Italian gaming machines market regulation model and its effects (2010)
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September 2010 Emmanuele M. Cangianelli MAG CONSULENTI ASSOCIATI Italian gaming machines market: Regulation model and its effects
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Transcript of Italian gaming machines market regulation model and its effects (2010)
September 2010
Emmanuele M. Cangianelli
MAG CONSULENTI ASSOCIATI
Italian gaming machines market: Regulation model and its effects
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Why we are here
� To synthesize the Italian Electronic Gaming Machines regulatory model 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 a social, economic and competitive sustainable business environment
� To shape next market developments and regulatory targets
� To consider this experience in shaping new jurisdictions ‘s gam(bl)ing regulatory and business models (i.e. Greece, Poland…)
September 2010
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Shaping the market
September 2010
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How change figures from a dramatic grey market to a regulated, monitored
and profitable market?
� In 2002 – 2003, after some uninspired attempts to regulate the gaming machines market, Italian Parliament approved for the first time electronic gaming machines (AWP) regulation guidelines
� AAMS (State monopolies and gambling authority) drafted operative regulation; in the meanwhile grey machines were legitimized to have a first significant tax income and to evaluate market dimensions
� Therefore, was published the first new AWP regulation and launched the tender for concessions allowing the right of operating gaming machines in the Italian market by controlling all administrative and operational data
� The AWP regulation in 2004 was the first result of the AAMS approach to reach a social, economic and competitive sustainable business environment in Italian gambling markets
September 2010
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Social, economic and competitive sustainable 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
(2004: gaming machines; 2006: betting and online skill games \
poker; 2010: online casino games)
� Introduce (lotteries exception) multi-operators markets
� Develop online managing \ auditing systems for any gambling
activity
� Enhance distribution chain responsibilities, confirming revenues
levels
September 2010
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Gaming machines allowed
September 2010
AWP2 Multiplayer
AWP2(roulette-like, black jack-like)
VLT
Server monitored Server based
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Concession Police licence \ AAMS monitored
Central
Control Systems
AAMS
Venue \AWP games point of sale
EGM Management
Money collectionVenue Management
Concessionaire (fully integrated)
Concessionaire (integrated)
AWP owner \commercial
operator
Venue \AWP games point of sale
Concessionaire
(system provider)
Competitive, economic and sustainable business environment
10%
15%
75%
A competitive market
with:
• 10 concessionaires
• more than 100
licensed
manufacturers
• more than 1.500
commercial 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)
System
certification
(SOGEI)
AWP certification
(laboratories)
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Results
September 2010
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AWP1 machines
Gaming machines market evolution
September 2010
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 EGMSource: AAMS, MAG Analysis
Presently, nearly half of the
italian gambling market
turnover is generated by EGM
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Gaming machines market evolution
September 2010Operating EGM, € mln turnoverSource: 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 in Italy* Legal turnover
0
50.000
100.000
150.000
200.000
250.000
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 with AWP2 machines, operating with encrypted data \ smart cards on
motherboard)
� (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
September 2010
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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 control systems,
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 work 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)
September 2010
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Expected EGM market turnover by business model
September 2010% turnover (handled wagers) – Casinos EGM are differ ent than AWPs and VLTsSource: MAG Analysis
Dedicated
venues
15%
Street
offer
69%
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Historical
Casinos
16%
2009
Dedicated
venues
52%
Street
offer
40%
4
Historical
Casinos
8%
2014
Around 2014, gross gaming revenues of EGM dedicated
venues should go over 40% of the whole market
AWP1machines
AWP2machines
Casino machines
AWP2machines
Casino
machines
VLTs
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Reality of gaming machines and casino environment worldwide
Italian EGM market positioning evolution
World of entertainment
Tourist targetLocal target
Gambling
Italy 2010
Italy 2005
Italy 2014
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 in dedicated
venues)
– More cashless operations, with higher security and opportunities (for marketing
and RG objectives) for player tracking and consumer behavior analysis
– Higher commitment from gaming companies (rather than to street operators)
to prove their socially responsible approach
- Effective under age gambling control in dedicated venues
- Enhance responsible gambling programs
– 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 gaming taxes
September 2010
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In this paper
MAG
is a strategy and business advisory
firm.
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
MAG
is a strategy and business advisory
firm.
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 a
regulated, 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
