Bingo clubs and arcades around the UK have been hit another blow this week as reports surfaced that the Treasury is considering a proposal to make new coins from nickel-plated steel instead of the alloy that is currently used. The proposal would cost the private sector more than ten times what would be saved by the Government.

The 10p and 5p coins currently used are made from the nickel and copper alloy cupro-nickel, which have become more expensive to make in recent years as the price of copper has risen. Bingo clubs and arcades would get hit by significant costs as they had raced to have coin mechanism recalibrated or changed. When the Treasury introduced a new 50p and £2 coin the costs were not as great. For the majority of bingo clubs and arcades the previous changes only meant adjustments to gaming machines and coin counting equipment. However, as the majority of cash bingo systems used in the UK take only £1 and 10p coins there would be a need to immediately replace all the mechanisms at all positions in most bingo clubs.

Bingo clubs on average have around 500 cash bingo positions which would cost up to £40 per position to change. In addition there are on average 60 gaming machines, change machines and coin sorting machines per site which would cost around £150 per machine to update. The cost to each bingo club for updating all the machines to accept new 10p coins could therefore be as high £30,000. It is estimated that bingo clubs and arcades alone in the UK could end up with a cost of around £60 million.

Not only would the coins mechanisms have to be recalibrated to accept both sets of coins but there would also be an increased risk of the coin mechanisms accepting fake coins. Currently the coin mechanisms are set up to accept the one 10 pence piece. The coin’s shape, weight and magnetism are detected to prevent fakes being used. With two coins of the same shape and only slight difference in weight the chances of problems are increased. There always has to be a margin of error built into the settings within the mechanism to account for the various degrees in wear and dirt of coins and with two similar coins fake coins are less likely to be identified. Luckily, due to the value the most common fake coin in the UK is the £1 coin and there are few reports of fake 10 pence pieces being used.

The new proposal would save around the Government around £8m and some reports suggest the first issue of the new coins could happen as soon as January. Companies that supply and service coin related machines in the UK are also likely benefit. Such companies will have seen a dramatic drop in business in recent years as gaming companies postpone capital expenditure due to the recession.

Vending machine companies are also seriously concerned about the idea. They have warned the Government that it could cost the industry millions of pounds. Chief executive of the Automatic Vending Association, Jonathan Hilder told the Daily Telegraph: "We've told the Treasury and the Royal Mint that this is going to be a disaster, but they haven't taken notice.

"It's meant to be a money-saving exercise, but this will cost the vending industry £42m and the coin machine industry as a whole possibly as much as £100m."

A Treasury spokesman commented: "The proposal to make new 5p and 10p coins out of nickel-plated steel rather than a cupro-nickel alloy is one of many measures being considered by the government with a view to reducing the fiscal deficit."