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US Investors the Likely Solution

The United States online casino gambling market has really angered a lot of the international community because of the protectionist policies that keep all foreign companies from operating any sort of internet based services for US gamblers. This resentment is perhaps bleeding into the round of discussion and debates about the Gala Coral Group accepting American investors to keep the company afloat. The Gala Coral Group staved off an attempted hostile takeover from Harrah’s Entertainment several years ago, but is still in hot water. Although the takeover plan was stopped, Gala is still facing some very real financial issues that can really only be solved by accepting foreign investments in the company.

The largest problems that have crippled the financial viability of Gala Coral are the laws in the United Kingdom that put a huge tax on the online casino and gambling industries, in addition to the smoking ban in the UK. Gala is a land and internet based gambling group that has strong interests in both markets; and because the company operates fully out of the UK, all of the revenue has huge VAT and gambling specific taxes placed on it – so much so that Gala is not the first, or the last land and online casino gambling group to nearly go under from the high taxes. Bingo in particularly is treated very unfairly in the UK market and the high taxes on land bingo are essentially sinking Gala.

So what’s a company to do? Gala is now considering an offer from the Blackstone Group for a bid of GBP 300 million that will infuse the company with cash and give it a chance to restructure within both the land and online casinos to create a foundation for profitability in the future. Blackstone is incredibly well respected in the US market and there is a strong chance that this deal will progress through to completion within the coming weeks.