Rank attacks `unfair' edge for Lottery

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The Independent Online
Rank, the bingo, Odeon cinemas and Butlins leisure group, hit out yesterday at what it claims is the unfair advantage enjoyed by the National Lottery over other forms of gambling. The Lottery's launch in November 1994 was blamed for a collapse in profits from Rank's bingo operation last year.

With a government consultation paper on the much-criticised 1968 Gaming Act expected next week, chief executive Michael Gifford made a final plea for a more level playing field in his last results announcement before retirement in April. He called for a change in the law which currently forbids both bingo halls and casinos from advertising.

Critics of the ban say it has become indefensible in the context of an estimated spend by the Government of pounds 40m a year on advertising the Lottery. Smashing previous expectations, the Lottery has in a year developed into a pounds 5bn drain on the UK's leisure spending.

The introduction of the Lottery, and especially of the March introduction of scratchcards, contributed to a fall in profits from Rank's recreation arm from pounds 69m to pounds 50m. That took the shine off otherwise better-than-expected results for the 14 months to December.

To bring itself into line with other FT-SE 100 companies, Rank has changed its year end from October to December. Pro forma figures for the calendar year showed a 6 per cent rise in group profits from pounds 384m to pounds 407m.

That was at the top end of analysts' expectations and the shares, which have stagnated over the past couple of years, added 18p to close at 482p. Brokers focused on a bullish assessment of prospects for 1996 and a 19 per cent increase in the dividend to 15.75p.

To counter the threat from the Lottery, Rank said it was accelerating an already-planned investment programme. Mr Gifford said Rank would spend a further pounds 450m in addition to the pounds 1bn programme it had already flagged.

The extra expenditure will be directed into the building of "at least" 16 large out-of-town bingo sites in the UK, which the company believes are better-placed to fight off the threat of the Lottery.

Investment Column, page 18