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How Will Inflation, Cost Of Living And Energy Costs Affect Bingo Halls?

Every one of us is going to be affected by inflation which means rising costs to…everything.  Last week saw Ofgem  announce the energy price cap increase, the Bank of England putting up interest rates bit by bit, the war in Ukraine having an ongoing impact on shipping grain to the UK, which in turn increases the cost of food products. Its never ending, no matter which way you look at it

Everything is expensive. You can’t seem to leave a supermarket spending less than £100 if you are doing a food shop for a family of 4 these days. It is hitting peoples wallets and hitting them hard. Reports suggest that average family savings are going to shrink and the number of people on average incomes, living pay-packet to pay-packet will increase from October this year when we actualise the rise in gas and electric.

It is extremely worrying to read that many average earning families are only financially equipped to live for 19 days without an income (if jobs are lost, illness strikes etc).

Businesses are feeling it too. That includes bingo hall operators. Bingo halls were just on their way out of the gloom of the pandemic closures, but are now faced with rising overhead costs and a potential reduction in customer footfall. Rank Group, that own Mecca casinos have said that despite reaching 90% of pre pandemic revenues, they are taking a conservative attitude to company profit predictions for 2022 – 2023 and 2024.

Energy Prices

illustration rocket with oil barrel on the back of it sky rocketing energy pricesBritish companies are in the midst of facing a crisis surrounding the “cost of doing business”, ministers have been warned. Thanks to the increasing cost of energy bills, which are expected to rise again and again to more than fourfold in the autumn, these businesses are looking at a future of uncertainty.

The majority of UK companies are actually due to renegotiate both their gas and electricity rates in October, with many of them having contracts that expire in 2022, too. And those companies looking to enter into a new contract in autumn will be forced into paying that massive rise in price.

The gambling industry remains active throughout the United Kingdom as one of the major contributors to the economy and tax income. Yet the land-based sector of the industry is definitely likely to suffer from not only the increase in energy prices, but also the cost of living for the average everyday person.

And while many people will be thinking of land-based casinos and sports betting shops, there is another side of this that should be considered – bingo halls. These establishments have been a part of the UK landscape for many decades now and are enjoyed by both old and young people today.

Will these bingo halls be dramatically affected by the rise in energy prices and the fact that usual players may not have as much money to spend on gaming? What does the industry expect to happen when it comes to the upcoming months? And can the next appointed Prime Minister of the United Kingdom do anything to alleviate such serious issues?

Inflation Impact

inflation on union jack flag with magnifying glassEverything needed by a bingo hall will have increased in cost due to inflation.

To put this into the perspective, last year (July 2022) inflation was sat at 2%, therefore things cost, on average 2% more, whereas now inflation is sat at 10%. Inflation is looking set to rise steeply over the coming months, with around an 18% rate of inflation predicted for early 2023.

Fingers crossed this is the peak and we see it slow its rate of increase from then on. Or it may decrease which is another matter entirely.

Inflation effects everything needed to run a bingo hall from the toilet paper used in the loos to purchasing wholesale food and drinks, to then sell on to customers. Even trades people coming in to complete maintenance work will request more money because the cost of materials to them has also increased.

What do businesses often do when they are faced with cost hikes? They pass it on the the customer. Of course. Therefore the customer sees possibly an increase in ticket costs, membership fees, increase in cost of food and drink purchased.

I appreciate this is put in pretty simplistic terms, but it really is the case here.

Cost Of Living: The Effect On The Bingo Player

buzz bingo hallBingo players are  going to have to think twice about their visits to the bingo hall. A YouGov survey of gamblers (in general) found that 32% of the regular gamblers claim they are going to have to cut back on their gambling budget because of the rising cost of living.

Its fair to say this probably would be applicable to bingo plays as well. That is potentially a drop of a third of customers. People have less disposable income after bills and making essential purchases (food), therefore they are going to re-evaluate what they do with the reduced pot of money they have left.

