On November 30, 2006, the smoking ban in Scotland was reported to have shaved 15% in total revenues and as much as 90% off the earnings of most of the bingo gaming establishments in the area. According to Neil Goulden, CEO of Gala Coral, the situation is threatening the very existence of smaller bingo halls. Mr. Goulden further stated that Gala Coral would consider a joint partnership with the horse racing market with Gala their bid for bookmaker Tote, which is owned by the state. The following day, December 1, 2006, Gala Coral will learn if they were successful in bidding for betting shop licenses in Italy, like rivals Ladbrokes and William Hill.
Goulden added that there has been a significant impact in Scotland where the profits are down about 5% to 15%. The converted cinemas and those areas and establishment that are vital for a local community are hit the hardest. Gala Coral is considered the largest gambling company in Europe, with a market value of about 4 Billion pounds or equivalent to $7.82 Billion, managing 175 bingo halls, 31 casinos and 1,500 licensed betting offices. Gala Coral is owned by private equity firms Candover, Cinven and Permira.
Goulden commented that the 15% dip in revenues by bingo halls in Scotland can translate into a 90% drop in total profits. At larger, more modern bingo halls like Gala Coral, the profit impact could be as little as 10%. Smaller bingo halls in Scotland are expected to close in the coming months if nothing is done to rectify the situation. On the other hand, Gala Coral has made a bid of about 405 million pounds for bookmaker Tote. The British Government is considering their options after turning down a bid of about 320 million pounds for Tote last September from a consortium of British horse-racing industry big names.
The Government has decided to sell the bookmaker, but their attempt was halted last year by the European Commission, which said that the price was so low that it is considered state aid. Other possible buyers for Tote are its former executive, John Heaton, a management buy-out and the horse-racing industry consortium. CEO Goulden said that he was hopeful that the British Government would make a decision before the Christmas season.
They are more interested in investing in the horse-racing industry than the new super casinos that Britain is allowing under the new rules. However, they would still bid for new licenses to operate the 8 large and 8 small casinos that are permitted under the new round of licensing next year.
Thursday, February 15, 2007