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TRANSCRIPT
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ITALIAN
GAMING MACHINESMARKET: REGULATION
MODEL AND HIS EFFECTSSeptember 2010
Emmanuele M. Cangianelli
MAG CONSULENTI ASSOCIATI
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Why we are here
To synthesize the Italian Electronic Gaming Machines regulatorymodel as the first and the major realization of the Italian approach
to gambling regulation To explain an experience in changing figures from a dramatic grey
market to a regulated, monitored and profitable market within asocial, economic and competitive sustainable business environment
To shape next market developments and regulatory targets
To consider this experience in shaping new jurisdictions sgam(bl)ing regulatory and business models (i.e. Greece, Poland)
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Shaping the market
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How change figures from a dramatic greymarket to a regulated, monitored andprofitable market? In 2002 2003, after some uninspired attempts to regulate the
gaming machines market, Italian Parliament approved for the firsttime electronic gaming machines (AWP) regulation guidelines
AAMS (State monopolies and gambling authority) drafted operative
regulation; in the meanwhile grey machines were legitimized to havea first significant tax income and to evaluate market dimensions
Therefore, was published the first new AWP regulation and launchedthe tender for concessions allowing the right of operating gamingmachines in the Italian market by controlling all administrative andoperational data
The AWP regulation in 2004 was the first result of the AAMSapproach to reach a social, economic and competitive sustainablebusiness environment in Italian gambling markets
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Social, economic and competitivesustainable business environment
Shift State monopoly approach (maintaining and managing gambling
tax revenues as a policy tool):
from direct management or ban
to concession and progressive opening to all gambling markets
(2006: betting and online skill games \ poker; 2010: online casinogames)
Introduce (lotteries exception) multi-operators markets
Develop online managing \ auditing systems for any gambling
activity Enhance distribution chain responsibilities, confirming revenues
levels
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Gaming machines allowed
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AWP2 MultiplayerAWP2(roulette-like, black jack-like)
VLT
Server monitored Server based
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Central
Control Systems
AAMS
Venue \AWP gamespoint of sale
EGM Management
Money collectionVenue Management
Concessionaire (fully integrated)
Concessionaire (integrated)
AWP owner \
commercialoperator
Venue \
AWP gamespoint of sale
Concessionaire(system provider)
7
10%
15%
75%
A competitive market
with:
10 concessionaires
more than 100 licensed
manufacturers
more than 1.500commercial operators
more than 110.000 AWP
venues
Networked AWPs systems
allows to constantly
monitor how many
machines are operating
and how much turnover
and GGR is generatedThe model permits a significant role to operators different
than game owners concessionaires (near 70% of NGR)
Competitive, economic and sustainablebusiness environment
System
certification
(SOGEI)
AWP certification
(laboratories)
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Results
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Present Italian (legal) gambling marketsturnover
9
mln Market turnover.For Casinos* , estimated handle. Casinos EGM are different than AWPs
Source: AAMS, ANIT, MAG Analysis
Lotteries;
18.874;
32%
Betting;
6.151; 10%
Gaming
machines;
25.200;
43%
4
Historical
Casinos*
4.555
8%Bingo;
1.512; 3%
Online
Card and
skill
games;2.348; 4%
2009
Lotteries;
8.850; 27%
Betting;
3.384; 11%
Gamingmachines;
15.137; 47%
4 Historical
Casinos; 2.230;
7%
Bingo; 948; 3%
Online Card
and skill
games; 1.654;
5%
H1 2010
Presently, nearly half of the italian
gambling market turnover is
generated by EGM
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AWP1 machines
Gaming machines market evolution
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AWP2 machines
120.000
179.000
226.000
275.000
348.000 340.000
2.451
10.705
15.227
18.608
21.466
25.200
2751.199 1.705
2.346 2.715 3.079
0
5.000
10.000
15.000
20.000
25.000
30.000
-
50.000
100.000
150.000
200.000
250.000
300.000
350.000
400.000
2004 2005 2006 2007 2008 2009
operating AWP Turnover ( mln) NGR ( mln) mln EGM
Source:AAMS, MAG Analysis September 2010
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Gaming machines market evolution
