Gala Coral, the private equity-backed gambling operator, has secured a licence from the Chinese province of Hebei to open what would be the country’s first bingo club.

The company, controlled by Candover, Cinven and Permira, believes the Chinese love of numbers-based gambling could support the development of up to 100 clubs in the province and, over time, hundreds more in other regions.

Having secured a provincial licence, the company now needs a licence from Beijing, although Neil Goulden, chief executive, said he was confident of success because the low stakes nature of bingo was “right in the sweet spot” of the Chinese Government’s gambling strategy.

Gala has secured a lease on its first property and is discussing the terms of a profit-share deal with a local sports lottery. The group has spent about £3 million so far in China.

The company has also just bought its first Italian bingo club, in Genoa, and Mr Goulden said further acquisitions were possible. However, as with its Chinese move, the principal aim of opening bingo clubs is to ease the development of internet bingo, which is the fastest growing part of the on-line gambling market. Its bingo web-site generated underlying earnings of £25 million last year, mitigating the decline of its UK bingo club profits in the face of the smoking ban and the abolition of high-jackpot Section 21 gaming machines.

Earnings from its clubs fell by 16.4 per cent to £136.7 million in the year to September 29.

Despite the bingo decline, which Mr Goulden said was broadly in line with the fall at Rank Group’s Mecca chain, the group increased earnings by 7.2 per cent to £401.8 million and operating profits by 29.8 per cent to £309.9 million on turnover up 83.2 per cent to £1.31 billion.

Its Coral betting shops lifted earnings by 33.6 per cent to £194.3 million, while its casino division was up 3.2 per cent at £33.2 million.

Mr Goulden said the company believed that over the next three to four years, its international operations would grow to account for about 10 per cent of group operating profits. It has 219 betting shops in Italy and is targeting Spain, Greece, the Balkans, India and South America for further expansion.

He said that an exit for Gala’s backers, probably via a stock market flotation, was “at least two years away” although a merger with an international rival was also possible.

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