The UK Gambling Commission is launching a consultation into whether an alternative to the casino gaming reserve requirement can be found.
Bricks and mortar casinos licensed in the UK are required to hold a casino gaming reserve that can be drawn on in the event of an unexpectedly large customer win that can’t be met from cash in hand or working capital. This enables the casino to immediately access the necessary funds to meet its obligations.
The gaming reserve sets a formula that is applied to the gaming stake limits set by a casino to derive the level of funds required in reserve. Under the present formula, a small provincial casino with a maximum stake of £25 requires a reserve of £125,000. A Mayfair casino with a £3,000 maximum stake requires a reserve of £15m. When the mechanism was reviewed in May last year, the UK’s 20 casino operators collectively had over £100m available in casino gaming reserves and, although this is not all held in cash, having this money set aside is nonetheless a significant financial burden.
No such requirement exists in any other sector of the industry or remote gaming and the gaming reserve is not a standard internationally, with neither Nevada nor Singapore employing such a system.
Largely seen as a way to uphold the good reputation of the casino industry, the gaming reserve is a requirement set out in the UK’s Licence Conditions and Codes of Practice. The Commission is now investigating whether the reserve ought to be retained or revoked.
If it is retained, the reserve can either be left unchanged or the formulaic approach can be revised. According to the Commission, this is supported by a minority of casinos that view the reserve as an important feature of the industry that contributes positively to their reputation.
If it is removed, it may well be replaced with an additional requirement in the licence condition on protection of customer funds, such as imposing a requirement that any operator holding customer funds for use in future gambling must disclose whether, and if so how, they protect these funds in the event of insolvency.
The Commission is inviting the views of stakeholders up until August 12, 2011. Any proposed changes are expected to be published the following month.
