Marketing costs Rank Group big

rank-group-takes-gala-casinosMulti-channel gambling firm Rank Group saw a rise in total revenue of 5 percent that wasn’t helped by poor performance from their Blue Square Bet online sportsbook brand. The company saw group revenue for the six months to Dec. 31, 2012 rise to £312million with impressive results from their land-based operations having much to do with it. That was where Grosvenor Casinos delivered a 33 percent increase in operating profits and more customers coming through their venues’ doors meant the company’s results looking a little rosier.

When looking at digital as a whole the outlook doesn’t look too bad. Revenue increased by 12 percent and the company’s fastest growing channel was moile with an increase in revenue of 172 percent to £7.5m. They now estimate that 30 percent of their digital customers play games on a mobile device. The same could not be said for Blue Square, the firm’s beleagured sports betting brand.

Blue Square saw revenue drop by 6 percent to £7.6m thanks to a lower than expected win margin from their sportsbook. That paled into insignificance when compared to a 182 percent widening of their operating loss to leave them running at a loss of £4.8m. Much of this was down to an increased marketing spend that failed deliver the customer numbers expected. Games performed well, however, with an increase in revenue of 18 percent to £4m, whereas sports betting revenue dropped 23 percent to £3.6m.

The results go to show why Rank chose to review this part of the business and they will deliver an update “in due course”. The bottom line seems to be that even with a crack team of marketers working on the case they are simply too far behind their competitors and a way back doesn’t look particularly likely.

The Mecca and Grosvenor Casinos online brands had no such trouble as both recorded big gains. saw revenue rise 11 percent to £30.4m but they also posted a drop in operating profit of 3 percent to £11.4m due, again, to marketing spending. Grosvenor Casinos, meanwhile, increase their digital revenue by 91 percent to £4.4m with another rise in operating loss from £(1.5)m to £(1.8)m.

The company called it a “good” year, and talking about their main responsibilities in the coming 12 months, Ian Burke, group chief executive, stated: “Our focus remains on generating sustainable returns for our shareholders. This will be achieved by developing further our gaming-based entertainment brands as well as engaging positively with Governments to ensure that our activities make positive social and economic contributions to the jurisdictions in which we operate.

“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.”

The coming year will be a defining one for Rank Group is so much as they could be getting rid of Blue Sq and at the same time finding out whether the Competition Commission will allow them to purchase a number of Gala Casinos – a decision that is due on Feb. 20. The two will shape the future of the firm and they’ll hope it changes the company’s course that is currently veering away from where it should be.