Will a bank give a loan to set up a casino?

paddyrg

spaceboyted wrote: »

What I really wanted was advice from those who have successfully built themselves up to the stage where they were in a position to get such a loan. Also I really wanted to know if banks do lend to casino start-ups because of there nature.

Alas, nobody lends 100% of anything, 50% is usually the absolute maximum, so you need to think in terms of selling equity/forming a partnership/finding a business angel. Some banks will not touch gambling (Islamic banks, some Christian ones, etc), some don't care. Of course with gaming, you also need a strong line of credit for the house 'bank'. You can insure the losses with other underwriters, but this will reduce profits (naturally).

I think it's great you have dreams and ideas, but you can make it easier for yourself here by asking questions differently! For instance, 'I am interested in the gaming industry, how would I get into it?' will get you very different, and hopefully more supportive answers!

Had you asked that question, I would suggest 2 routes - either start at the ground and work up (it is always good to have a boss who has done every job in a place - staff trust them and are less likely to try to rip them off), or train as an accountant and work in the back office to gain the financial insights required. I would advise, though, that the industry still has a seedy side, and that gambling causes a lot of unhappiness, so there are ethical questions along with practical ones - just make sure you think them through! Some of the profit you take will be directly from the mouths of the families of gambling addicts, for instance.

spaceboyted

paddyrg wrote: »

Had you asked that question, I would suggest 2 routes - either start at the ground and work up (it is always good to have a boss who has done every job in a place - staff trust them and are less likely to try to rip them off), or train as an accountant and work in the back office to gain the financial insights required. I would advise, though, that the industry still has a seedy side, and that gambling causes a lot of unhappiness, so there are ethical questions along with practical ones - just make sure you think them through! Some of the profit you take will be directly from the mouths of the families of gambling addicts, for instance.

Very sound advice and thanks for the response. Trust me I do realize you need to gain massive amounts of experience in the gaming industry if I am ever to obtain a loan to start my own casino. Your response reassures me that this forum is a good one. I really should have rephrased my questions if I want to get the answers I am looking for. Maybe this isn't the best place to throw out crazy ideas like I have in my previous posts. I will never lose my passion for new business ideas though, however crazy them seem. I love it!

paddyrg

The only thing to remember though is crazy ideas are ten-a-penny - following through is what makes the difference between a dreamer and an entrepreneur. Maybe instead of throwing out lots of ideas, start with a smaller, simpler one and give it a go. Buy and sell some stuff - if this http://www.amazon.co.uk/Portable-Battery-Powered-Travel-Charger/dp/B003XTI5RK/ref=pd_sim_d_1 is listed at £2 on Amazon, you may be able to get a boxful for £100, then with a trader's or peddlars license sell them for a fiver each or 3 for a tenner (or whatever) on the streets. It will give you a good chance to see what sells and doesn't sell, and gets you out there to start learning bookkeeping, etc which will be essential as you grow your business. And it means you'll have more of a feel for what will and won't be an idea worth trying out for yourself too!!

Edit - umbrellas are another one - some shops sell crappy ones for 99p, but if you have a bagfull and wait for a rainy day, those are suddenly going to sell for £3+ each (or a fiver, 3 for a tenner, etc).

cottyh24

Please don't think I'm knocking you and your enthusiasm, but I'm not sure you've thought this idea through properly. You would need a LOT of money to set up a casino. I'm not 100% sure on the rules in this country, but the Vegas casinos have to hold enough cash to cover all the chips they have on site, incase they have to pay out on all of them. How would you get this amount of money? The bank won't give you the money to do this as it would be a gamble for them. You could lose the whole lot on your first night, paying out winning punters. How would you pay the bank back then? You obviously have the desire to set up your own business, but I think you have to start a bit smaller than a casino, or do as others have suggested and get to know the operation by working in one.

Good luck, I hope you come up with an idea that is right for you.

spaceboyted

cottyh24 wrote: »

Please don't think I'm knocking you and your enthusiasm, but I'm not sure you've thought this idea through properly. You would need a LOT of money to set up a casino. I'm not 100% sure on the rules in this country, but the Vegas casinos have to hold enough cash to cover all the chips they have on site, incase they have to pay out on all of them. How would you get this amount of money? The bank won't give you the money to do this as it would be a gamble for them. You could lose the whole lot on your first night, paying out winning punters. How would you pay the bank back then? You obviously have the desire to set up your own business, but I think you have to start a bit smaller than a casino, or do as others have suggested and get to know the operation by working in one.

