During the last two weeks several areas in the UK have experienced heavy snowfalls. Travel has been difficult and many fear that the bad weather could send the country back into a recession. Despite the weather some were optimistic including Rank Chief Executive Ian Burke who told reporters “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.” Before tax profits slipped to £31.3 million during the six months prior to December.
The company blamed the decline on increased spending on marketing its Blue Square betting business and higher operating costs at the company’s Mecca Bingo halls. Rank operated 35 Grosvenor Casinos and more than 100 Mecca bingo clubs throughout the UK. Rank said the company is reviewing the future of money losing Blue Square. Blue Square is a small player in a highly competitive and consolidated industry. It wasn’t all doom and gloom for Rank. The online version of bingo has been more profitable than the land based version of the game for Rank.
Studies have shown that when the weather turns nasty players stay home and play their favorite games on the internet. In 2010 a series of severe Arctic storms hit Britain paralyzing traffic and making travel all but impossible. Online bingo operators reported a huge increase in player numbers and many online bingo operators were able to post record fourth quarter figures because of the player surge caused by the storms.
The benefits of online bingo were emphasized for Rank after Rank said that the snowstorms had cost the company three million pounds. Operating profit from online bingo was 11.4 million pounds beating the 11.1 million generated by land based venues. Rank, which is owned by Malaysia’s Guoco, reported a 4% decline in pretax profit and blamed the decline on the poorly performing Blue Square betting business. Rank Chief Executive Ian Burke said “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’s profit growth in the online bingo sector mirrors that of the gambling industry. Online betting is extremely popular and growth has been driven by the use of smartphones and other mobile devices. Blue Square’s future is uncertain and most say that Rank will dump the operation because of huge losses.