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Two fat ladies, 88; clickety-click, 66; dancing queen, 17 - the catchphrases of bingo-calling have made their way into modern parlance. So too, the leading companies in the sector have gone to considerable effort over the past few years to widen their presence by improving their facilities and games to tempt younger, more affluent visitors.

While these have gone some way to helping the sector shed its image of being a cheap form of entertainment for working-class women and senior citizens, the industry has been hit hard by the combined effect of the smoking ban and the rise of online gambling.

A high proportion of bingo-hall customers are smokers, and if they are outside having a fag break, they are not spending additional money on gaming machines or interval games.

Changes in legislation over the past few years have also led to restrictions on the number of low-stakes gaming machines in clubs and the prizes they can offer. This has resulted in falling attendance and revenue from stake money and ancillary activities.

Between 2006 and 2009, revenue fell by 26% and admissions by 22%, according to Mintel. Last year, bingo clubs attracted 72m customers and generated £2.4bn in revenue. In 2009, these figures are predicted to fall yet further, to 63m players and £2bn in revenue.

The problems facing the sector have been exacerbated by the government raising bingo duties by almost 50% in April's budget.

More people have stopped visiting bingo halls because of the recession than because of the smoking ban, according to TGI research carried out in January. However, it remains many players' only leisure activity, and they will not give it up lightly.

Most bingo players are over-45, and go to bingo clubs for the social nature of the game, rather than to gamble. Nonetheless, the age and social status of participants have shifted over the past 10 years, with more under-45s and ABC1s playing.

The refurbishment of bingo halls to attract this new breed of player has been hit, because as a group they are most likely to be attracted to online bingo. Only about 6% of club bingo players have also played online, though the number trying it out is growing.

Online stake money is estimated to have reached £600m annually, and the web accounts for 20% of total bingo revenue, according to BingoPort.

Bingo remains a niche activity, with between 3m and 4m players. There has been much consolidation in the market and Gala and Mecca now account for 47% and 33% of club market revenue respectively.

Size is significant in this sector, as the bigger the operator, the bigger the prize pool it can offer. Smaller clubs can, how-ever, team up to offer bigger prizes - a major draw for players. The National Game, organised by the National Bingo Game Association, enabled member clubs to offer big-money games. About £1m was paid out each week, but Gala withdrew in 2008 to focus on its Gala High 5 game, which has a cumulative jackpot exclusive to its clubs.

As well as an online operation at galabingo.com, the company is looking to further integrate its offline clubs with mobile bingo.

Mecca, owned by the Rank Group, is looking to extend external gaming areas to better accommodate players wanting to smoke. It has developed these areas in 46 of its clubs, offering  1100 additional interval-game positions to boost revenue.

Bingo is in competition not only with other leisure activities such as a trip to the cinema or the pub, but also other low-stakes/high-returns gambling activities such as the National Lottery and scratchcards.

Mintel predicts that by 2014, bingo-club admissions will have fallen to 50m a year, while turnover - including stakes and additional revenue from food, drink and gaming machines - will be £1.5bn.