This is the blog of British investigative journalist Jason Lewis.
It features articles from my time as Investigations Editor of the Sunday Telegraph and Whitehall and Security Editor of the Mail on Sunday.
I specialise in writing on intelligence and security matters, human and civil rights and the activities of the British State.
Monday, 10 January 2011
High-rollers turn tables on casinos
They bet millions of pounds on the turn of a card or the drop of a roulette ball and are the gamblers that exclusive casinos love to court.
Casino Royale, the Ian Fleming novel made into a film, was thought to be based on an Aspinall casinoPhoto: ALLSTAR
By Jason Lewis, Investigations Editor 8:00AM GMT 09 Jan 2011
When they are on a losing streak, the so-called Whales — the big players in the gambling world — can lose a fortune in a few short hours, boosting their host’s profits.
Recently the world’s high rollers appear to have been on a winning streak – and London’s top casinos have been hit.
Just before Christmas one of the capital’s gaming clubs lost £12 million to one wealthy sheikh in a couple of hours.
The accounts of another casino — Aspinall’s — show that profits have been hit by an unusually high number of wins by its clients.
After a run of “bad luck” the casino has been put up for sale by its owner Damian Aspinall, the son of the late John Aspinall, bringing an end to the family’s interests in high end gaming.
Last year Aspinall’s Club lost £4.5 million and revenue was down to £20 million – £16 million less than in 2008.
The Aspers Group, which runs the Mayfair club and three modern casinos in Newcastle, Swansea and Northampton, reported an overall loss of £12 million on top of a £19.4 million deficit the previous year.
It was also in breach of its loan agreements with the Royal Bank of Scotland and its total debts climbed to £55 million – up £15 million in just 12 months.
Last July it signed a refinancing deal with the bank, reducing the RBS loans from £33 million to £24 million.
A report, signed by Mr Aspinall last July blamed the London casino’s losses on the success of the high rollers winning big at its tables.
All casinos’ profits are based on the drop and win ratios — how much clients bring to the club and how much of this ends up in the club’s coffers. The Gambling Commission, the watchdog that oversees gaming in Britain, said the six “high end” casinos in the West End saw clients buy £1 billion worth of chips to play at the gambling tables last year. Out of this huge sum, they lost £151 million to the casinos — a “house win” or “percentage drop” of 15 per cent.
According to the Aspinall’s directors’ report, the company’s “London casino sustained a prolonged low hold percentage of half the normal rate for almost the entire financial year”.
With it paying nearly £2 million for the lease on its Georgian mansion in Mayfair — where John Aspinall opened the club in 1992 — and facing group staff costs of £17 million and gaming duty of nearly £10 million, the big wins of the its wealthy clients “had a direct effect on the profitability of the business”.
The report warns: “All high end casinos experience periods of volatility in their hold percentage, due to runs of bad luck.”
After the disastrous year, Aspinall’s bank has imposed strict covenants on the group which require regular checks on its financial performance and the possibility that its loans could be called in.
In the 1960s it was dukes, earls and cabinet ministers, who made their way to the exclusive gaming tables in Mayfair. Aspinall’s Clermont Club, which John Aspinall sold in 1972, is believed to have been the basis for Casino Royale in the James Bond novel by Ian Fleming.
Today’s Whales tend to be secretive Chinese, Russian, Asian and Arab billionaires who can lose millions at the tables without breaking sweat.
The Saudi Arabian entrepreneur Adnan Khashoggi has been a regular big player at the top London clubs for many years. Other names whose win/loss positions have reputedly moved in the multiple millions in a single night include the Malaysian tycoons Tan Sri Lim Kok Thay and Quek Leng Chan, and Indonesia’s Putera Sampoerna. Other prominent members in the West End include Pini Zahavi, a football “super-agent”.
Now Damian Aspinall, a regular in the gossip columns after a string of relationships with glamorous women, including the TV presenter Donna Air, with whom he has a daughter, and the model Naomi Campbell, has decided to sell Aspinall’s.
He confirmed the scale of the club’s debts but said it was not unusual for a casino business.
He said: “You are talking about a business that has £250 million a year drop (the money staked by its clients). So it is a bit circular. You are looking at unlucky years. That is the business we are in.
“Anyone in the business with high value VIP tables will have years when you do well and years when they don’t do well because it is volatile.”
Asked about the house’s performance last year, he added: “That’s completely normal. You are talking about a volatile business.”
He said over a 10-year period Aspinall’s was winning 18 per cent of the money gambled at its tables. But he added: “You have years when you do nine per cent and years when you do 24 per cent.”
The most recent available accounts for the club are for 2009 and Mr Aspinall said the club was now doing better.
He said that despite his plan to move away from the elite clubs founded by his father such businesses would not die out. “I think there is a future,” he said.
“You have got to be grown up about those sorts of investments. You lose £10 million one week, and win £8 million the next. It is part of the business. When you lose these amounts it is a knock for the casino concerned, but you have weeks like that. We also had a week where we won £11 million in six days. It is big numbers these days. The winners could be three people over a number of days, it can be one person in one night. There are plenty of players all over the world who have won and lost that sort of money in a night.