The Rank Group owners of Mecca Bingo have been given the green light in a long planned merger with rivals Gala.
The merger of these two gaming giants has been on the cards for a long time and it finally looks like the deal may go ahead now. However, Rank has been told that they must remove a Scottish Casino from this £205 million pound takeover. Plus other sites in Bristol, Cardiff, Liverpool and Stoke on Trent as well as an existing licence Gala have to build a new casino in Edinburgh, could also be excluded from the deal.
One more site which will be excluded is the Gala Casino in Dundee, as this is already under a compulsory purchase agreement with Dundee City Council.
In a report from the Competition Commission it states that Rank’s proposal to acquire 23 Gala sites could reduce competition in Aberdeen and Edinburgh, as well as several English cities.
Less competition between gaming giants, could be bad for the public who frequent their establishments. Good competition is healthy in most aspects of business as rivals tend to go head to head with each other to bring us the best deals possible. Take out the competition and there is nothing left for them to fight over, hence why this could be a bad for their players.
The merger between the Rank Group and Gala was first revealed back in May 2012 and it has taken to this point (Feb 2013) to move the deal any further. The Rank Group will not be taking over Gala entirely, as they are after acquiring ‘23 of their casino and cold licences’ from them.
A ‘Cold Licence’ means the operator (which in this case is currently – Gala Coral Group) hold the right to operate a casino in a particular location, even if they are not active at the time. If they hold the cold licence, no other gaming operator can open a casino in that area, which is why the licence holder ‘holds’ all the cards (so to speak).
The office of fair trading took a look at the planned merger and they referred this to the ‘Competition Commission’ CC in August last year. The outcome of which, is that this transaction between Rank and Coral is now permitted as long as the casinos in Bristol, Cardiff, Liverpool and Stoke on Trent are not included in the deal.
The CC also put another clause on this deal going ahead, whereby the Rank Group must sell the cold licence they currently hold in Edinburgh to an upfront buyer who is approved by them. If the Rank group do not agree to this clause, they will not be allowed to purchase the Gala casino which is already in Edinburgh.
If this planned merger does go ahead, casino competition will be dwindled down to just two main competitors – Genting and Rank in the UK. Land based casinos compete for custom mainly on running good promotions and customer service, if there is not going to be much in the way of competition left in this arena, it could affect the promotions they decide to run. So in return, it could be ‘us’ the customer who might get a raw deal compared to what we may have got if there had been more fierce competition for our custom.
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