UK: Rank investors hold out for Bingo boost

The owner of the Mecca bingo chain saw its shares lifted today amid hopes of new British government measures to help the battered industry.

British sports minister Gerry Sutcliffe, who spoke at the Bingo Association’s annual meeting yesterday, is set to present measures to help bingo clubs in the coming weeks after hearing industry appeals, including from Mecca owner Rank.

Possible measures may include loosening the restrictions on money-spinning gaming machines imposed on bingo clubs since last September.

Rank shares rose 6% as brokers at Evolution Securities said the measures could boost bingo revenues at a time when the industry is under pressure because of a UK-wide smoking ban, new gambling laws and a double tax burden.

But clubs are unlikely to gain imminent relief from the tax regime under which they pay VAT of 17.5% and gross profits tax of 15% on bingo participation fees. British Chancellor Alistair Darling denied pleas to change the rules in March’s Budget.

A British Department for Culture Media and Sport (DCMS) spokesman said “ministers were clear on the way forward”.

But Bingo Association chief executive Paul Talboys said that “any celebration at this stage may be premature”.

He added: “The industry is encouraged to see the minister clearly has a genuine interest in the plight of bingo.

“The industry is operating under extremely difficult circumstances and the (British) government’s failure to address the double taxation issue places great emphasis on any positive statement the DCMS may make.”

Rank said in February it expects a “challenging” 2008 despite signs of gradual improvement at Mecca, which suffered a 13.5% fall in like-for-like revenues in the eight weeks to February 24.

The company has seen its shares slump by almost half since last October as the new rules limiting the number of high-value £500 (€640) jackpot machines cuts back its takings.

Rank is also attempting to tackle the smoking ban by providing outside enclosures at 50 of its clubs by the end of the year, and running “interval bingo” games for smoking punters.

Meanwhile the company has pruned back investment plans for its Grosvenor Casinos chain and transferred its pension scheme to a subsidiary of investment bank Goldman Sachs, saving more than £30 million a year in payments.

Elsewhere in the gambling sector, there was also takeover speculation today after reports that London’s exclusive Les Ambassadeurs casino could be sold for £75m (€96m).

Las Vegas gaming giant Sheldon Adelson is weeks away from agreeing a deal to buy the club from Indonesian billionaire Putera Sampoerna, the Times newspaper said.

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