Slump and tax rise hit bingo
Jun 16 2009 by Iain Laing, The Journal
ALMOST 200 jobs are under threat as the UK’s biggest bingo operator prepares to close loss-making clubs.
Privately-owned Gala Coral is ready to consult staff on closing at least six of its 156 clubs. This could lead to 180 jobs lost on top of 200 last November.
Gala Coral, which also owns the Coral bookmaking chain and employs 19,000 people across the group, was unavailable for comment.
Bingo clubs have been under pressure in recent years from the smoking ban, restrictions on money-spinning gaming machines and the downturn.
Chancellor Alistair Darling cut VAT on bingo in April’s Budget, but imposed a shock rise in bingo duty from 15% to 22%.
Gala Coral’s nearest rival, Mecca Bingo owner Rank, rushed out a profit warning after the Chancellor’s move.
Rank expects an extra £6m in costs this year, rising to £9m in future years as a result of the tax rise.
Both companies own a string of casinos, but these have also been hit by the Treasury imposing gaming duty on casino card rooms. Gala Coral, owned by private equity firms Candover, Permira and Cinven, saw underlying earnings fall 10% to £362m in the year to last September 27, with revenues down 3% at £1.27bn.
The firm, of Barking, Essex, also has £2.5bn in debt and is said to have asked investment bank Lazard to examine refinancing options. This is believed to be because more restrictive bank covenants prevent the company using £200m cash to fund growth. Lazard and Gala Coral declined to comment.