11Operating EGM, mln turnover
Source:AAMS, MAG Analysis - * 4 historical casinos EGM not considered
17.551
20.705
23.72725.350
26.449
29.011
2.451
10.705
15.227
18.608
21.466
25.200
0
5.000
10.000
15.000
20.000
25.000
30.000
35.000
2004 2005 2006 2007 2008 2009
EGM turnover n Ita y Lega turnover
0
50.000
100.000
150.000
200.000250.000
300.000
350.000
400.000
450.000
500.000
2004 2005 2006 2007 2008 2009
Operating EGM in Italy* Legal EGM
Operating EGM in Italy(including grey and black machines)
EGM turnover in Italy(including grey and black machines)
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Social sustainable business environment
Dampen illegal \ grey market to around 15% of the whole market
Ensure games rules and payouts to players
Expel illegal organizations from one of their core markets
More effects in fighting grey market will come in 2010 (AWP market entirely
works withAWP2 machines, operating with encrypted data \ smart cards onmotherboard)
(some) responsible gaming tools on AWPs (self setting of time \
wagers limits)
limits to machines operating by venue typology (since 2003)
(some) communication programs to distribution chain
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Next targets
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Present business scenario
Italian gaming market started the new Video Lottery Terminals era
VLTs are server-based gaming machines connected to central controlsystems, managed by concessionaires and audited by AAMS
approach taken to this new regulation - in development since 2006 and
finalized within the funding program caused by the Abruzzo earthquake
(2009) - is based much more on the general Italian approach to
online/networked gaming regulation than AWPs
VLTs payouts (RNG determined, including jackpot systems) starts from 85%
(rather than fixed 75% in AWPs)
terminals may be installed only in dedicated gambling venues and may
works with cashless systems
VLTs segment aims to:
cover the last mile to the total public control of the EGM market, fighting
illegal offer with an even more competitive offer
push players more to dedicated gambling venues than from the presently
predominant street venues (coffe bars)14September 2010
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Expected EGM market turnover bybusiness model
15% turnover (handled wagers) Casinos EGM are different than AWPs and VLTs
Source:MAG Analysis
Dedicate
d venues
15%
Street
offer
69%
4
Historical
Casinos
16%
2009
Dedicated
venues
52%
Street
offer
40%
4
HistoricalCasinos
8%
2012
Around 2012, gross gaming revenues of EGM dedicated
venues should go over 40% of the whole market
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Reality ofgamingmachines andcasinoenvironment
worldwide
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Italian EGM market positioning evolution
World of
entertainment
Tourist targetLocal target
Gambling
Italy 2010
Italy 2005
Italy 2012
Italy 20xx
Source:MAG elaboration on a E. Bidault layout
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Next regulatory challenges
What we expect:
More skill-based gaming (with introduction of poker tournaments indedicated venues)
More cashless operation, with higher security and opportunity (formarketing and RG objectives) for player tracking and consumer behavioranalysis
Higher commitment from gaming companies (rather than to streetoperators) to prove their socially responsible approach
Enhance responsible gambling programs
Effective under age gambling control in dedicated venues
Dedicated venues to become a strength in harm minimization
All those targets needs: maintaining low taxes and a stable regulatory environment
national policies targeted to local and\or social destination of gamingtaxes
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In this paper
MAG
is a strategy and business advisoryfirm.
MAG assisted Italian gaming and
betting authorities in shaping and
starting up the Italian gambling
regulated market in 2002-2007.Presently,MAG advises some of
the major companies involved in
Italian and European gambling
markets.
For further information
Shaping the market
How change figures from a dramatic grey market to aregulated, monitored and profitable market?
Social, economic and competitive sustainable business
environment
Gaming machines allowed
Competitive, economic and sustainable business
environment
Results
Present Italian (legal) gambling markets turnover
Gaming machines market evolution
Social sustainable business environment
Next targets
Present business scenario
Expected EGM market turnover by business model
Italian EGM market positioning evolution
Next regulatory challenges
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