It has been a bad 2008 for Gala Coral, the gambling operator, but it may be ending on a high note after its new chief executive said that the sharp decline in bingo had levelled off.

After a year in which its private equity backers had to inject further funds, Dominic Harrison, who recently succeeded Neil Goulden, chairman-designate, said that trading had started to recover from the impact of the smoking ban and the scrapping of big-jackpot gaming machines.

Gala has shut 13 bingo clubs and four casinos since the smoking ban, but no more are envisaged. Mr Harrison said: “We're predicting a modest increase in bingo next year.” He added that the low-ticket nature of its businesses should insulate it from recession.

In the year to September 27, underlying earnings fell 10 per cent to £362 million, from sales down 3 per cent at £1.27 billion. Losses before tax widened from £128 million to £397 million after its interest bill jumped by £53 million to £498 million.

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