Top Ten Online Bingo Group Sees Profit Fall

With the bingo industry reeling from the effects of the smoking ban, double taxation, and for online operators, American and French exclusionary tactics, Top Ten Holdings, which operates bingo halls, amusement arcades, online bingo and a snooker club, has announced a drop in both revenue and profits for the six months ending 30 September.

In the current year, revenue for the first half-year fell from £14.69 million to £13.65 million, while op-erating profits dropped from £2.1 million last year to £1.4 million in 2007. The company foresees a flat second half as well, and is unlikely to declare a dividend until business picks up.

Top Ten has more than 40 clubs across the UK, with a focus on the north of England. Its chairman, Sir Aubrey Brocklebank, in acknowledging the impact of the unprecedented challenges besetting the industry, said "Our strategy to sell off our most marginal clubs will assist the group to ride out the difficult market conditions."

The company has closed two small bingo halls during the period, realizing £551,000 on the sale. Further closures are expected in the current six months. Top Ten Bingo has reduced its staffing and other costs through the closures, and is tightening its belt across the board. Rivals Stylus Sports are fol-lowing a similar strategy, with two more bingo halls closing down in the last few weeks.

The Top Ten group is the third largest bingo club provider in the UK, after Gala Bingo and Mecca Bingo.

The group is lobbying the Government for the removal of VAT on bingo games. This tax is not levied on other forms of gambling in the UK, which only pay Gross Profits Tax. Although not expecting a short term solution to the problem, Top Ten is hoping for a VAT refund in the order of £5.4 million if its protest is successful.

Share strategists don't at present see a lot of value in Top Ten's stock, which lost considerable ground in October on profit warnings. At the same time, unfortunately for the faithful punters, more closures are certain as the whole bingo club industry declines, through not only the massive set-backs of the past year but also the aging of the game's long-term customer base.

Apart from a roll-back of the taxation and exclusionary regulations, the industry is in urgent need of new blood in the form of a new generation of players. How to attract and keep them is no doubt at the forefront of many an operator's mind.

Written by Denise