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Simon Wykes talks about the challenges in the UK bingo industry

Gala Bingo managing director Simon Wykes has spoken of the challenges of operating in the UK bingo industry.

According to the Financial Times newspaper, Wykes’ comments came shortly after parent company, land-based betting operator Gala Coral, announced plans to sell its bingo division to raise up to £250 million ($400 million/€292.5 million).

The announcement has generated interest amongst private equity groups, with the company having recorded earnings before interest, tax, depreciation and amortisation of £78 million last year. Gala Coral is reported to be considering a potential initial public offering next year.

However, Gala Bingo has suffered a drop in visitor numbers as its low-income audience cut back on spending.

Bingo halls are unable to recover VAT on infrastructure, meaning investment in such venues is more expensive.

“We need to attract new customers – and so we need to invest in facilities,” Wykes said. “But the real challenge is the level of VAT that we have to pay. It makes investment impossible.”

Wykes said that investors considering a move into the leisure sector would find it “easier to get return elsewhere in the leisure industry because of the VAT issue”.

He also predicted that between 120 and 150 of the 500 bingo halls in the UK face immediate closure unless the tax burden on the industry is lifted.

“Those will go and we will end up with a much smaller industry,” Wykes said. “People will just stop going and start doing something else.”