Should You Buy Shares in Rank?

Viva Las Vegas. As Britain headed towards the deregulation of its gambling industry, Rank thought the management of gaming companies was the place to be. Blackpool stood to be the new Vegas but without the sun. The government, having been in favour of large-scale deregulation, has changed its mind, however, and has progressively tightened its gambling bill to protect the public.

This is the same public that can gamble as much as it likes at internet-based casinos with no regulations. But when the gaming bill makes it over the finishing line, it should at least create a stable environment in which Rank’s management can plan its strategy.

Rank has announced that it is looking at demerging into two divisions — gaming and Deluxe films. Deluxe has always been looked on as a cash cow but has lacked the excitement of gaming in the eyes of investors.

On demerger, Deluxe is likely to be valued on a yield basis and may prove attractive to a venture capitalist because the company, along with three or four others, dominates the market.