Bingo faces core problem

Pubs and clubs are busily planning for the change in the law, which has

been active in Scotland since last March, with many preparing to add
outside areas to cater to smokers.

Some leisure industries will be hit harder than others, and bingo in
particular could be faced with a major slump in trade. Since the
legislation came into force in Scotland, operators there have seen
turnover drop by between 14% and 27% and seven venues have closed.

Bingo Association marketing and communications director Steve Baldwin
believes the prospects for England and Wales are even bleaker. 'Most of
the bigger operators have many more clubs in England and Wales, and the
impact in Scotland is expected to be amplified with more closures and
job losses when the ban extends this year,' he says.

Rank, which operates the Mecca chain of bingo halls, reported in a
trading statement last month that business had been stunted by the
performance of its Scottish clubs. Since the introduction of the smoking
ban there, year-on-year revenue has declined by 15%, with admissions
down 6% and spend per head down 9%. 'Nobody had predicted that the
effect of the smoking ban would bite so far, so deep, so fast,' says
Baldwin.

Underlying causes

The reasons that bingo has been hit so much harder than other sectors,
such as bars and restaurants, are fairly simple. 'In other environments,
pubs for example, you can buy your drink at the bar and take it outside
to consume. You have purchased your drink in a licensed premises, but
you don't have to consume it there,' explains Baldwin. 'Due to the way
the bingo industry operates and is legislated, you have to be inside the
building to play.'

In Scotland, smokers are now turning up later at bingo halls and leaving
earlier. Moreover, while they are at the clubs, they are going outside
the premises between games to have a cigarette, rather than spending
money on secondary services such as slot machines, table-top bingo or
drinks from the bar.

Bingo revenues are also suffering at the hands of the current tax
regime. 'It remains the most heavily taxed gambling activity in the UK,'
says Baldwin. 'We have to pay VAT on what is called a participation fee,
which neither casinos nor turf accountants have to. There is a need for
some fiscal relief and that could easily be served up by removing
VAT.'

Bingo clubs in Scotland have begun a campaign for a £10m tax
rebate from the government to compensate for the loss in revenue caused
by the smoking ban. They are preparing to request £100m in relief
from Chancellor Gordon Brown when the other UK bans take effect.

'The changes being brought in are not the result of a change in consumer
behaviour as a result of natural market forces; they are the result of
legislative intervention,' Baldwin points out.

The Bingo Association supports the need for a ban on smoking in public
as a way to address the nation's health. However, it is angry that the
ruling is coming into force several months before the Gambling Act is
implemented. The Act is expected to benefit the bingo industry, through
changes such as the provision for roll-over jackpots, to create a bigger
prize fund over the course of several weeks. The industry argues that
the hiatus between the two is effectively hitting it with a double
whammy.

To prevent customers from deserting clubs, the industry is taking a
two-pronged approach by trying to support existing players who smoke,
while simultaneously attracting a new generation of participants.

Initiatives to retain customers include the introduction of information
leaflets and investment in online bingo. Gala, for example, has enlisted
Sharon Osbourne to front a TV campaign intended to boost web play.

Encouraging online bingo has its drawbacks, though. The industry has low
levels of what is termed 'problem gambling'; if a problem is suspected,
managers are encouraged to put players in touch with support charity
GamCare. But it is not easy to be so vigilant when it comes to online
players.

Operators are also examining whether they can change the timings of
games to cater to those who wish to go outside for a quick cigarette.
The National Bingo Game, meanwhile, which is played across all clubs, is
developing additional types of games that operators will be allowed to
offer after the Gambling Act comes into force in September.

However, these actions are unlikely to alleviate the impact of the
smoking ban, especially since a change to timetables risks alienating
non-smokers.

Beyond middle-aged women

Work to extend bingo's core customer base from its traditional audience
of middle-aged women has also increased over the past year. The National
Bingo Game rebranded in 2006 and launched a major advertising campaign
to attract different types of players while remaining relevant to its
current customers.

'The industry is doing all it can to prepare its customer base (for the
change), but a business has to remain loyal to its core customers,' says
Baldwin. 'The industry's core customer base smokes. We are now being
asked to be disloyal to some 60% of our customers, purely as a result of
legislative intervention. No one has yet been able to answer why bingo
and women are being penalised. Bingo clubs are one of the only places
women can go on their own and feel safe.'

The odds are that the smoking ban will lead to huge job losses, club
closures and declining revenues. But the industry does have an
innovative idea to mitigate the losses. It aims to help customers who do
smoke to kick the habit by setting up special quit-smoking clubs within
bingo halls. If that works, the industry will be able to boast that it
has furthered the government's cause as well as its own.

DATA FILE - SMOKING BAN



KEY DATES

- Ban in Scotland has been in effect since 28 March 2006.

- Ban in Wales will come into effect on 2 April.

- Ban in Northern Ireland will come into effect on 30 April.

- Ban in England will come into effect on 1 July.



KEY STATISTICS

- 30% of the UK population smoke.

- 60% of bingo players in the UK smoke or attend with a smoker.

- 73% of bingo players in the UK are women.