Pensioners that often frequent the halls are going to see pension money go less far, likewise they will re consider what this is spent on. Especially as they have no opportunity to work over time or a second job to top up the funds.

That said, we all need a night out and to participate in activities that we enjoy, therefore it might not be such a bad hit after all. Take a wander through a hospitality area in a town or city and you still see people enjoying meals out at restaurants.

In short, bingo halls are going to have to increase their operating losses. While some of the big players in the bingo hall world may still have huge operating profits, they are inevitably going to carry some business debt along. This  sadly could mean some closures.

Mecca Bingo Owner Reports Return to Profit

mecca bingo hallIt wasn’t so long ago that the Rank Group published its yearly report relating to its profits and outlook for the future. The company owns both the string of Grosvenor casinos running through the UK as well as Mecca Bingo halls.

Within that report, Rank said that it had garnered a profit of £74.3 million in the year up to the end of June 2022. Comparing that with the £107.3 million loss it experienced in the 2020-21 same period of time, it would seem like everything has returned to form for the gambling company. And this came about even though footfall had actually fallen in its Grosvenor venues, especially within London.

Mecca, on the other hand, is in line to return to profitability, Rank Group said. Visitor numbers to the bingo halls were hit by a rise in new COVID-19 cases within the first three months of 2022, and seven of these venues were closed down permanently in that first quarter, too.

Even with that being the case, net gaming revenue for Rank Group was up by 221% for that timeframe when compared with the same period in 2021. But thanks to the company’s Transformation 2.0 program, an improvement of the customer offer and growing customer numbers is being focused on, with the Grosvenor casinos now delivering good returns after refurbishment. It is hoped that a similar outcome will occur within the Mecca bingo halls.

However, even though success of sorts had been experienced in the year up to the end of June 2022, Rank Group boss John O’Reilly said that the future will be heavily challenging. And that, he said, is due to the rising energy costs and cost-of-living crisis affecting so many people and businesses.

Rank reported that its energy costs had already doubled to about £23 million by the end of that year period. The outlook for the future, based on suggested market prices, could result in that figure increasing to £46 million by the end of June 2023.

At such levels, will Rank Group be able to keep all of its Mecca bingo halls and Grosvenor casinos operating successfully? Certainly, the company has had little issue with closing down several Mecca venues across the UK before, so could the rising costs mean that additional sites will have their doors shut forever?

Midway through August, a report noted that shares in Rank are on a losing streak, though. And this pushed it into the red zone, thanks to the combination of low tourism numbers and the cost-of-living problem.

Shares in the company dropped 3.4% to 85p, and O’Reilly noted that trading was most likely to remain at a difficult stage in the upcoming months as well. With customer budgets being squeezed thanks to the rising costs of everyday necessities, it leaves them with less money to utilise on gambling, including at bingo halls.

Bingo Halls Need to Provide a Comfortable Experience

mecca bingo socially distanced players screenshot
Credit: This Is Money

Bingo halls, like land-based casinos, need to provide a comfortable experience for their players. This doesn’t just mean that they should have comfortable chairs to sit in, pleasing surroundings to look at, and so on. It also means that the halls and all rooms within should be either heated or cooled to an appropriate temperature, which takes gas and/or electricity to achieve.

At the same time, the halls need to be lit properly, there needs to be electric for any gaming machines incorporated into the bingo hall as well. Plus, if food and drink are provided, then this requires energy as well.

So much goes into the running of a bingo hall that most players wouldn’t even give a second thought to when deciding to partake in a night out with friends dabbing their cards. But there is little doubt that the owners of these bingo halls will be focusing heavily on the energy costs and general cost of living crisis because it could mean that they don’t have much of a future.

The fact that players are likely to not have as much money to utilise on playing bingo each week or month is already a bad enough situation for the halls. But if they are also experiencing rising costs for various energy necessities, then how do they go about paying their bills if they don’t have as much income from gamblers?

