to be part of the much-heralded Royal Pier development, as did Kymeira, while Grosvenor wanted to redevelop its casino at Leisureworld, and GGV, who have just opened the large casino in Leeds, were going for a berth in Phase 2 of a Hammerson shopping development in Watermark West Quay.

Stage 2 of the competition was evaluated by an independent panel of experts, and then adjudicated upon by the Licensing Committee. GGV came last, not because it was a bad casino – quite the contrary – but because since the retail scheme was going to happen anyway, the benefits of the scheme would not be the result of its casino. Aspers, on the other hand, would catalyse the wider development, including because the capitalised rental from Aspers' lease will fund the reclamation works. These kind of fact-based decisions are generally outside the scope of judicial review.

GGV's challenge was brought on two grounds. First, the evaluation of benefits should have been mathematical, since the words "Gross Value Added" had been used in the evaluation criteria. Second, the licensing authority should have considered whether an alternative tenant could be found to step into Aspers' shoes to provide equivalent impetus. The Judge found no merit in either argument, and refused permission to judicially review the decision. As to the first, he said: "Although I accept that GVA is usually expressed as a monetary value, I consider that, in the context of the broad evaluation exercise which it was required to carry out, the Advisory Panel was entitled to take the view that it was not required to make a mathematical calculation of the GVA of each of the applications." As to the second, he said "there is no evidence that such a fundamental amendment, as suggested by the claimant, would be countenanced, and that the wider development would go ahead as originally envisaged without the prior construction of the casino development."

And that may be the end of the super-casino road. Taking a roll-call, eight authorities were permitted by Parliament to grant large casino licences: Great Yarmouth, Kingston upon Hull, Leeds, Middlesbrough, Milton Keynes, Newham, Solihull and Southampton. Of these, only Leeds, Milton Keynes, Newham and Solihull have so far been built, 10 years after the Gambling Act came in, plus even fewer small casinos. After the drama of the Casino Advisory Panel and the beauty parade of Councils seeking the right to grant licences, one wonders why. There are probably two main factors. The first is the change in the taxation regime for casinos, which deterred many operators, particularly American and Far Eastern, from joining the game. The second is the ratio of tables to slots, which means that an awful lot of tables have to be provided to gain the right to large numbers of gaming machines. That, coupled with the financial crash, meant that much international gambling capital went elsewhere.

And now? The future debate is probably around the portability of grandfathered Gaming Act licences from district to district, so that dormant licences can be brought back to life. It may also be around parity between the rights of grandfathered licences and Gambling Act 2005 licences in terms of gaming machine provision. There may even be a call to liberalise casino gaming to the extent that authorities who want to grant new casino licences should be allowed to do so. But, in truth, the glint in Tony Blair and John Prescott's eye, reflecting a dream of casino-based urban regeneration, has faded. Now, the end-game will represent a trade-off between the deregulatory and public protection themes running through Government. Hopefully, the arbiter will not be the Daily Mail, although in gambling, to be frank, it often is.

Philip Kolvin QC is Head of Cornerstone Barristers and the advisor to the 16 licensing authorities with the right to grant casino licences. He advised Southampton City Council throughout the competition and acted for the Council in the GGV judicial review, instructed by Andrew Forrest.

Click here to view the judgment.