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Update ITALY VLT MARKET


The online gaming sector is currently tripping over itself to establish a foothold in the Italian market after France has turned out to be a damp squib and opportunities in the US, which appeared so promising, have been crushed by the back tracking of Atlantic City’s governor.


hitting the jackPot One of the key areas of VLT expansion in Italy is in the area of jackpots. Just how attractive this feature will prove to be has yet to fully emerge, but operators believe that jackpots will prove crucial to the success of the sector both now and in the future. The figure of 12-15,000 terminals on the market means that there's currently little real competition in the marketplace, with smaller cities and towns yet to feature on the VLT roadmap. We also need to see what will be the outcome of competition within the locations as they install multiple systems and a wider variety of games from existing suppliers. For those concessionaires that are both operators and suppliers, the consensus of opinion is that rivals will have to wait until their allocation of machines is fulfilled before competitors are likely to be able to reap the same rewards. Conflicts of interest are undoubtedly going to happen, if they haven't already, but that's through no fault of the suppliers, but rather the flawed phased deployment forced upon the market by AAMS and SOGEI.


Another problem for the second phase suppliers is the lack of viable locations. As mentioned, concessionaires are becoming increasingly picky. As a further 15,000 machines are predicted to be installed this year, exploiting the first wave of VLT locations in Italy has proven relatively straightforward. Now, however, there are not enough interesting locations currently available in which to install this next tranche of machines. Location remains the critical element of success. For VLTs it is a matter of location, position and size. Halls capable of offering less than 20 machines are thought insignificant. Operators want the largest possible space, from 500- 1,000sqm. At the same time, demographics are equally important. The big cities of Rome and Milan have been obvious targets, where the best Comma 6a halls have catalysed into the best Comma 6b halls, though it's the location that has played the crucial factor, rather than any transition in Comma 6a play to their VLT counterparts.


Locations are being snapped up right now next to cinemas, within shopping malls and prime footfall sites. Gaming is no


longer being hidden away in Italy, but rather the mini-casinos are taking their offer to the masses. There are worries that once this phenomenon enters the public consciousness the sizeable increase in stakes and prizes will bring criticism from the usual sources. While operators remain pessimistic that we'll see a doubling of the location figures this year, at the Rimini show we were told of locations that had not worked out and had swapped back to their Comma 6a roots. There are also tales of operators having wholesale swapped their locations to VLT-only locations who were now asking for their old machines back, mixing their locations with Comma 6a and 6b to complement each other's income.


the oPerator’s view From an operational standpoint, Comma 6b requires far less maintenance than a 6a machines site, with bills and tickets instead of coins presenting much less of a daily logistical challenge. However, there are anomalies, as in other markets. If a machine is inoperable in the marketplace the operator must pay a penalty fine. If the maintenance needed to fix the machine isn't carried out within 60 days then the device will need to be certified once more with new software. If the machines is removed during this period from the network, the operator must continue to pay an amount of tax


pro curve the industry's first curved LCD display


Video Lottery Terminals, on the


other hand, have a maximum bet of 10 euros, a maximum win of 5,000 euros and a percentage payout of at least 85 per cent of the bets and also


features a jackpot.


up to €100,000 per location, and up to


€500,000 on behalf of the


concessionaire.


calculated on the presumed average tax income 'coin-in' per day. When the machine is re-connected to the network the average tax is then recalculated and any difference must be repaid.


Following the second phase of homologation and into the expansion of VLTs beyond the initial 56,000, predictions range from two to three years, though no one is currently suggesting that there will be an expansion in the number of concessionaires in the Italian market. The sheer scale of the investment is daunting to say the least. Companies must show a minimum turnover of €30m and would be obliged to install a minimum of 5,000 networked Comma 6a machines in the marketplace. Such infrastructures present enormous logistical challenges to new entrants who would then only be able to site VLTs as a 14 per cent proportion of their Comma 6a estate. Siting the minimum number of 5,000 6a machines would enable an operate to site just 700 VLTs, with guarantees of €1,000 per unit and €15,000 per terminal for the licence. To start, independent operators estimate that they'd need €3.5-5m, at which point they would then need to establish an infrastructure of people and facilities to manage the network and estate. The final tally would hit €15m all too quickly, which is currently thought to be prohibitive for any new entrant.


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