Surely that just leads to a double whammy where both the bingo halls and the players suffer. Without being able to offer customers a comfortable bingo experience, then it is highly likely that many of them will simply stop going to the halls.

Potentially, some gamblers are already considering turning to the online bingo sphere instead. But even that will suffer from either fewer customers returning due to not being able to afford it and/or smaller bets being placed or shorter gaming sessions occurring. Bingo halls, like the rest of the gambling industry, could be in very dire circumstances where the energy prices and cost of living are concerned.

In March of 2022, it was reported that around 18% of gamblers are likely to stop participating in gambling altogether, thanks to the rising inflation. A survey conducted by YouGov on behalf of the Department of Trust (DoTrust) asked 700 gamblers about the impact of rising costs in relation to their own gambling habits.

A total of 127 respondents said that they were intending to stop gambling altogether in the upcoming months, while 32% suggested that they would spend less on the activity.

Of the 351 people who said they would decrease or stop gambling altogether, the majority of them cited the pressures on their finances due to the cost of living as the primary reason for it.

Minimal Assistance from the Government

government support conceptThe fact that soaring energy bills are being handed out to people across the European continent has led to governments stepping in to help ease the pressure. Ireland has given out energy credits, reduced the tax on gas, electricity and fuel, and has also cut bus and train fares for people. Households were also given a €200 energy credit in April and then a 9% to 13.5% cut to VAT.

Germany passed a variety of measures to alleviate the cost-of-living crisis in July, including a €9-a-month ticket scheme for all forms of transport, as well as a cut on taxes for fuel. People in gainful employment are also able to receive an energy price lump sum of €300.

And going one step further, Spain introduced free train travel across certain parts of the state-owned rail network. Last year, it also cut VAT on electricity bills from 21% to 10%, while another 5% decrease was announced last in July. Gas canister prices are also fixed until the end of the year.

The French government is also poised to nationalise its energy company EDF, which will cost many billions of euros, but will hopefully help to tackle the energy issue. By bringing EDF into full state ownership, it aims to reduce its dependency on imported fossil fuels.

In January, it also announced that it was forcing EDF to take an €8.4 billion financial hit by limiting bill increases to just 4% in 2022. A rebate of 15 cents per litre on petrol and diesel was also introduced earlier on in the year.

In the United Kingdom, anyone on income-related benefits of tax credits will be eligible for a £650 cost-of-living payment, while a pensioner payment of £300 and disability payment of £150 are also available. Once winter rolls around, a £400 discount on electricity bills for all households will be introduced and a £150 rebate on council tax for bands A-D has been paid out to all households as well.

High electricity-using businesses within the UK could see additional relief provided by the Government, too. The announcement on August 12 stated that businesses such as the steel industry and paper mills could benefit from this, although whether casinos and bingo halls fall into this category is anyone’s guess.

Consultations are taking place on the option to increase the level of exemption for certain environmental and policy costs from 85% of costs up to 100%. This, the Government said, reflects higher UK industrial electricity prices when compared with mainland Europe, and it would reduce the risk of industries like steel, paper, glass and so on choosing to relocate form the country.

Around 300 businesses supporting 60,000 jobs would be assisted by it. However, it is likely that bingo halls and other gambling options aren’t at the top of the list for the Government when it comes to additional funding.

None of the support that the UK leadership has offered so far has really directly subsidised consumer energy prices, and it has been of no help where gambling businesses are concerned. And while the Government suggests that more help is on the way, it’s not likely to be anywhere near enough for many people or businesses.

Liz Truss, who is the favourite candidate to succeed Boris Johnson as the United Kingdom’s Prime Minister in September, has not provided any insight into how she plans to tackle the cost-of-living crisis or inflating energy bills, other than taking away the recent hike in National Insurance costs.

The opposition to the Conservative Party in Keir Starmer’s Labour team, has called for a windfall tax on the profits of oil and gas companies to be extended, so as to assist with funding a freeze on energy bills during the upcoming winter months.