Online bingo shows its worth at Rank
LONDON (Reuters) - It may lack the noisy camaraderie of a trip to the bingo hall, but the online version of the numbers game has proved more profitable for Britain's Rank Group than the original.
The merits of the online business were further emphasized when Rank said a snowy January had cost it 3 million pounds ($4.7 million) in revenue as Britons opted not to venture out to its bingo halls and casinos.
Operating profit from online bingo was 11.4 million pounds, just beating the 11.1 million earned from the venues themselves.
The company, majority owned by Malaysia's Guoco, reported a 4 percent decline in pretax profit to 31.3 million pounds in the six months to December, with its loss-making Blue Square betting business proving a drag.
Many parts of Britain have seen heavy snow over the last two weeks and there are fears that the bad weather will hit economic activity and push the country back into recession.
Pub groups Enterprise Inns and Mitchell & Butlers both said the recent cold snap had hit sales.
"Allowing for the slow start to the second half we remain confident in our prospects for the remainder of the year and in our longer-term growth strategy," Rank Chief Executive Ian Burke said.
Rank's main activities are in Britain where it runs 35 Grosvenor Casinos and more than 100 Mecca bingo clubs.
Profits growth in its online bingo business mirrors that in the gambling industry as a whole where online betting is the fastest growing part of the market, helped by the popularity of smart phones and tablets.
However, Rank has said it is reviewing the future of its own struggling online betting business Blue Square, a relative minnow in a crowded sector.
"We felt the losses were not losses we could continue to sustain," said Burke.
Blue Square reported an operating loss of 4.8 million pounds in the six months and Rank has now cut its spending on marketing the business.
"There were 11 or 12 competitors advertising and that spending just wasn't cutting through," said Burke.
He declined to comment further on the future of the business pending completion of the review.
Rank is awaiting regulatory clearance for a planned 205 million pound deal to buy the casino business of Gala Coral.
A preliminary report by the Competition Commission said Rank could have to sell six casinos to get the deal approved.
($1 = 0.6332 British pounds)
(Editing by Louise Ireland and Brenda Goh)
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