The fact that casinos have a high start-up cost was the reason for my question in the first place. What I was basically after was how I could raise the funds and in what position do I need to be in to do this. I'm sure that not all casinos where funded entirely through private investors. There must have been loans given out to set up a casino somewhere. Under what conditions this would happen is what I really wanted to know.

paddyrg

spaceboyted wrote: »

I'm sure that not all casinos where funded entirely through private investors. There must have been loans given out to set up a casino somewhere.

Remember casinos are an ideal way to launder money, I suspect you may find a fair amount of that if you delve too deeply into many casino's accounts. Either way, if banks lend for it, it'll be hedged with other assets.

Savvy_Sue

coupleuk wrote: »

Sue,

When warranted, your positive suggestions have to be commended BUT there are times when people need to be told very bluntly that they are are living on another planet (rather apt given the username of the OP in this thread).

My problem is that I'm a mother. Say to one of my sons "You can't do that" and they'll just go out and prove me wrong. Or say "That's a really daft idea" and they'll just go and do it ...

Therefore I approach it obliquely, as in "if you want to get there from here, your route might take you via ... "

Fortunately they generally work these things out before spending much money!

Plus I read quite a few posts where I think "not a snowball's chance", but as I have no experience in most of these fields, I don't think it's my place to ask "are you serious?"

Now, if the OP ever says they want to set up out of school childcare and get a bank loan for that, I promise I will ask "are you serious?" Been there, done that (twice), got the grey hairs, and ALWAYS said to anyone asking about how to do it "Don't! Just DON'T!" :rotfl:

spaceboyted wrote: »

What I really wanted was advice from those who have successfully built themselves up to the stage where they were in a position to get such a loan.

I think there's two things to say here: one is that it's a SMALL biz board (and casinos generally aren't 'small'), and the other is that you don't have to read too many threads to see that most people running their own businesses here are passionate about what they do, AND work far harder and longer hours than they ever did in their day job, AND make far less money than they ever thought possible ...

spaceboyted wrote: »

Also I really wanted to know if banks do lend to casino start-ups because of there nature.

thing is, whether they do or not, if you don't want the money now it would be a brave poster who predicted what the lending situation will be by the time you do want to borrow.

HappyMJ

spaceboyted wrote: »

The fact that casinos have a high start-up cost was the reason for my question in the first place. What I was basically after was how I could raise the funds and in what position do I need to be in to do this. I'm sure that not all casinos where funded entirely through private investors. There must have been loans given out to set up a casino somewhere. Under what conditions this would happen is what I really wanted to know.

The loans that gala and grosvenor have are to purchase the buildings. They raised the deposit on the open market then used those funds to put a deposit on a property with a commercial mortgage to raise the remaining funds. If you rented your property you won't get any bank funding.

You'll need to go venture capitalists with your idea. I don't think too many would help you though.

If you wanted to make some money from gambling then buy the lease on a small (i.e cheap) pub and then rent some fruit machines and see how you go.

jamespir

ok you may not have thought about this but how do you plan to make money from a casino its not just as simple as sticking a few machines/tables in you need licences money to pay out in case of wins the capacity to hold the takings money for staff etc

and you obviously got to get people in to play and want to sepnd money with you and you amy find you lose loads in first few months you have to cover these losses somehow

david39

The problem that will stop you (besides the bank loan) is that there are a limited number of licences available for casinos. The number of casinos is strictly regulated and they are only able to run in pre-selected cities. You cannot just apply to your local authority for a licence to operate anywhere - they may not have approval for casinos in their area and, if they have, it is unlikely that there are any vacant ones.

All the worthwhile ones are run by the big gambling concerns (Gala, Mecca, William Hill etc.) and their stance has always been that the only ones that make money are the ones in central London where the high rollers are. Unfortunately, in order to get a central London licence (if one ever became available) the applicant would need to show that he/she/they had successfully operated a casino in the provinces.

It's a bit of a closed shop, really.