Caesars planning to build major casino in London

By Liz Benston (contact)

Tuesday, Oct. 12, 2004 | 10:54 a.m.

In the company's first move into Europe, Caesars Entertainment Inc. said it will develop and operate a luxury casino resort adjacent to the Wembley soccer stadium in London.

The $600 million Caesars Wembley resort will be built on 13 acres in a 58-acre redevelopment area and will include a 400-room hotel, casino, spa, pool, designer shops, convention area as well as restaurants, bars and lounges, the company said today.

The resort is part of a broad redevelopment effort that will include redeveloping the 90,000-seat Wembley National Stadium and the 13,000-seat Wembley Arena. The project is subject to the anticipated deregulation of Britain's gambling laws to allow more casinos and slot machines.

"Wembley is a natural location for our first European casino project," Caesars Chief Executive Wally Barr said. "Like Caesars, Wembley is a name known around the world and is synonymous with the best in entertainment."

Like many of its major casino competitors in the United States, Caesars has been scouting potential deals in Britain since the government announced plans to open up its gambling market. But Caesars had been silent on deals while companies such as Harrah's Entertainment Inc. and MGM Mirage lined up multiple joint ventures to build several casinos across Britain. Caesars officials had said the company needed more assurance that regulators would adopt rules favorable to U.S. investors.

"The legislation hasn't been introduced or passed yet, but we believe that given the results of the Parlimentary scrutiny committee and the positive reaction of various government agencies that things are certainly far enough along," Caesars spokesman Robert Stewart said today.

"We believe this is the best location in the United Kingdom to locate a casino resort," he said. "What we will bring will complement what is already being developed as an international leisure destination."

Analysts and U.K. companies attending the Global Gaming Expo in Las Vegas last week said the legislation to allow more casinos in Britain is expected to pass next spring with some licenses awarded by early 2006. While the size of the planned casinos and the numbers of slot machines in each have been discussed, government officials haven't yet decided on potential casino tax rates and the process by which local boards would approve casinos -- two major factors that may ultimately determine how many of the announced projects will get built, experts say.

Deutsche Bank analyst Marc Falcone said in a research note to investors today that the scope and location of the planned resort "makes for one of the more compelling projects announced in the U.K."

"This joint venture allows the company to leverage the Caesars brand name, one of the most well recognized in gaming," Falcone said. "We think this will be particularly important as gaming continues to expand globally."

Stewart said the company isn't talking with other potential U.K. partners right now.

"Right now we're focusing on this development as the premier Caesars-branded project in U.K.," he said.

Caesars' partner in the project is Quintain Estates and Development Plc, a U.K.-based property investment and development company. Each partner will own 50 percent of the joint venture.

Quintain Estates and Development owns the Wembley Arena, an indoor concert hall, which is expected to be redeveloped into a new music and entertainment venue by early 2006, Stewart said. In a statement today, the company said it also will develop shopping outlets, a sports mall, nightclub and Britain's largest multiplex nearby.

"The regeneration of Wembley will have a major, positive impact on the economy of London and the U.K.," Quintain Property Director Nick Shattock said.

Wembley is located in a northwest suburb of London.

MGM Mirage last year announced a joint venture with the Earls Court and Olympia Group company to develop a casino and entertainment complex at the Olympia Exhibition Center in the heart of London. The partners have committed an initial investment of about $250 million to build the project should Britain deregulate its antiquated gambling industry.