David Cook seeks to discover the truth about the UK bingo market
There have not been too many positives to take from articles written about the state of the UK bingo market in recent times. The Financial Times reported via the Bingo Association in 2012 that bingo clubs had become casualties of tighter spending and the growth of the online market. In a 2014 article on the topic, The Independent used a statistic that the number of bingo clubs in the country had dropped to fewer than 400 from almost 600 in 2005. Multiple reasons could be given to explain this supposed decline, such as the smoking ban implemented in 2007 and a lack of movement with the times. So what can bingo still offer in the modern climate? As some of the people we spoke to will tell you, some views of the market could be considered misconceptions.
One person making a case for the defence is Miles Baron, chief executive of the Bingo Association. “The decline of bingo is grossly exaggerated,” he says. “It’s been pummelled a bit and lots of things have gone against it over the last 10 or 15 years, but it’s still here. You’ve still got 800,000 people playing bingo every week. There are still 360 retail bingo clubs and then add on the holiday parks and some of the high-street arcades that also offer bingo. It’s not going away.”
When dissecting the UK figures, bingo’s performance has been a touch erratic. Its annual non-remote UK gross gaming yield (GGY) dropped from £703.1m for the period April 2008 to March 2009, to £625.6m for the same period two years later. The total then increased to £701.2m for the 2012/13 period. The latest sum, released as part of the UK Gambling Commission’s (UKGC) industry statistics report in November, showed that the 2014/15 tally was £662.3m, down from £672.4m a year earlier. Given that UK bingo GGY has not allowed itself to go into a rapid decline, it would hardly read as being in the ‘get out while you can’ category, if you based your theories on these figures.
A reduction in bingo duty has partially helped the market stabilise. The duty rate is 10% of profits in an accounting period, reduced from 20%. The new measure was implemented in June 2014.
According to Baron, the reduction has had an effective impact. He says: “What it’s done is halted the decline in bingo club volumes. Bingo club volumes have stabilised over the year-and-a-half since the duty cut. We are seeing investment into the fabric of retail bingo clubs. There has been a tailing off of the closures of bingo clubs, but to be honest, that’s not going to totally stop because some of the bingo clubs just need to move on. They need to react to the current environment and some of them are now in areas that can just no longer sustain the traditional model of bingo clubs. We won’t see an end to all the closures, but what we might see and what we are beginning to see is new and more modern iterations and premises start to sprout up again now that the duty change is beginning to filter through.”
Indeed the land-based bingo story for some of the market’s most powerful operators currently reads as a perhaps surprisingly positive one. Rank, owner of Mecca Bingo, reported an increase in the brand’s retail operating profit for the year ended 30 June 2015, up from £21.1m to £28.9m, even if revenue did fall. Spend per visit increased too, although visitor numbers were down.
One of the most striking news stories relating to the market last year was Gala Coral’s announcement in October that it is to sell the retail division of its Gala Bingo business to Caledonia Investments, a deal which completed just before Christmas. Caledonia Investments is paying £241m and will purchase 130 Gala Bingo clubs in the process. This fell in line with confirmation in July that the Gala land-based clubs would not form part of the combined Ladbrokes Coral, as part of the recommended merger between the two operators which is awaiting approval from the Competition and Markets Authority.
Lorien Pilling, director at GBGC, told Gambling Insider of his consultancy’s surprise at the Caledonia deal, in light of the performance of the land-based market. He said: “They’re not going to get any benefit from cross-selling between land-based players, online and vice versa. We’re not sure whether or not they will actually own the bingo clubs or whether they will be sold and leased. It doesn’t seem like a property deal where you’re buying quite a number of buildings across the country. We think £241m is quite a lot for a sector of the gambling business that doesn’t immediately seem to be on the up.” The deal is awaiting approval from UKGC and no estimation has been made as to when it will be able to complete. Gala Coral declined to make a comment for this article.
If Baron’s prediction for the future of the market is anything to go by, then the story could be one of change or evolution as opposed to decline. He says: “In five years’ time, I think unfortunately we will shed some of our older, more traditional and parochial businesses. Our old cinemas and clubs try and operate in a market where perhaps the local demographics have changed beyond recognition. I think we will see smaller, more boutique bingo clubs start to open up, which will maximise the level of technology that’s now available. You don’t need rows and rows of tables and chairs that perhaps you once had to.”
As Baron explains, it could come down to how adaptable the land-based market is to change – as is the case with all forms of land-based gaming – as to whether or not it will still play a prevalent role in the gaming market moving forward. Innovation could well be the deciding factor in whether the bingo market can make it a full house and succeed across all channels of gaming in future years.
WORLDWIDE GGY ON THE RISE
Assessing the global bingo market across both land-based and online
From a worldwide perspective, data suggests that the bingo market is likely to be on the up in years to come. Figures supplied by Global Betting and Gaming Consultants (GBGC) show that global bingo GGY increased from $11.79bn for 2013 to a predicted $12.21bn in 2014. The total is forecast to rise again to $12.55bn for 2015, and GBGC forecasts it will continue to increase to $13.31bn for 2017.
Just over 51% of the 2014 total emanated from North America, while Europe accounted for 36%. Next comes South and Central America with 10%, with other regions providing 1.02% or less.
Reflecting on the 2014 total, Nicholas Batram, leisure and gaming analyst at Equity Research says: “I don’t know whether this includes side games but assuming it does, then this [increase] doesn’t surprise me. Most of the leading UK operators have reported solid growth in their bingo operations – part of this will be market share gains from some of the more sportsbook-orientated gaming companies. However, mobile is also giving bingo a useful lift, while product development in terms of side games is a driver.”
This article first appeared in issue 33 (Jan/Feb 2016) of Gambling Insider