Gala Coral which is the parent company of Gala Bingo may be doing extremely well with their online bingo operation but things for the high street Gala bingo halls have not been doing so well of late. Without doubt some blame must lay at the Governments door as the increased taxation imposed on bingo halls at a time when trading is already difficult must be a contributory factor. Gala Bingo like all other bingo halls have been struggling against a tide of problems including the smoking ban, the previous double taxation, changing customer trends, the Government enforced removal of all section 21 machines and of course the current financial crisis.
This catalogue of problems affecting Gala Bingo is - if an article published in the Times is to be believed - taking its toll on the biggest bingo operator in the country. The report says that the Gala Bingo group are currently in talks with staff about possible closure of around six under-performing clubs with the anticipated loss of around 180 jobs and further proposed plans to sell around 50 clubs over the next few years. Of course Gala Bingo have already been forced to close 13 clubs to date and with the latest proposals it looks like taking the current portfolio of bingo clubs down by a third to around 100.
Debt for equity may help avert catastrophe
Gala Bingo is currently suffering more than some others due to problems with the agreed repayment covenant for the huge £2.5 billion net debt that the company currently sits on. The repayments to the banks are causing problems for Gala bingo stopping them from being able to fund plans for growth. Although it is believed that they are trying to negotiate swapping £500m debt for equity, should this be possible it will most probably throw the company a lifeline.
Whilst Gala Bingo struggles to tread water, Government pushed them further under
Gala Bingo are putting all the blame at the door of the Government for the need to look at further closures, with the report stating that Gala Bingo have been forced to make further closures due to the shock budget announcement of the tax hike affecting bingo halls. Gala Bingo and Rank are expected to receive a refund on overpayment of VAT which amounts to somewhere in the region of £200m after the EU decided that the Government was unfair to tax certain games differently. It is felt in the industry the Government increased the current duty in anticipation of such a decision by the EU.