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NEWS 27 August 2010

Insider Track: Bingo by the Numbers

The longstanding tradition of UK bingo has experienced a rebirth in terms of it dramatically shifting from land to online. Virtually extinct are the fusty old bingo halls dominated by Gala and Mecca. And now that the online rebirth has transformed the game with sexed-up brands like Foxy and Wink Bingo, those older, household names are all but left behind. Gambling Insider and H2 Gambling Capital put online bingo under the microscope.

Online bingo global
• H2 Gambling Capital (H2) estimates that the global online bingo market was worth $1.95 billion in 2009 in terms of gross gambling yield, which was an increase of 16% on 2008.
• The global online bingo market can continue to grow strongly with compound average growth of 14% forecasted over the next three years.

UK Bingo market
• The UK is the largest online bingo market globally and during 2009 it was estimated that the UK online bingo market was worth $560 million in terms of gross gambling yield. This represented growth of 25% on 2008.
• Over 300 bingo sites or brands are estimated to be operating in the UK online bingo market at present, with the number ever increasing. The number of sites is likely to continue to increase over the coming years as more and more companies offer online bingo.
• We have already seen numerous media companies, through B2B deals, launch their own online bingo brands and the list continues to grow. Since the start of the year, there have been further media/online bingo tie-ups with Heart FM signing with leading bingo provider Gamesys.
• Outside of media, online operator Amuso launched in the online bingo space through a deal with Cashball/NYX Interactive.
• Given how mature the UK online bingo market is, it’s not surprising it’s also the most competitive market. Leading UK bingo operators can be seen spending heavily on TV ad campaigns on both satellite and terrestrial channels, and the intense level of competition does not look like it will abate any time soon.
• Other leading bingo markets in Europe include Spain, Sweden and Finland.

Spanish Bingo market
• The Spanish online bingo market was worth $255m in 2009 in terms of gross gambling yield.
• The Spanish online bingo market is viewed as a market that is only in its infancy, with many viewing it as a market with huge potential. This positive view is due to the fact that historically Spain has had a large land-based bingo market, with over 400 bingo clubs in the country that generates around $1.8 billion in gross gambling yield from bingo games a year.
• A key difference with bingo in Spain is that it’s quite popular with male players.

Swedish Online bingo market
• Sweden is another of the key online bingo markets globally, with H2 Gambling Capital estimating that the Swedish online bingo market was worth $176 million in terms of gross gambling yield in 2009.
• The Swedish market, similarly to the UK, is quite mature and is highly competitive.
• Key players in the Swedish market include Svenska Spel, Unibet and Bingo Lotte.

Finnish online bingo market
• The Finnish online bingo market was worth $86 million in 2009 according to H2 Gambling Capital, which represented an increase of 5% on 2008.

Markets for future growth
Markets that are being highlighted as having potential for future growth include France and Italy given recent regulatory moves. In general while many emerging markets have a tradition of playing land-based bingo, there are few countries where it is as popular as it is in the UK. However, the opportunity in new emerging markets is likely to be offerings of soft gaming propositions that rely more on side games than the bingo game itself. Given the success of the leading operators in successfully marketing their existing products to what is a largely female demographic, it’s safe to say they can continue to grow the online bingo market.

Key Points: UK Bingo
• Target markets: the north and north east of England.
• The reputation of bingo being associated with smoky, fusty bingo halls is diminishing.
• Smoking ban combined with the popularity of online bingo has paralysed land-based bingo.
• Online companies have sexed-up bingo for a younger audience, aligning themselves with attractive brands, translating in record numbers of players and gross revenue.
• The largest online bingo market in the world. In 2009 it was estimated to be worth $560 million in terms of gross gambling yield—an increase of 25% year on year.

Key Points: Spanish Bingo
• The Spanish online bingo market is currently smaller than the UK.
• H2 estimate that the Spanish online bingo market was worth $255 million in gross gambling yield in 2009.
• The outlook is positive given the increased number of operators that are looking at this potential market.
• Bingo has a strong history of tradition in Spain.

Cross Section: Bingo Brands

Bingo.com:
• Figures from year ending December 31, 2009 show a $5.63 million (£3.68 million) profit, a five percent increase on 2008 figures of $5.37 million. (£3.51 million)
• Player numbers increased in 2009 and with new partnership with Unibet

Beacon Bingo:
• Sold to gambling investment company Praesepe PLC for £45 million
• Beacon Entertainments generated turnover of £35.9 million, and operating profits of £5.4 million before depreciation, amortisation and non-recurring costs in the 56 weeks ended 26, April 2009.

Party Bingo:
• Revenues at Party Gaming's bingo sites rose 25% to £17.3 million in the three months to December 31, 2009.
• Party's sites include Foxy Bingo, Think Bingo, Cheeky Bingo, Bingo Scotland and Party Bingo, which were acquired last summer when they took over Cashcade in a £95 million deal.

General Market Stats from the UK Gambling Commission:
• The annual report from the UK Gambling commission, analysing sales from 2008 to 2009, has shown bingo revenue to be up 4.6%.
• The number of bingo operators dropped during 2009, with 2,166 bingo operators registered with the UK Gambling Commission compared to 2,224 from the year before.
• Mecca Bingo and Gala Bingo now run more than 40% of the bingo clubs in the UK. Mecca Bingo has a 15.9% stake, while Gala Bingo run 24.4% of all bingo clubs in the UK.
• In March 2010 The Gambling Commission licensed 225 new bingo operators after Parliament approved a Department for Culture Media and Sport proposal to increase prize gaming limits in bingo clubs.
• Official statistics released by the Government show that high-street bingo is in decline. Since 1997 the amount of bingo halls in the UK has reduced from 650 to the current figure of 460. This shows a decline of 29%.

General Market Stats:
• Last Christmas, Alistair Darling’s pre-budget report announced that bingo duty would be cut by 22% to a new figure of 20%.
• Software giants Playtech recently bought up UK bingo company Virtue Fusion, boasting more than 20 licensees, with the intention of advancing their bingo offering in Europe.
• British bingo hall and casino operator Rank Group recorded strong sales at its Grosvenor Casinos and Rank Interactive units in an "encouraging" start to 2010. Rank stock has risen 40% in the year to date, outperforming the FTSE All Share Index by 30%.
• 888.com did not fare so well as disappointing returns from their bingo operation caused share prices to drop 12.1p to 81.7p for this year’s second quarter.
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