Private equity groups with an interest in buying Gala Bingo have been warned away by the company’s managing director, reports the Financial Times.
Simon Wykes said investors should steer clear of the sector “unless [they] had a huge amount of capital and didn’t mind paying over the top.”
The comments come as Gala Coral, the company that owns Gala Bingo, looks at potentially disposing of its struggling bingo division in a deal that could raise up to £250m.
A number of private equity groups have shown interest in the company which had earnings before interest, tax, depreciation and amortisation of £78m last year.
However, Gala Bingo has suffered a drop in visits as its low-income audience cuts back on spending.
Wykes said: “We need to attract new customers – and so we need to invest in facilities. But the real challenge is the level of VAT that we have to pay. It makes investment impossible.”
He also predicted that between 120 and 150 of Britain’s 500 bingo halls faced closure unless the industry’s tax burden were lifted.
“Those will go and we will end up with a much smaller industry,” he said. “People will just stop going and start doing something else.”
