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Gala Bingo to Shut Down Six Bingo Clubs

June 17th, 2009

Close on the heels of the smoking ban and the steep rise in bingo tax from 15% to 22%, UK bingo major, Gala Coral, is getting set to close down at least six of the 156 clubs operated by it. This translates to almost 200 jobs going under the hammer. The bingo house had already cut 200 jobs in November last year due to decline in revenues.

Gala Coral has shut down 13 bingo clubs and four casinos since the smoking ban and the introduction of the new unfavorable gaming machine regime. Reports suggest that if this situation were to continue, the company could either dispose or shut down a further 40-50 clubs and make a strategic shift to contemporary, single floor venues to improve profitability.

The smoking ban in bingo halls has been extremely detrimental to business-simply because smoking and playing bingo are activities ingrained into the psyche of the bingo player and cannot be dissociated from one other. Even as the smoking ban crippled the bingo industry, the increase in bingo taxes by over 7% has been a death sentence to many small and medium bingo operators. Over a 100 bingo operators across the industry are currently considering shutting down operations. Added to this, the prevailing economic recession and the introduction of new regulatory mechanisms for money-spinning slot machines all have had a highly negative effect on the fate of land-based bingo in the country. The positive impact of the reduction in VAT on bingo by Chancellor Alistair Darling in April’s budget presentation has been more or less minimal, so far.

Key stakeholders in Gala Coral, private equity firms Candover, Permira and Cinven, suffered a loss in earnings of 10% amounting to 362 million pounds year-on-year, as per September 27, 2008. Net revenues fell by over 3% and stood at 1.27 billion pounds.

Following the hike in bingo duty, another gaming major, the Mecca Bingo operator, Rank Gaming Group, also issued a profit advisory to its investors. Rank Group estimates that its costs could go up by an additional 6 million pounds this year and by 9 million pounds in subsequent years, due to the tax hike alone.

Gala Coral owns and manages the reputed Coral bookmaking chain and currently has over 19,000 personnel on its rolls. They have not come forward with any official statement in this regards as yet and declined to further comment on the issue.

Calvin Azuri

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Gala Bingo to Shut Down Six Bingo Clubs

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