FOREX Cloud Hangs Over Heads of New UK Bingo SitesThursday, 6 May 2010 | Written by Carol Dian
Fears of election stalemate and a resulting hung Parliament weighed heavy on the British Pound as it got hammered during Monday's currency trading sessions. Sterling fell through the critical $1.50 support level which had held strong for almost a full year. FOREX technical analysts are now projecting further declines based upon this very bearish chart signal, and fundamental analysts point to the decreasing chances that a unified Parliament will be able to address the UK's ballooning budget deficits.
Although some exporters could potentially benefit by weaker Sterling, the large universe of newly minted online bingo sites stands to suffer. Recent entrants to the UK online bingo arena include Bingo Hollywood, RedBus Bingo and Tasty Bingo. Significant initial capital is required in order to effectively launch these sites, and much of the debt raised was denominated in U.S. Dollars and Euros. A declining Pound will directly hit top line revenues seeing the majority of these site's proceeds come from UK based consumers.
Monday's trading marked a disaster for the Pound, and at its low point during the day it traded at $1.4781. Currency analyst Audrey Childe-Freeman indicated that the increasing risk of a hung Parliament will have further deleterious effects upon Pound valuations. At some point, new bingo sites will face exceeding difficult choices. One option is to reduce marketing expenses, however, this route can lead to decreased membership and consequently hit top line revenue. Alternatively, bingo sites can scale back on prize pools - but this would also entail potentially driving away customers into the arms of more established sites. Suffice to say, new UK bingo sites are hoping that a clear front runner soon emerges within this tight election cycle.